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Need Advice on bankruptcy!!

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  • jpg7n16
    replied
    Originally posted by kristy
    Hi,

    For which type of bankruptcy you need advice. is this chapter 7 or chapter 13. Let me know i'll give you proper advice for this.

    Thanks
    It should be neither. There is no use debating the benefits of chapter 7 vs 13, because this is not a situation that warrants bankruptcy.


    OP: "I plan on jumping off a tall building without a parachute or bungee cord and seeing what happens. What do you guys think?"
    User1: "Don't do it."
    User2: "Don't do it."
    User3: "It's not worth it."
    User4: "That would cause more harm than good."
    User5: "Don't do it."
    Kristy: "Well you just need advice. Are you thinking Empire State Building or Willis Tower? Let me know, and I'll give you good advice"


    Bankruptcy should be used for those in truly dire financial position, not those people who are just unwilling to change their lifestyle to pay back what they owe. This poster has more than enough income, assets to sell, and not enough dischargable debt to warrant destroying his financial position by filing bankruptcy.

    Don't do it.

    Leave a comment:


  • Eric80
    replied
    I think that filing for bankruptcy should be your last option as this will affect your future as well as your current position. I would definitely opt for consolidating your debts as this is a better way for you to manage your debt and it allows you to increase your credit rating.

    Leave a comment:


  • littleroc02us
    replied
    Remember if you delare bankruptcy you will be in some serious trouble regarding your credit score for a long time. (7-10 years) It's a last ditch effort to stay afloat. Find another way.

    Leave a comment:


  • bjl584
    replied
    Sell the cars and buy a beater for cash. Then take that extra $900 and start chipping away at your other debts. You can dig yourself out of this hole without bankruptcy or debt consolidation. It will just take some dedication and sacrifice.

    Leave a comment:


  • Bastille
    replied
    Bankruptcy does not hinder your ability to get new credit. I started getting new credit offers within 6 months and I started rebuilding.

    Leave a comment:


  • cjscully
    replied
    Originally posted by cicy33 View Post
    Not always a good option anymore. used to be, but now they can send you a 1099 for the balance and you now owe income tax on the forgiven amount. Never mind that it is not income, generally it is the interest that has piled up.
    This has always been the case with debt settlement. The creditors are required to issue 1099C's any time they forgive more than $600 on a debt through settlement. This may or may not result in a tax liability for the debtor. If the debtor is insolvent at the time the debt is forgiven it may be able to be excluded from the debtor's taxable income. If the debtor is solvent this income may be taxable. See the IRS website for details, Internal Revenue Service. You may be able to exclude Discharge of Indebtedness income if client can show you are insolvent. For more information on tax ramifications of this program consult a tax preparer, CPA or Tax Attorney or refer to IRS Publication 908 - "Bankruptcy Tax Guide" and IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness available on the IRS website.

    Originally posted by littleroc02us View Post
    I've never heard of that happening. The Collection Companies will call and call and call, you can tell them that you will settle at a later time, but you don't have the money. What are they going to do, you don't have the money. When you do save some money, settle with them. It does work, you just have to be persistent.
    They could sue. Not being an attorney and not knowing the specific laws in the OPs state, I can't say what their exact options are in terms of executing any enforcement of the judgment. Despite JPGs statement that CCs could garnish, this is not always the case. BTW the threat from the payday loan company is a violation of the Fair Debt Collection Practices Act.

    Debt Settlement may be a good option for the OP. Hard to say if there are better options for his circumstances without knowing if he is fully back to work and back up to his regular income.

    Leave a comment:


  • littleroc02us
    replied
    Originally posted by cicy33 View Post
    Not always a good option anymore. used to be, but now they can send you a 1099 for the balance and you now owe income tax on the forgiven amount. Never mind that it is not income, generally it is the interest that has piled up.
    I've never heard of that happening. The Collection Companies will call and call and call, you can tell them that you will settle at a later time, but you don't have the money. What are they going to do, you don't have the money. When you do save some money, settle with them. It does work, you just have to be persistent.

    Leave a comment:


  • cicy33
    replied
    Originally posted by littleroc02us View Post
    Stop paying them. Don't answer their calls for a while. If you do, tell them that you will settle with them for pennies on the dollar. Stock money a way in the meantime.
    Not always a good option anymore. used to be, but now they can send you a 1099 for the balance and you now owe income tax on the forgiven amount. Never mind that it is not income, generally it is the interest that has piled up.

    Leave a comment:


  • Seeker
    replied
    Originally posted by UNLVGRAD View Post
    Hello.

    I would like advice and information on bankruptcy vs. debt consolodation. I recently became ill and was in the hospital and on bed rest for over a month. Due to this I became very behind on my bills. I have over $20,000.00 in CC debt with about 5 different Credit Cards. I am a few months behind on them and the creditors are calling and send letters. My plan was to declare bankruptcy.

    I would like some guidance on what I should do? Should I go forward with the bankruptcy, do debt condosolation?

    Help!!

    Thanks so much!

    In response to your bolded question above, I'd recommend neither.

    Debt Collection FAQs: A Guide for Consumers

    This is the first thing I'd do: Send a certified letter to each creditor whom is calling you, stating that you do not wish to be called anymore. Covered in the section "How can I stop a debt collector from contacting me?" at the above link. They cannot harass you or if they continue to do so after receipt, you can report them to be in violation.

    There are many other pages at that site which can be helpful to you.

    Secondly, with an income of 50k, you should be able to take care of the backlog of debt. You've only really listed two debts... but the 20k backlog of CC debt can be financed with the $900/month you spend for two car loans. In fact, you can clear your 20k CC debt in 21 months from just those dollars. Without a listing of income verses expenses and debts, we cannot further advise you.

    The reason most advise against Debt Consolidation is that usually they do not help you. Usually you pay a fee and they do not pay anything toward your debts until they can mitigate the total debt owed by you and thereby increasing the amount they make. You do not "make less" your debts, you just pay someone else to take care of everything but you still have to pay more than the total debt owed (you just are paying someone else to do that work.... but they get all the benefit and you gain nothing).

    BK cannot be done blindly anymore. Just because you have had a bad medical situation, this does not exempt you from paying those debts. You are still working, and you have to detail out every dollar earned and spent before any judge will even look at your BK filing.

    Most likely, you would end up with Chapter 13 (which is essentially a debt repayment plan).

    BK is for life, though it does get off the 'records' after 7 to 10 years (depending on which type), but every time a loaning company or potential employer asks if you "ever" filed for bankruptcy, you will have to answer that with an affirmative. If you do not answer truthfully in writing, you would be commiting criminal fraud. BK is a LAST resort of people who have no alternative; with 50k a year, you have alternatives.

    Leave a comment:


  • littleroc02us
    replied
    Don't do either. Also, who cares about the FICO score, your not borrowing money anytime soon. Here is what you do:

    1. Sell the cars, you'll have to drive a piece of crap car until you get out of this mess.
    2. Put your student loans on Hardship deferment.
    3. Start paying off your cc's smallest to highest balance. Pay as much as you can on the smallest and they will start dissapearing like dust in the wind. Pay them off with diligence, if they call don't answer.

    Leave a comment:


  • rugioz
    replied
    Consolidation may not be an option based on the damage to your credit. In your situation I would file chapter 7 on the credit cards and your auto loans. Time goes by quickly, and before you know it, the damage to your credit will be gone.

    Leave a comment:


  • solvemybadcredit
    replied
    Well, I would definitely avoid bankruptcy if possible. It is just like the last option. You could consolidate and have a look at settlements, secured refinancing. Or sell whatever you have. Loads of people don't realize that they will be cut off credit for a long time after filing bankruptcy, including a basic current account.
    Drop me a line and will talk it over or just give us more details.

    Leave a comment:


  • cypher1
    replied
    I'm sorry, but $900 in car loans each month? Don't get me wrong, I love cars too. I don't mean to be too judgmental, but with those payments, you could own a decent/reliable car with 6-7 of those monthly payments (IMO), and remove some of that stress for free.

    Leave a comment:


  • jpg7n16
    replied
    Agree with Maat55 - sell the cars.

    If you file bankruptcy, you'll lose them anyways (as they would be sold to satisfy your debt obligations) - so save your credit history, and your financial health. Sell the cars, pay down the debts agressively over time.

    And yes, CC's can eventually garnish your wages - but both them and the payday loan place would have to take you to court before that could happen.

    I feel it was a threat on their part (payday loan peeps). Until they take you to court, they can't garnish anything.


    Your debt isn't even over 1/2 your income - you don't need bankruptcy, you need a budget.

    Leave a comment:


  • maat55
    replied
    I think you are splurging way too much on cars. You should not have 900 in car payments. If you are back to earning your regular income you are likely able to pay your debt, if you are willing to drastically change your lifestyle in the short-term.

    I would start with downsizing your auto debt as much as possible. A second job would not hurt either. I would focus on the selling one or both cars in the short-term, then settle with the cards later. You do not need debt consolidation.

    Leave a comment:

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