Should we file for Bankruptcy?

[Ianthe]

We've been trying to pay off our debt, we've paid off about $5000 so far this year, but we have about $25k left to go, not including student loans.

I am getting overwhelmed and frustrated, and my DH is no longer making much money, leaving us in the hole every month now.

We have several court summons over the debt. Through the court they want to charge us an extra few thousand!

I feel like a fool that we've paid so much into getting debt free, not really getting anywhere, and maybe needing to file bankruptcy anyway.

Anyway, I don't know what to do, and need some outside advice from you knowledgeable mamas.

Me getting a job WOH is not an option- I am a full time student (on scholarship, that I have to maintain a 3.5 GPA) and full time mama!

[bobandjess99]

How close to being done with your degree are you, and is the degree one that will give you decent earning power? IF it is only a year or 2, and you will have a good career ahead of you, it might be worth it to hang in there and get to the point where you can make good on your debts, etc.

[Ianthe]

Originally Posted by bobandjess99

How close to being done with your degree are you, and is the degree one that will give you decent earning power? IF it is only a year or 2, and you will have a good career ahead of you, it might be worth it to hang in there and get to the point where you can make good on your debts, etc.

3 years And then I am hoping to get into a masters program (on scholarship or assistantship if I can). We're waiting to find out if DH has been accepted into a master's program which is only a one year program, then his earning power will be a lot more, assuming he can find a job in our lovely economy.

[choli]

How did you run up the debt? That would factor into it to me.

[Ianthe]

Originally Posted by choli

How did you run up the debt? That would factor into it to me.

We were caught in the housing bubble and it all went towards an investment condo that is now sold (short sale)... it is CC debt that was used for repairs, appliances, etc, that we don't have anymore- they went with the condo.

[lunarlady]

I would say don't file yet. i would do everything possible to avoid that, as it will thrash your credit rating for years to come. Have you tried contacting the credit card company to work out a repayment schedule that you can handle? Have you looked into transferring the debt from CC to something with a lower interest rate so that you can pay it off faster? Have you considered taking out more student loans to cover the CC debt? CC debt is so evil, I know how it feels to be drowing in it. But there are multiple ways out, if you start exploring.

[p1gg1e]

Id not file. I know it seems overwhelming. Organise your budget cut back and change what you can. Can you watch kids even once a week for extra money? Have you looked at a pro rata plan?

http://fpu.chuvala.com/docs/ProRataPlan.html

You can do this its like unraveling a vary tangled ball. BR you will still have to pay back part of it so it wont solve things over night.

[shelleyd]

Originally Posted by lunarlady

I would say don't file yet. i would do everything possible to avoid that, as it will thrash your credit rating for years to come. Have you tried contacting the credit card company to work out a repayment schedule that you can handle? Have you looked into transferring the debt from CC to something with a lower interest rate so that you can pay it off faster? Have you considered taking out more student loans to cover the CC debt? CC debt is so evil, I know how it feels to be drowing in it. But there are multiple ways out, if you start exploring.

I must say that this is a very bad idea. If you do indeed need to file bankruptcy down the road, you cannot include your student loans. If you pay your credit card with student loans you have essentially tied yourself to that debt for life with no option of bankruptcy ever. I don't know if you should file bankruptcy but I do think that the very fact that you are considering it means that you should absolutely not make your credit card debts student loan debts! Good luck.

[roxemama]

If you are considering it, go to http://www.bkforum.com as a resource. Plus you can consult a lawyer for free. At least this way you can weigh your options and understand a little better the consequences. My DH is considering filing fortunately it won't hit my credit so it's easier that we can depend on my credit if be. However, he has a great deal more CC debt and a 2nd mortage due to the housing bubble and repairs, like you. I don't know all the details of your disposable income or if you could work out payment plan with your CC company. Since student loans aren't eligible, maybe you can pay the CC off if they will work with you and defer your loan. You situation is more complicated since it will trash both of your credit up to 10 years. The thoughts of bankruptcy are very stressful and somewhat relieving at the same time. Good Luck!

[VisionaryMom]

BK is bad, yes, but I'm guessing your credit rating is already trashed if you have court summons. That means your credit rating probably isn't the biggest factor - and likely won't be good either way for a while.

I don't think bk is an option to consider lightly, and I've been in pretty desperate places. I won't get into my soapbox about it, but I'd seriously look into other options. If you take 5 more years the way you are, then you would have it paid off. The upside is that you would've learned to live on your pay without the money you were paying toward the debt (assuming you aren't still using credit), which means you could either increase your standard of living or funnel to retirement and not feel it. You also will be making more money if your plans hold, so you likely will be able to pay it off before the 5 years are up.

Now, I also will say that I had an assistantship in my master's degree program. It paid $650 a month. That was in 2002. I know that varies based on various factors, but a one-year master's degree program will be intense. It's likely your husband won't make much money, and getting a second job could be tough. Grad schools are more popular in recessions, but that also means the job market becomes more saturated.

[NewDirections]

Yes, I'd file for bankruptcy in your situation. You need a fresh start.

I filed 5 years ago. I wish I would have done it sooner. I racked up a ton of credit card debt on useless carp in my 20's. I just couldn't get out from under the mountain of debt. I felt such relief when the debt was discharged. I'm grateful that I was able to get rid of the debt and have a fresh start. Today, I don't have any debt (except for student loans) and that is due to me filing for bankruptcy and being much more financially responsible (I'm not saying you've been irresponsible.)

It's true that it will affect your credit, but the more time passes the less it will. I filed 5 years ago and my credit was 723 when I checked last month.

I hope I didn't sound like I took my bankruptcy for granted and spent all this money so I could file I will forever be thankful that I was able to get rid of that debt and I'm embarrassed that I spent so much $$$$$$$$$$ on utter carp. I totally kick myself now for wasting money when I could have been investing even just a little bit of it.

[leigh09]

do you own a home? you mention your debt is because of an investment condo, what are you living in now?
i am asking because what we are doing is consolidating our debt into our mortgage on our home

[Ianthe]

Originally Posted by leigh09

do you own a home? you mention your debt is because of an investment condo, what are you living in now?
i am asking because what we are doing is consolidating our debt into our mortgage on our home

No, we had to short sale both of our properties. We are renting now.

[Ianthe]

We still haven't made a decision, but at this point I'm feeling like we have no other option. We've paid down and paid off a lot, but now we are in the hole every month so I just don't see where we have the money to keep up with paying things off when we are struggling to keep our power on. There is nothing we can cut out (we have a contract for internet/tv), and we are living as simply as possible... our cars are paid off (and breaking), and I'm just feeling like I am drowning!

I would never take out student loans to pay off CCs, I know they can't be included in bankruptsy. I don't want to take out any more student loans either, but at this point it's going to be necessary for us to meet our monthly budget with us in school.

DH recently talked me into paying $3000 to a debt that I didn't have a good feeling about- that was our savings, and I am kicking myself for letting him talk me into it, because we could have lived off that instead of take out student loans head:

[bobandjess99]

I am concerned about 1 thing. You say you are in the hole each month. How will that change once you discharge your debts, if you declare bankruptcy?? It sounds like you are talking about taking out loans to cver your monthly bills while you go to school? I'm sorry, but it sounds to me like you are setting yourself up to go right back into debt. You need to have a plan in place to cover your bills. You also mention that dh will have good earning power "if he can find a job". How likely IS this? And you mention that you have 3 years left, and then are planning to go get a masters degree? So you are planning on spending another 5 years or so in school while your family is taking out loans and going into debt....are you borrowing for dh to go to school also?
It sounds to me, only knowing what you have shared in this thread, that you are not being realistic at ALL. It sounds like you are intending to live on credit and loans for another several years....perhaps accruing enough debt that by the time your 7 years is up, you'll be ready to declare bankruptcy again? Plans which bank on your educational investment allowing you to earn lots of money later is a VERY shaky prospect......just look around at how many people who post here with tens of thousands of dollars of debt in student loans can't find a job.....and also can't declare bankruptcy...basically, we are screwed for life because of decisions we made - some of us when we were very young, to pursue the golden ring of "education". And I'd be in a much better place if I had gotten a 2 year nursing degree, had no debt and double the earning power i have now as a 4-year degree social worker.
I just urge you to consider, very, VERY carefully these choices you are making.

[Ianthe]

i will not be taking out loans for my school, but dh will have to if he does grad school. He is and will be working a PT job while in school, and I am getting a full scholarship and all pell grant money for my living expenses.

DH already has a 4 yr degree.. unfortunately, nursing school is a few years waiting list in our area, and his one year grad program would cost as much as a nursing program (though I understand what you are saying.. I met him after he got his degree, there is nothing I can do about that).

I am trying really hard not to have to use more credit, but we might not have another choice but to take out student loans for DH.. unless his family pitched in and helped him (and that is not going to happen).

[*green*faery*]

check out BKforum.com, also you can usually get a consult with a lawyer for free. If your debt is already going to court your credit is messed up for a long time anyway. Be realistic, find a way to live within your means either way. I babysit part time and even a small amount of cash helps a lot! Make sure you have a clear picture of your budget. Many blessings-