Stressed and up to my eyeballs in debt...is Ch 7 the way to go?

[Azuieldrago]

If you want more accurate info, list your creditors amounts owed, actual monthly income, not what you possibily could make and your other debts. With that, the more experienced folks maybe able to come up with payment plan and keep you out of BK. Also now one will judge you. We all have hit rough patches and had to make hard decisions.

[FireMedic1]

Its not a test like school.

Colorado Median Income Standards for Means Test for Cases Filed On or After May 1, 2020

Household Size /Monthly Income/ Annual Income

1

$5,068.25

$60,819.00

If you make over this amount. You wont qualify for a Chapt 7. Then it will be a Chapt 13. Your lawyer will probably say stop paying your bills leading up to the BK filing. And cut back your hrs some to go below the 60k since you make 62k as you posted. Then it can be a Chapt 7 and a fresh start. I posted what I said to see if living expenses could be less than what they are now. Or sweat it out till fall when you said you could make 96k thats more than the debt to pay it back and not file. Fine line.

[Phoenixupward]

I'm sorry to hear about your financial troubles.  I know it's difficult but you need to relax and release the guilt.  The  Colorado state means test for a single person is  $60,819.00  for Chapter 7 which you are clearly above as illustrated by your 6 months aggregate income.   Your only recourse will be Chapter 13.  With that being said, you have student loans totaling 170k in which repayment is imminent.  How much of your student loans are private and which are federally funded?  I don't know how educational loans are treated in the private sector but I do have experience in federal student loans program.  With federal student loan programs, you can apply for a forebearance due to economic hardship.  You can also apply for an income sensitive driven payment plan.  The Cares Act of 2020 has suspended all student loan payments until October 2020.  You should have seen a reduction on your student loans due to a decrease in interest payments.  Also, the Care Act protects renters from eviction and you can use your security deposit towards your rental payment.  Also, landlords are forbidden to evict renters due to the health crisis.  It's obvious that rent is your biggest issue and it's draining your disposal income.  I know. I like in NY/NJ area and when I was having financial difficulties, I left my expensive apartment with all the accoutrements to move in a small standard apartment that was way cheaper.  You are going to have to move so you can strategize a course of action towards financial freedom.  Use the Care Act 2020 to your advantage. Good luck and keep me posted. 

[Anonymous]

When are you done with school?  When you are done will you be able to pick up a second job?  

What do you currently bring in each month as income?

[Anonymous]

I'll be done with school in December.  I would be totally willing to, I'm just not sure I can wait until then to do something.  If I got only my base bay and a weekend differential, my take home would be around $3,800 per month.  Pretax that's somewhere in the neighborhood of around $5,100 or so each month.  The problem is, we had significant mandatory OT and crisis pay over the last 6 months and now, because of Covid, our OT and bonuses are discontinued.  

So it's tricky...on paper it looks like I make a lot more than I actually do.  The bonuses, differentials and OT arent guaranteed...

[Anonymous]

Thank you, I appreciate that!  I have a 130K in fed loans and 42K in private loans.  I'll definitely look more into it, for sure!

[Anonymous]

That's fair and I appreciate the feedback for sure.  I think all of the cutbacks at work will be the cut I need to qualify...I just wonder if it will bring down my average pay soon enough.  Will the cutbacks at work, my take home pay will drop to around $3800 per month which is a gross of about $5100.  After the last 6 months of mandatory OT and crisis pay, I look good on paper.  What my actual pay is without all of that is quite a bit lower.  

[Anonymous]

Have you considered asking for a pay cut? I took a pay cut of close to 50% to be able to apply for chapter 7. I was in the same boat as you, I made to much to qualify but not enough to keep up. So I did what I had to do and struggled for 6 months until my income was low enough to file. 

[Anonymous]

I dont think I have enough info to really help.  From what I tried piecing together from multiple post, you made significantly more than 3800 per month over the last 6 months or so.  Were you able to cover your bills then?  

It is your choice to take the bankruptcy route but I think you should be certain that you have done all you can first.  Maybe you have.   The reality is that there are 2 options to get yourself out of this on your own...more income or fewer expenses.  Have you gone over your monthly budget to make sure you have squeezed out all you can?  Do you have the option to get a roomate?  Can you get additional deferment on your student loan to give you time to tackle the other stuff come September.  If your OT is cut, can you supplement with a part-time job?  

Bankruptcy should be your last option.  You need to determine how much you are willing to sacrifice to dig yourself out.   You are getting close to the finish line with school.  That in itself will take off a load.   

[Anonymous]

First, many of us have been there, so try to not beat on yourself. No matter what you decide, the fact you are taking a good hard look at your situation means you'll find a way out. 

As someone working in the healthcare field myself, I remember what it was like when student loans went into repayment and the financial stress became real. My circumstances were a bit different leading up to bankruptcy, and were rather sudden, but I filed BK13 when I was 30. At that time I had 120k in student loans, ~100k in other debt and made ~50k/yr in the Northwest. I did not pass the means test to file BK7. It felt like the worst thing I'd ever done, but now looking back, my finances are much better than they were then. After making reasonable payments for 5 years, all other debts besides the student loans were discharged, and I was able to save a lot towards retirement and paying back the student loans.

My BK was discharged half a year ago, and I've been able to start a strong rebuild because of the lack of baddies before filing. I burned 2 CC's in the BK and had no other derogs. It does make a difference. Sure I wish I'd done things differently--took out less in loans, found another way to address them--but what's done is done, and I'm able to move forward with a much brighter financial future. I now think Ch13 was better, since it'll fall off my reports sooner than a Ch7. Depends on your situation though. 

Definitely talk to BK attorneys, although be aware that they make money if you file, so they may not have as much incentive to help you find alternatives to BK. Good luck, you'll figure it out!