Is bankruptcy the best option??

[Theycallmebeezy]

Good morning/afternoon all

I'm currently around 70k in debt in credit card/personal loans. Im currently being paying all my bills on time but due to a recent job change, my income has decreased and it's becoming hard to stay afloat. One of my cards in particular has a very apr and monthly that I can no longer afford. Im considering bankruptcy or settling the card for a cheaper amount . Any advice will be greatly appreciated. My current credit scores are around the 550s due them being basically maxed out.  I have no late payments no collections and no judgments on my current credit reports.

[Jeffster1]

I was in the EXACT same position as you in 2016-2017. I was on time on all my payments but just treading water. There was no way I would ever be able to pay the credit card debt off. The default APRs alone sank me. 

Eventually, it got to be too much. Still on time with all accounts except one. After a few months, the creditor served me with papers. 

I called a debt collection attorney who listened to my story over the phone. This attorney is known for handling celebrities (I live in LA). He very kindly advised me to contact a bankrptucy attorney.I was so grateful that he devoted the time to me on the phone that he did. I guess I lucked out.  He gave me a name of a local BK attorney and I made an appointment for the next day. Best thing I ever did was to go in for my consultation. The hardest part for me was allowing myself to accept that it had all become too much for me. The attorney explained to me how "this is life. It happens." His advice went a long way to end my guilt.

My attorney held my hand every step of the way. I filed a Chapter 13, and, in my case, circumstances had much improved for me.  I was able to convert to a 100 percent plan, and I got my discharge 3.5 years later. I learned discipline during my 13 that I did not have before. My monthly payment was high...I did not apply for credit while in BK...and I learned to live on cash. 

Best decision I ever made. I know my story may not be useful for some, but, for me, it allowed me to plan for my future and  possibly retire early. I am a PIF guy now. My rebuild began a couple days after my discharge, and I have built a credit profile of which I am proud. 

In my opinion, the most important aspect was having a great BK attorney. He was responsive; caring; and understood how difficult that first step can be. I felt very protected. 

 BK changed my life. I will admit that life IN BK was easier than my life the previous year. I cannot envision any other option that would have helped get my life back on track.

[Theycallmebeezy]

Thank you so much. Do you have the attorney info ? 

[sarge12]

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@Theycallmebeezy wrote:

Good morning/afternoon all

I'm currently around 70k in debt in credit card/personal loans. Im currently being paying all my bills on time but due to a recent job change, my income has decreased and it's becoming hard to stay afloat. One of my cards in particular has a very apr and monthly that I can no longer afford. Im considering bankruptcy or settling the card for a cheaper amount . Any advice will be greatly appreciated. My current credit scores are around the 550s due them being basically maxed out.  I have no late payments no collections and no judgments on my current credit reports.

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First of all, Bankruptcy should be considered as a last option only at reclaiming your life. Problem is to be able to objectively look at the situation to realize it is the only way that will work. Many can actually delay filing for quite some time by gradually borrowing from Peter to pay Paul. Then they are finally forced to file by some unplanned for expense, or some creditor filing suit. A chapter 7 falls off in 10 years, if you see that there is no reasonable possibility that your credit score can be very good by then without filing...then Bankrupty is almost certain, and delaying is just delaying the inevitable, and the time required to recover. If your fridge goes out, and it will at some point, you have to have a fridge. Same applies to a car, which you need for employment.

Unplanned expenses for repairs, slight loss of income, medical issues, and other aspects of life will almost definitely sabotage even the most carefully laid out plans for debt repayment if the amount of monthly payments are over a certain threshold as a percent of income. Some look at all normal expenses...rent, groceries, taxes, utilities, and monthly payments on debt, etc. only, and plan accordingly. That is a mistake, as you must allow for accidents, home repairs, appliances, inflation, illness, etc. that happens to everybody. If your financial situation is such that it is impossible to handle lifes unplanned for expenses to better your finances, then file, and the sooner the better. The 2 biggest mistakes people make with credit is getting so deep in debt that bankruptcy is inevitable, and delaying the filing of bankruptcy when it is, in fact inevitable.

Now certainly, life can also provide unexpected windfalls of income to prevent filing...inheritance, winning the lottery, or a greatly unexpected job offer, but planning your finances based on hope for a windfall is not the best plan of action. By the way, if you need to file, don't play the lottery or slot machines. The fridge eventually breaking is going to happen, as will your car, HVAC system, or any other appliance. A windfall is not such a certainty. It will take 10 years for a ch.7 to fall off a report. If you delay filing for 2 years, it will take 12. I can't say for sure if you are at the point where bankruptcy is inevitable, but it looks like you are.

[Jeffster1]

@Theycallmebeezy I sent you a DM. 

[Lurker22]

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@Jeffster1 wrote:

I was in the EXACT same position as you in 2016-2017. I was on time on all my payments but just treading water. There was no way I would ever be able to pay the credit card debt off. The default APRs alone sank me. 

Eventually, it got to be too much. Still on time with all accounts except one. After a few months, the creditor served me with papers. 

I called a debt collection attorney who listened to my story over the phone. This attorney is known for handling celebrities (I live in LA). He very kindly advised me to contact a bankrptucy attorney.I was so grateful that he devoted the time to me on the phone that he did. I guess I lucked out.  He gave me a name of a local BK attorney and I made an appointment for the next day. Best thing I ever did was to go in for my consultation. The hardest part for me was allowing myself to accept that it had all become too much for me. The attorney explained to me how "this is life. It happens." His advice went a long way to end my guilt.

My attorney held my hand every step of the way. I filed a Chapter 13, and, in my case, circumstances had much improved for me.  I was able to convert to a 100 percent plan, and I got my discharge 3.5 years later. I learned discipline during my 13 that I did not have before. My monthly payment was high...I did not apply for credit while in BK...and I learned to live on cash. 

Best decision I ever made. I know my story may not be useful for some, but, for me, it allowed me to plan for my future and  possibly retire early. I am a PIF guy now. My rebuild began a couple days after my discharge, and I have built a credit profile of which I am proud. 

In my opinion, the most important aspect was having a great BK attorney. He was responsive; caring; and understood how difficult that first step can be. I felt very protected. 

 BK changed my life. I will admit that life IN BK was easier than my life the previous year. I cannot envision any other option that would have helped get my life back on track.

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I couldn't have said it better, the only thing I'd add is each situation is unique - I'd encourage you to do a consultation with a bankruptcy attorney and see which option is best for your situation

[FireMedic1]

Welcome @Theycallmebeezy 

What state and what is your income. Look up the means test and make sure your under the income amount for a Chapt 7 if it comes to that.

[Theycallmebeezy]

I'm in California and I'm about 70k in debt 50K is credit card debt and one card in particular is killing me due to the interest. I've stopped using my cards and made hardship arrangements on the ones where that was an option.  I also have a business I'm launching in late January that I don't want to have to liquidate if I file for ch 7. I've starting cutting  my expenses and downsized my apartment. 

[FireMedic1]

Yes do all that you can to cut back and make deals to aviod BK. If it does come down to a last resort to file. The 2023 max income for 1 person limit max income to file a Chap 7 will be $69,660. Otherwise it will be a 13. With a business coming soon. As we say. Consult with a lawyer for legal advise. Hopefully you dont have to. Best of luck. Happy New Year!

[Theycallmebeezy]

I talked to an attorney but I think I won't be able to afford the ch 13 monthly payments. (Around 1000-1100/mo.)I was making around  69k but I recently got a pay raise to 72.5 k but with taxes, pensions and insurances , it feels more like 59k.