I am hoping to get some guidance as to what my next step should be. I have approx $16,500 in credit card debt. 6 months ago I started a debt consolidation program so with that I had to stop paying all of my accounts so they can be settled. Few months in I had to cancel because they were not communicating with me. Now I am in a place where all of my accounts have been turned over to 3rd party collection agencies. Because of this my credit score has diminished to around 490. With that score and derogatory marks, I cant get any loans for debt consolidation. Some have suggested filing bankruptcy but I am not sure my situation is severe enough for that. I am 26 yrs old so I really do not want that to affect the next 10 years in this very special time in my life. I do not have any savings to start paying off the collections agencies and Im sure soon they will come after me. As of now I am focusing on getting a job where I have a higher income to make payments in case I find an angel who gives me a personal loan at a decent interest rate. Any thoughts ?
It really depends on how much money you can put towards that debt each month. For someone making decent money, filing BK over $16k isn't worth it. For someone on disability whose income is $600/month, it could totally make sense.
I'm willing to guess that it would probably be better to get on a budget and start setting aside money and try to settle these debts on your own for a fraction of the balance. (This is what the company you were working with was going to do and you can just the same do it without them.)
The big reason not to file BK is that it can only be done every 7 or 10 years (depending on the chapter filed) and should someone file and then incur serious unmanageable debt (medical in most instances, the #1 reason for BK's) then they wouldn't have the BK option available. I have generally always been healthy and was hospitalized twice in my 20s and early 30s for very odd/rare conditions.
That being said, a BK on your reports for 10 years isn't as bad as it's made out to be. You just don't want to utilize it unless it's the last resort.
If you could list who the collection agencys are. There may be a few that have company polocies that they will delete them from your reports if settled or paid in full. (PIF)