Bankruptcy?

[gettingittogether]

Hi everyone!

This is my first post and after reading through some posts I thought I would join and ask everyones opinion. I am considering filing bankruptcy. Here is my situation:

I bring home about $2950 per month
Expenses:
$1400 household bills (I live with my boyfriend and we split some finances, cable, etc. This includes a $7200 secured loan at 18%, payment $225/mo)
Credit Card Bills - $250 per month (7 cards, maxed out, very low limits, interest rates from 15-30% )
Car Payment - $360 - had to refinance due to divorce - int rate 18.99% 2 years left
Car insurance $183/ mo
Son's schooling $400/mo
Gas - $200/mo

This leaves me with roughly $160 per month for anything that may come up. I can't pay any more on my cards, I'm barely making the minimums. What ticks me off the most is that I've ran these cc bills up and I paid them all late last month after paying them all on time for years, now my credit score is like 480. Is it worth me trying to dig out of this hole??

Thank you all!

[disneysteve]

$1400 household bills (I live with my boyfriend and we split some finances, cable, etc. This includes a $7200 secured loan at 18%, payment $225/mo)

Can you itemize this for us. What exactly is included in that $1,400?

How much do you owe on the car and what is it worth today?

What is the school situation with your son? What grade is he in? Could he go to public school instead?

What is the total owed on the credit cards?

[gettingittogether]

Thank you for your reply!

$850 rent
$200 food
$100 cable, internet, phone
$115 loan
$50 water
$50 electricity
$50 cell phone

The payoff on the car is $7200... trade in on it is about half that, private party value is maybe 5K

My son is in second grade, in public year-round school. I have to pay for before and after care. In a regular month, its about $330 per month. When they are off track, that goes to $500. $400 is an average.

Total owed on credit cards is about $8000. Obviously not a lot, but with the interest... I just feel like such a failure and so stupid for getting into this!

[dczech09]

So you have
$8,000 in CC debt (15 to 30%)
$7,200 car loan (18.9%)
$7,200 secured loan (18%)
Total of $22,400
Your income is $35,400
Your Debt-To-Income is 63.27%.

I really do not bankruptcy is the solution here. Bankruptcy is an absolute LAST resort and will be much more painful than society would make you believe.

I would sell the car. If you went bankrupt, you would have to sell the thing anyway. So sell the car, use the proceeds to buy an inexpensive car for no debt. You will have to try to arrange a deal with the car loan lender to see if they can put the rest of the balance owed on a note or something. But get rid of the car; its killing you!

What is the secured loan? I assume that is separate from your car? If so, could you sell the object that is secured and pay off the balance right away?

Do you have any savings or investments at all that are not in a 401k or other retirement plan?

Have you been living on a budget? Probably not because you have a lot of credit card debt. You need to live on a written budget. You should have started that years ago, but I guess today will be as good as anytime to start.

That $100 for cable, internet, and phone- see if you can reduce this. This stuff is really a luxury at this point.

What is the '$115 loan' you mentioned on your breakdown? What is the balance and interest rate?

What are you doing for additional work? You need to find some ways to bring additional money in. Even an additional $500 per month delivering pizza would do wonders for your budget, right?

Is there something that can be done about the $400 for school care?

[dczech09]

In regards to selling the car and getting a note for the additional money owed:

You may be thinking that the lender would not do this since you have low credit and what ever. If they understand that a bankruptcy on your part would result in less money for them, they will absolutely work with you.

[photo]

Is it worth me trying to dig out of this hole??

Yes, absolutely. Yes, you've made some unwise decisions, but who hasn't in life? We just learn how to do it differently in the future.

Others have great advice. I'd only add to cut out non-essentials like cable and landlines. Don't spend money on any new possessions until they're absolutely essential.

[gettingittogether]

Thanks everyone!

I don't think I could sell the car and end up with any proceeds. I owe 7K on it. I may be able to sell it for $5 or 6K. Then I still owe the bank and have no car.

Yes, the secured loan is separate from the car. It was secured by household items (tv, wii, and some things I don't even have anymore).

No savings, no real budget either. I ran up the cc bills getting things fixed and moving. The cable/phone/internet is a bundle.. I need the internet for school (which I am in full time) and the house phone for when the kids are there. The cable is the only real luxury, as I don't really do anything else (get my nails done, etc).

The $115 loan is the secured one. The total monthly payment is $225, my bf pays the other half.

Right now, I am not doing anything for additional work. I work full time and go to school full time as well. I don't know if I could squeeze in another job. Maybe weekends!

Unfortunately there is nothing I can do about the school care other than complain.

[Redraidernurse]

Thanks everyone!

I don't think I could sell the car and end up with any proceeds. I owe 7K on it. I may be able to sell it for $5 or 6K. Then I still owe the bank and have no car.

Yes, the secured loan is separate from the car. It was secured by household items (tv, wii, and some things I don't even have anymore).

No savings, no real budget either. I ran up the cc bills getting things fixed and moving. The cable/phone/internet is a bundle.. I need the internet for school (which I am in full time) and the house phone for when the kids are there. The cable is the only real luxury, as I don't really do anything else (get my nails done, etc).

The $115 loan is the secured one. The total monthly payment is $225, my bf pays the other half.

Right now, I am not doing anything for additional work. I work full time and go to school full time as well. I don't know if I could squeeze in another job. Maybe weekends!

Unfortunately there is nothing I can do about the school care other than complain.

Are you having to take out student loans to go to school?

[gettingittogether]

Very few. I use tuition reimbursement through my job.

[minnie1928]

If you are using the house phone for emergencies, why not pick up a prepaid cell phone instead? As far as cable, could you drop it and watch shows on hulu or the network websites?

As far as the car goes, I don't think you understand what people are suggesting. If you sell the car for $5000 and buy another car for $2000, that would reduce your overall car debt to $4000 (down from $7000) and reduce your monthly payment.

Are you utilizing a dependent care flexible spending care account (assuming they offer one)? That could help reduce your tax bite on the daycare.

Do you typically get a tax refund or do you pay in? If you get a refund, you should adjust your withholdings to reduce your refund and put more money in your pocket now.

Cell phone...can you do anything with that? are you near the end of your contract? could you go prepaid?

[minnie1928]

Very few. I use tuition reimbursement through my job.

Excellent!

[gettingittogether]

Hi Minnie -

Thank you for your reply. The phone is part of a bundle with the cable and internet. I don't even know what hulu is. I think we may be in a cable contract. We are also in a cell phone contract as well.

I thsurely don'tunderstand what you are saying about the car. I sell it for 5, I owe the bank 7 so...won't I have to pay off the loan for the bank to release the title? I mean pay the difference? So then I have to come up with 2K, and then somehow find money for another car.

I typically owe about $200 on my taxes.

I have looked into the FSA but I cant enroll until next year.

Thank you for your advice!

[bjl584]

Hi Minnie -

Thank you for your reply. The phone is part of a bundle with the cable and internet. I don't even know what hulu is. I think we may be in a cable contract. We are also in a cell phone contract as well.

I thsurely don'tunderstand what you are saying about the car. I sell it for 5, I owe the bank 7 so...won't I have to pay off the loan for the bank to release the title? I mean pay the difference? So then I have to come up with 2K, and then somehow find money for another car.

I typically owe about $200 on my taxes.

I have looked into the FSA but I cant enroll until next year.

Thank you for your advice!

Yes,
you will need to come up with the difference on the car loan as you stated. It's a judgement call. Can you secure a loan to both pay off the difference for your current car AND buy another car for less than you owe now? (7000) You may be able to, but the replacement car that you end up with may not be reliable and may cost you more in the longrun in repair costs. I would probably just keep the car and focus on getting the loan paid off if I were in your position.

[snafu]

Those interest rates [15% - 30%] are outrageous! 1 st see lenders and try to get interest rates lowered to somewhere near normal. Sorry but you will have a difficult year resolving earlier decision/errors in judgement. I doubt you could afford the up front costs for bankruptcy and you certainly wouldn't like the nasty after effects. Employers routinely check FICO numbers and significant numbers won't hire individuals who have been through bankruptcy. It speaks volumes about individual's responsibilities and value systems.
2nd write yourself a budget and stick to it to the penny. Can BF pick up a larger percent of rent? Child care, food, transportation,CC & loans. In your situation cable, internet, phone are luxuries [they only feel like necessities because you're used to having them] you can't afford. Prepaid phone for emergencies. Every library has free internet and DVDs. Seek some intermittent part time work; non agency house cleaners here earn $ 65. for 4 hrs work. While you must finish out this semester perhaps you will need to defer being a student until you climb out of the mess.

[gettingittogether]

I will probably keep the car... it seems like the best thing to do right now. It doesn't give me any problems, so I'll see what happens.

Snafu... I dont know when the rates got so high! It's really a mess. I know of an attorney who will do the bk filing and what not and you can make them payments. I wonder how much of a hit I'd take, FICO wise. I'm already extremely low.
Thanks for the heads up on employers checking FICO scores. I have a job now, so thankfully, I don't need to worry about that now *knock on wood*
He has agreed to pick up a larger share of the bills, so that will help me tremendously. I am also expecting about $3K over the next few weeks, so I will be able to pay a few of these off. Thank you Jesus!

Thank you all for your advice. I truly appreciate it!