Should I file?

[Anonymous]

Hey guys, here's my situation - I was a medically uninsured homemaker for a few years during which time I had a hospital stay and various other medical bills add up. My ex wouldn't pay them. I'm long since divorced and have been clawing my way out of debt and disastrous credit. I've come from about a 500 to almost 700 in two years. I have numerous small cards open, and a ~$25k auto loan with 100% payment history on each.

Here's my issue. I've been able to call all of my medical debt collections agency and work out payment plans except for the one that holds the majority of my debt. They told me I owe about $24k total, some of which is already reported to my credit, leaving $21k outstanding. I explained my rebuild and offered to make the same payments I was making to all my other debts and they LITERALLY LAUGHED AT ME and told me if I couldn't pay minimum $500/month the rest of the accounts would go to collections. I absolutely cannot afford to pay anything near that. Tbh I'm stretching myself paying my other debt folks $25/month each and staying current on all my other bills. I refuse to let that one creditor drag me down and drown my other bills, I've worked too hard! Then TWO DAYS after I spoke with them by phone, boom FOUR NEW COLLECTIONS reported on my credit report 🤬

I had this entire plan to buy a home in the next 15 months or so, I've been cultivating this plan so carefully over the last 6 months but now I'm trying to weigh the balance... if all these individual accounts totalling $24k are reported to credit, is that going to blackball me from a mortgage in 15 months? Should I file bankruptcy and push my home purchase back to 2 years from now? Are there any other options at all here? I'm feeling desperate and seeing all my hard work go down the drain and I'm trying hard not to panic but 😱

[Anonymous]

I can only speak to my thought process, and I am far from the most logical person on this board. If you are not able to pay on this new obligation and there is no reason to think your financial situation will drastically improve in the next 15 months, then I don't think you will be getting a mortgage in the original goal of 15 months (again, I am not an expert and someone more experienced can help you with mortgage specific questions). If you pass the means test and are eligible for Chapter 7 protection, then it opens the door for you to potentially be in a house relatively soon (24 months after discharge). If the ultimate goal is to get into the house as quickly as possible, this now seems like the fastest way given the recent development. 

I was in a similar situation to you, in that we had been working to rebuild credit for 18 months or so prior to finally making the decision to file. My wife lost her job, and we were trying to juggle everything, but the final straw was when we started getting sued for judgments because we were unable to pay as much in payments as they were willing to accept. That finally tipped the scale towards Ch 7. Now that it is over and I am almost a year into my rebuild, I wish we had done it sooner. 

I am not saying that is the right choice for you, as only you know the whole situation. However, it is amazing the relief that comes from finally being able to pay all your bills and not have everything hanging over your head every minute of every day. 

Finally, be proud of yourself no matter the choice! It sounds like you have done an amazing job! Keep up the good work and let us know how we can help support you (regardless of which path you choose). 

[Azuieldrago]

To file is a question you need to sit down on and think hard about. Then consult several lawyers to see how you sit. If you file, you will be 24 mths before buying a house. Flip side, financial freedom.

Personally, I am a spiteful person. I would call one more time, set up payments that work for you. If they deny, tell them they will get nothing than and file. 

I was a medical reason in my filing. They wanted like several grand a month. OH HECK NO. I meet the income requirements for reduced amount. They denied it anyways with no reason. OK, you won't get nothing. But thats me, you do what you have to. We may not fully be able to answer if you should or not, but we will help you rebuild no matter what you decide. Rebuild in 2 yrs with a BK or how many yrs paying it off and then rebuild after that. 

[FireMedic1]

The number one reason people file is medical debt. I am a broken record when I answer the should I file question. I'll answer it the same way I have been for over 4 yrs here. In 2 yrs after filing will you be better off then being debt free or trying to repay the debt you have now in 2yrs. You'll be financially free if you file. The rebuild can start afterwards. Then 4 yrs out you could be like my discalimer below. If you decide. You can close out your cards before filing. Get a house in 24 months not 15 after BK. Be debt free and enjoy a new life. As a med professional for 36 yrs. Debt is silently harmful for your health also. People dont bring that up much on here. I do. So its affecting your health as well as your wallet. I will never say yes file. I just lay out what it could be if you decide to file. See if you meet the means test for your state for a 7. Talk to some lawyers. Its your decision. Keep us updated.

[wa3more]

I think you would need to look at your whole financial picture and see if you can cut anything out.  If you have good income and expenses that can be cut, bk on 20k might be a bit extreme 

[twono]

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@Anonymous wrote:

Hey guys, here's my situation - I was a medically uninsured homemaker for a few years during which time I had a hospital stay and various other medical bills add up. My ex wouldn't pay them. I'm long since divorced and have been clawing my way out of debt and disastrous credit. I've come from about a 500 to almost 700 in two years. I have numerous small cards open, and a ~$25k auto loan with 100% payment history on each.

Here's my issue. I've been able to call all of my medical debt collections agency and work out payment plans except for the one that holds the majority of my debt. They told me I owe about $24k total, some of which is already reported to my credit, leaving $21k outstanding. I explained my rebuild and offered to make the same payments I was making to all my other debts and they LITERALLY LAUGHED AT ME and told me if I couldn't pay minimum $500/month the rest of the accounts would go to collections. I absolutely cannot afford to pay anything near that. Tbh I'm stretching myself paying my other debt folks $25/month each and staying current on all my other bills. I refuse to let that one creditor drag me down and drown my other bills, I've worked too hard! Then TWO DAYS after I spoke with them by phone, boom FOUR NEW COLLECTIONS reported on my credit report 🤬

I had this entire plan to buy a home in the next 15 months or so, I've been cultivating this plan so carefully over the last 6 months but now I'm trying to weigh the balance... if all these individual accounts totalling $24k are reported to credit, is that going to blackball me from a mortgage in 15 months? Should I file bankruptcy and push my home purchase back to 2 years from now? Are there any other options at all here? I'm feeling desperate and seeing all my hard work go down the drain and I'm trying hard not to panic but 😱

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Having 4 new collections recently, in itself, would hinder you greatly from getting a mortgage in 15 mos.

[Phoenixupward]

Filing for bankruptcy is a business decision that legally protects the debtor. You have already presented your current financial situation in which you have been working very hard to hold everything together without much wiggle room.  My question to you is: "Do you have a substantial savings currently?"  A person without a savings is like a fish out of water.   If all of your income is going to pay creditors leaving you with no disposable income to sock away, then you are technically working for free.   One's income should allow an individual to have far more liquid assets than liabilities.   Even though I'm glad that I filed 2yrs ago, I'm still dealing with medical issues related to stress.  They are minor but my financial issues were a contributing factor.   My rebuild has been seamless (over 40k in available credit and I have 17 dollars currently reporting). The only thing I regret is I wish I had filed sooner.  Whatever you decide good luck with your decision. 

[Anonymous]

I truly appreciate all of these thoughtful responses! To add a little more information, my household income is roughly $50k pretax, and my housing and vehicle payments alone total almost $2k/month. I desperately need to refi the vehicle payment as I got roped in to a predatory lend and am paying over 17% interest, but I don't know where that should fall in the list of priorities. I'm kicking myself for not refinancing two mo ths ago when my scores were doing really well, now with these new collections even NFCU probably won't help me with that 😬

[twono]

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@Anonymous wrote:

I truly appreciate all of these thoughtful responses! To add a little more information, my household income is roughly $50k pretax, and my housing and vehicle payments alone total almost $2k/month. I desperately need to refi the vehicle payment as I got roped in to a predatory lend and am paying over 17% interest, but I don't know where that should fall in the list of priorities. I'm kicking myself for not refinancing two mo ths ago when my scores were doing really well, now with these new collections even NFCU probably won't help me with that 😬

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File, let the car go, buy a cheap cash car.  A 15-20 yr old $2000 honda , should last for years still. In less than a year post DC, you should be able to finance a car well under 10%.