Should I file Chapter 7 with moderately small debt?

[TripHop]

Hi all,

I hate to be that guy asking for advise on his first post but I need your help. I'm 29 and wondering if I should file Chapter 7 or wait until the debt collectors give up and it’s charged off. The only debt I have is from credit cards which total around $20k. It’s spread across 7 cards so I owe each moderately small amounts between $1k – 3k. I paid the minimums for 4 - 5 years but I haven’t paid on any cards in year. The debt has gone to collection agencies but I’m not being sued or garnished (yet at least). I also have a $30K student loan but I know that’s not included in Bankruptcy and I have being paying it on time. I don’t owe any backed taxes, I don’t have car payments, and I rent an apartment so the Bankruptcy would only be for credit cards. Is it possible for me to just deal with collection calls and letters until they stop or is Chapter 7 a better option given my situation? I hoping they wouldn't sue me for $1k to 3K.

[MovingForward_2012]

Only file a Chapter 7 if they threaten to sue. You will be scarred for 10 years versus 7 years and 180 days. Also many CCCs blacklist so I would get on payment plans for the ones you wish to reestablish in the future.

[aussiesareforever]

I agree. Don't do it unless they threaten to sue. That was what ultimately drove me to BK although in retrospect, I should probably have tried to settle with them.

[TripHop]

Thank you both, I will hold off until on filing Ch 7 until I'm being sued or garnished.

[MovingForward_2012]

+1

[Countingpennies]

'Small debt' is a relative term. You really have to consider your whole financial picture. I was laid-off in 2009 and my CC debt was less than $8000. 3 1/2 yrs. later, my income was 1/5 of its former self and my CC debt was about $20,000 (and I had stopped using the cards a few months after layoff.) I judgement, 2 more about to sue, and no prospects of getting my income back to where it was, I filed BK 8/2012.

I'm also much older than OP. At 29, that is the age that you will most likely need/want your good credit, if not now, in the near future. I didn't see the reason why OP stopped paying a year ago. Job loss? Just because? Anyway, if the income is there and will likely remain and increase, I would put as much cash as possible away for settlement negotiations when one or more of them does sue, and work on a plan to PFD and other steps to get your credit repaired. The sooner you start, the happier you'll be down the road. Save the BK for when you are truly desperate, and there is no other option.