What should I do with a settlement but it isn't enough to pay off everything

[Anonymous]

Hey, 

I wanted to know what you'd do with this settlement.  It will be about $8000 and it isn't enough to pay off my debt. Due to louse of spouse, job and home all in the same month, I've gotten into some deep debt.  I knew what not to do and did it anyway.  Everything is maxed, some are 30 days behind and I have about 6 lates on my credit report.  I have two big balances that require a $300 minimum that is killing me. I want to save at least $3000 because I need to move and my car is a 2013 with 150000 miles. I also want to take $1000 and get every little thing fixed on my car.  A few cosmetic touchups and then everything else is under the hood.  

Here are the approximates.  

I was thinking to get everything current, and then add some to the big balances to get the payment under 100 a month.  Then I thought to pay off 1, get things current or at 69%and go from there.    I listed the balance and then credit limit.  Let's assume all apr is 20%+ except for the 1st discover.  Paypal credit has been closed, but it honestly wasn't my fault. I set up a payment plan and tried paying online but they wouldn't accept it. I called and was transferred 5 x and no one heard of or could find my account.  Then I get a letter saying it was closed and in collex. Chase was also closed and is on a payment plan.  the apr is low.  I hate that had to happen, but I tried to prevent it beforehand.  Penfed, Amexp, and Sychrony,  Disco, Disco shared,  are current. 

REi                     8800 9000 

Mercury           3500  3500

Nordstrom      1900   5000

Chase               2200    2000

Discover          1900    2000

Penfed             4000  4300

american exp  1250   1300

Synchrony Car  (hey I needed tires, desperately)   850  1000

Navy Express    15000    15000

Disco(Shared)   5000   20000

Navy Visa            4000     4000

Target                   2000      4000

I can take $6000 and get all but REi and Navy AMEXP to 69% and that will leave nothing for savings.  Or I could take $3600 to get the 7 that are behind current, and then pay off American with the rest? 

I don't know, what would you do? 

[FireMedic1]

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@Anonymous wrote:

Hey, 

I wanted to know what you'd do with this settlement.  It will be about $8000 and it isn't enough to pay off my debt. Due to louse of spouse, job Are you working again? and home all in the same month, I've gotten into some deep debt. Was the home foreclosed on? If so will there be any suplus after auction? I knew what not to do and did it anyway.  Everything is maxed, some are 30 days behind and I have about 6 lates on my credit report.  I have two big balances that require a $300 minimum that is killing me. I want to save at least $3000 because I need to move and my car is a 2013 with 150000 miles. I also want to take $1000 and get every little thing fixed on my car.  A few cosmetic touchups and then everything else is under the hood.  

Here are the approximates.  

I was thinking to get everything current, and then add some to the big balances to get the payment under 100 a month.  Then I thought to pay off 1, get things current or at 69%and go from there.    I listed the balance and then credit limit.  Let's assume all apr is 20%+ except for the 1st discover.  Paypal credit has been closed, but it honestly wasn't my fault. I set up a payment plan and tried paying online but they wouldn't accept it. I called and was transferred 5 x and no one heard of or could find my account.  Then I get a letter saying it was closed and in collex. Chase was also closed and is on a payment plan.  the apr is low.  I hate that had to happen, but I tried to prevent it beforehand.  Penfed, Amexp, and Sychrony,  Disco, Disco shared,  are current. 

REi                     8800 9000 

Mercury           3500  3500

Nordstrom      1900   5000

Chase               2200    2000

Discover          1900    2000

Penfed             4000  4300

american exp  1250   1300

Synchrony Car  (hey I needed tires, desperately)   850  1000

Navy Express    15000    15000

Disco(Shared)   5000   20000

Navy Visa            4000     4000

Target                   2000      4000

I can take $6000 and get all but REi and Navy AMEXP to 69% and that will leave nothing for savings.  Or I could take $3600 to get the 7 that are behind current, and then pay off American with the rest? 

I don't know, what would you do? 

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Welcome @Anonymous .I would try and protect what is current so you dont lose them too. If you can get them all under 89% at one time. You'll be out of the maxed out area. Now if your working again. Whats your income and what would be your disposable income that you could apply to all the debts. Right now your sitting at over $50,000 in total debts. With the $8000 to pay down the debt. Your still left with $42,000 to pay off while interest is still accumilating.

I usually dont say it. But you could take the $8000. Get a lawyer and talk to them about filing BK. You'd have enough to move, fix your car and save some $ into savings. A new fresh start. You have a lot on your plate. But it comes down to this. Income and what would be left over to pay this mountain of debt. Life threw a hardball at you. Theres 2 ways out of it. A whole bunch of paying it off or fresh start. JMHO.

[Anonymous]

Thank you for responding.  

I am working but it is not enough to pay off the bills.  I'm drowning and getting things to 89% will keep me floating. 

I thought about bankruptcy but was afraid of it.  Like the details of what the creditors do and look for.  Will it affect the Disco account that I am listed as an additional cardholder. I wouldn't want it to affect them.  I really like Penfed and Navy fed and didn't want to get in bad standing with them.  I don't want to be on the burned list with them, Disco or Amex.  Can you file for some and not all?   I paid some of my school tuition on my Disco, can that be added in a bankruptcy?  Where I live they will not accept you for an apartment if you have a bankruptcy, ironically they want your credit to be between 600-700.  And of course the stigma of having one. Which I know isn't a big deal but ten years is a long time. 

I was moving in with my fiance and he died a month before I was to move in and I lost my job 20 days after he passed. After helping his family prepare everything for the services, I was shut out. So I don't know what happened with his home and legally, I had no ties to it. After some drama, I walked away from it and them. 

A fresh start would be awesome.  I had every intention of paying.  I'm just drowning and it has taken me longer than I thought to get on my feet. 

[FireMedic1]

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@Anonymous wrote:

Thank you for responding.  

I am working but it is not enough to pay off the bills.  I'm drowning and getting things to 89% will keep me floating. 

I thought about bankruptcy but was afraid of it.  Like the details of what the creditors do and look for.  Will it affect the Disco account that I am listed as an additional cardholder. No. Just have yourself removed as AU.I wouldn't want it to affect them.  I really like Penfed and Navy fed and didn't want to get in bad standing with them.  If you chose for a fresh start. You can pay NFCU back and they will let you back in. I don't want to be on the burned list with them, Disco or Amex.  Disco will also let you back in. There is no set time limit. Back they do forgive. Can you file for some and not all? No. Everything must be included.  I paid some of my school tuition on my Disco, can that be added in a bankruptcy? Doesnt matter what was charged on the card. It will be discharged. School got paid from Disco. Where I live they will not accept you for an apartment if you have a bankruptcy, ironically they want your credit to be between 600-700. Get the place before filing then with the 8g's. And of course the stigma of having one. Which I know isn't a big deal but ten years is a long time. Doesnt mean you cant rebuild. I'm 4.3 yrs post DC. See below for what could be accomplished on a successful rebuild. Its just me. All cases dont match to a tee. YMMV.

I was moving in with my fiance and he died a month before I was to move in and I lost my job 20 days after he passed. After helping his family prepare everything for the services, I was shut out. So I don't know what happened with his home and legally, I had no ties to it. After some drama, I walked away from it and them. My heart goes out to you. I am so sorry.

A fresh start would be awesome.  I had every intention of paying.  I'm just drowning and it has taken me longer than I thought to get on my feet. 

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I'm like a broken record when I post this. In the time to pay all the debt off compared to having a fresh start debt free. Which would be easier to live with. It would take less time to rebuild fresh than delay and try to pay all the debts off. Plus the stress the body goes thru being in debt is not good for your health and can cause a whole lot of problems. No one wants to file BK. I didnt. But sometimes we have to make decisions on whats best for me now, or whats best for the future. The choice is yours. I just lay out what it could be like on both sides of the fence.

[Anonymous]

^^^ excellent advice as always. OP, you’re in a very tough spot for sure. I won’t advocate either way but I think FireMedic1 has explained the two sides very well and I agree, as much as it seems like the end, cases like yours are why the option of BK exists. I feel for you - it’s an awful situation for sure. It’s worth your time and introspection to see all options and decide honestly what is best.

[Anonymous]

Thank you Firemedic for your kindness and advice.  I was also reading a ChooseFI board on Facebook and those folks are BRUTAL with people who choose bankruptcy. I was reading a different site and one person mentioned she has filed twice. I know it is more commonplace than I realize. I'm just tired, to be honest. I need a fresh start and things to get moving.  I didn't know I'd be here a year after he died.  

The lawyer helping me with my settlement also does bankruptcies and I decided to talk to him about it.   I should ask the lawyer, do I have to be removed as an AU on the shared Disco.  I don't want that person ask questions or know what is going on.  

Thank you for your words ImTheDevil!     

[FireMedic1]

You can always ask to be removed by saying it isnt doing anything for your credit scores. Thanks but no thanks. You can remove me. Its the truth when you think about it. So you wouldnt be lying to them. And Disco would never know. Even though your are not the primary account owner. You could  look at it this way. Your swimming up stream in a river and you haven't moved. Your in the same place no matter how hard you try. Eventually your run out of steam and head for the shore and get out. Relieved thats over with and it cant be done. Same applies.

No one wants to file BK. No one wants to tell others that they did either. But the laws were put into place long ago so people like us could get a fresh start and hit the reset button. If I could pass on what it felt like leaving the courthouse after it was done walking back to the truck. Man the relief that it was done was refreshing. No more calls. I could answer the phone again. No more threatning letters after dreading to go to the mailbox. The list goes on and on. The load lifted and outa here!

So talk to the lawyer and explain you want to change course and put me in a place where I could go for a swim and get somewhere for once. I'm tired and worn out. I want a new path. The path to financial freedom. Sound good? Keep us updated on how its going. We'll help you the thru the entire process and even when the rebuild starts. Good Luck and Happy Holidays!

PS. I dont have FB. Nor do I want an account. To much trash on there. I'm happy with Twitter.

[Anonymous]

You've been given great advice in this thread.

Speaking with your attorney will make you feel better about the bankruptcy. Don't listen to your friends, or family or strangers online who tell you never to file for protection. 

Where I live, a bankruptcy 7 costs around $3k to pay filing fees and a lawyer. Chapter 13 is around $5k. You have $8k. You have an escape route ready for you.  

The unfortunate, sad truth about BK is that is costs you money to get a fresh start and many people are not in the position you are where you can pay right now to start the renewal process.

In my attorney's office I saw people coming in to make a $200 payment every week to build up the payment of their BK fee so they could file and no attorney will take you on and file your BK without full payment first because then your attorney can get included your discharge and they won't get paid. You can pay. You can get out now. 

The only person feeling bad about your possible BK is you. The banks don't care. This is part of their bottom line. It's a risk they take. There's no morality in play on their side. I know you're concerned about finding a place to live, but with a BK on your record you're actually a safer choice to rent to than having a pile of debt that you cannot pay. 

[Anonymous]

^^^ that last statement is something many may overlook. A fresh BK presents you as a debt-free candidate who has basically no or minimal obligations for their become other than paying the rent and survival costs. Presenting that in an apartment interview if asked, may tip things in your favor given the events that led to filing.

[Anonymous]

Right. A smart apartment leasing company will know you have nowhere to go once your BK is discharged. You're a much better risk to them. For those who know, a BK is a fresh start for you, and a big binding agent for them because you have no escape and you want that implied guarantee of responsibility. 

In the lobby of my 341 meeting there was a guy there who had filed his own BK7. He didn't know, or understand ,the look back period, he didn't see his name on the meeting sheet. He was begging me to help him. I felt terrible for him that he was self-filing, but the trustee was a really kind guy who I hoped would gently help him through the process.

Being able to pay an attorney who specializes in BK is really important. You can file on your own, but there's too large a risk now of doing that then there was before the laws changed.