Bk

Geez, knowing a few single mothers myself,it's really tough especially with 24k income doesn't mean squat these days especially here in calif. I've help a few of those unfortunate mothers budget there finances, took abit of willpower to cut down from previous way of living but they avoid BK. With little info you provided, has she really tried budgeting I mean really cut down, I don't know what her interest rates are but you will be surprised at what the OC are willing todo to help. Especially if she has always been current, working on interest rate or refi a car are one way to put money back into your pocket that can go into paying down that principle amount on her CC's. This is a long and tedious route, but I'm sure that it will pay off in the future.

 

From the very little info provided, it sounds as if she has some level of disposal income left over after expenses. I'm goingto doubt she'd qualify for a chapter 7. More than likely get pushed into a chapter 13.

Her best bet would be to see a bk lawyer. Most will give a free initial consultation.

I'd agree with the previous poster. Living rent free is a huge advantage. She is blowing it with a $400 car payment and running up charge cards. She really needs to take a serious look at her personal finances.

 

PUT THE CARDS IN THE SOCK DRAWER...

Pay 90% of income towards the cards...IF POSSIBLE.

Use the other 10% for food and a bit for savings...

RE-FI the car???

 

Most on this board are anti-CCCS. They have really screwed things up for a lot of people. I have been very lucky w/ them, and so far, I have no complaints. BUT, my debt was nowhere near her debt. $25000 is A LOT of $$$. She's very lucky that she lives rent free. I was a single mother for a really long time, which is why I got so far behind. I had to pay rent, and car, and daycare--and I waited tables to do it--it was the only thing that I could do to make a lot of $$$ in short # of hours. It worked though. I would either refinance the car, or get rid of it for a smaller payment. A $400 payment is rediculous in her situation. I would try to get rid of any extras too, like cable (though sometimes it's a single mothers only salvation!) Next, they have what's called the snowball effect. Take ALL your extra $$, and put it one card per month, paying only the minimum on the others. ANY extra $$ goes on this one card (usually the one w/ the highest interest, though I choose to do the one w/ the smallest balance, because I see results faster and get less discouraged) Anyway, when that card gets paid off, you take ALL the $$$ that you were putting on that card and put it towards another card per month, in addition to the new cards minimum. It takes a REALLY long time doing it this way, but she needs to STOP using those cards. Cut them up, or give them to someone to hold (I gave mine to my mother to hide from me) It can be done, but it takes a long time, and a lot of persistance. It's so hard. I slipped up from time to time, but my credit is so much better now, than it ever was back then. She's very fortunate that she doesn't have to pay rent. Also, my state/city has a program for daycare. I didn't receive ANY state aid while I was a single mom, but I did receive daycare assistance thru a program in my city--it was based on your income, and it would pay a % of daycare costs. It was a Godsend to me, and as soon as I could, I stopped the program so my slot could be as equally helpful to someone else that really needed it. She could look into something like that too. WIC has a good program too, I've been told. I was too stubborn, or proud I guess, to allow myself to go on something like that. I'm really proud of myself that my son and I did so well on our own. He always had a ton of toys, etc. and never felt the hardship--but I'm glad those days are over.

Sorry this got so long. I just know how hard it is, from experience. I hope makes out ok. G/L

 

A couple of idea. Have her go to HR and be asolutely certain that she claims all of the dedcutions allowable in order to have as little withheld as possible. Secondly, she needs to get a cheaper ride either through a re-fi or, just a trade.

 

In MY state $24K would qualify her for food stamps and possibly cash assistance. Have her go to fuel assistance and ask for help with her elcetric bill and heating for the winter.

She may also qualify for daycare reimbursment, probably not ALL of it would be covered, but a good portion might be.

If her children are under 5 she would qualify for WIC, which will give her milk, cheese and cereal.

Is her ex paying child support religiously? Is he required to pay for half of the daycare? If not, she should try and get it ammended to have him help cover these expenses.

Explore all her options, BK is such a FINAL thing. Have her try to re-fi her car with a CU, especially if she has no derogs.

Your states DHHS is there for people in these situations, plus if she doesn't have medical the kids may be able to get medicaid.

Good luck!

 

if she files, have her reaffirm the car if it's reasonably new... she won't be able to get a good car interest rate post bk for a while and with 2 children she'll need safe, reliable transportation.

can she get alimony or child support?

 

The only problem w/ food stamps and dhs stuff, when I was a single mom, they counted my car as an asset. If it's worth too much, or you owe too much, you aren't eligble. It's the dumbest thing!! I needed a car to work to make $$$, but I couldn't have a car if I needed financial help. The state isn't trying to help people get on their feet, but to keep them on aid forever, so it seems. Just a little note anyway. It sucks, but that's the way it was!!

(I had no job, and my ex-husband had kicked us out, so we had no place to live, and I still was turned down! It was nuts!!)

 

My state is different, if you are in negative equity then the car isn't an asset. If you receive financial assistance here, they refer you to unemployment, but if you are already employed you go to UE once and they sign you off.

 

KHM-- that sounds much better. It's so stupid to deny someone, just because they have a car. I had the car before everything fell apart, and it wasn't worth what I still owed on it, so I couldn't really get rid of it. And, if I did get rid of it, what would I do to be able to work? It's a horrible catch 22.

 

Christi,

There are some good ideas thrown at you here by others, I assume your friend is in texas? like you if I remember correctly from your past post. I don't know what the cost of living is like in Texas but $300 a month for 2 children is pretty low to me, her ex got off pretty well.

1) Obviously she needs to get those CC's out of her hands, assuming most CC's have that crappy clause if you exceed there credit limit the higher % will automatically kick in usually around %19+, you mentioned she maxed out some of her cards?, I'm sure the interest pushed her over that limit. Grab those CC's from her and give it to a trusty friend or parents to hold, cut them up or whatever. Call those CC company's and try to get those teaser intro rates, I'm sure some will give it to her. Since she's been trying to pay on-time most will work with her situation. They do not want to see her default. Knocking down interest rates on her cards may seem petty but at this point every dollar counts in her financial situation.

2)I'm sorry but, I'm sure most agree $400 car payment is super high especially for a person with 2 kids and 24k income. How new is this car? can she trade in for less exspensive model? or like Marie said depending on age of vehicle reaffirming it will bring in some dollars. I assume she has insurance too? don't know how far she commutes to work, but insurance company's have cheaper policies say if you drive x amount of miles per year, luxury car owners buy this it can save you some dollars here too. Thats all I can really think of for her car at this point. Other than swap cars with her ex if he has a paid-off vehicle. Re-fi? try to obtain a longer term?

3) This may vary from state to state but go down to your local county clerk office and see if they have government programs that aid single mothers. I believe some have that can help you in daycare area, utility bills etc... like KHM mentioned.

4) Ummm Like Keepmine mentioned ealier, go and see what she can get written-off, depending on what can be written-off and such, see if she can file quartly she might see some money from there. What I'm trying todo here is free up some money to the point where that $300 from her ex can be used freely or not totally depended on when he can't come through with it.

I really admire single mothers that can work through this, this is going tobe tough really hard on a person mentally, best thing is a good friend to see her through this. This is just some of the things on the top of my head, it sorta hard to evaluate certain situations with such limited info, I'm sorry if I can't be more of a help, Best of Luck to her.

 

Oh forgot, Don't know what the financial situation is like on the rental property, but maybe if her parents are willing is to help her consolidate her bills on a HELOC 1st or 2nd? it should be alot easier for her to pay-off in no-time.

 

Christi,
I think your friend is a perfect candidate for a Chapter 7 bankruptcy. I also think it would be in her best interest to file a bk 7.

For more info I will email you privately.

clc

 

Under the current bankruptcy law, she is an excellent candidate for a chapter 7. She has no assets, and if she is upside-down on the car, the payment may be "crammed down" to the actual market value of the car (sometimes a chapter 13 is done to do this, it depends on the district she is in). As the unsecured creditors would get nothing in a 7, they would get nothing or just about nothing in a 13.

Keep in mind you must act right away. If the bankruptcy law is passed, and it is imminent, after 6 months, the cramdown would not be allowed and she would have to undergo counseling and a means test to file bankruptcy.

I would suggest looking at www.nolo.com or getting their nolo press book on bankruptcy from the library or the website to get an introduction to how the process works. Although they are advocates for filing yourself, I would reccomend using a good attorney so you know what is going on, but quickly educate yourself first.

After the consultation, the attorney will probably advise you to stop paying the cards and save the money for the filing fees and his fee. Be sure you are ready to do this if you are sure you want to file.
The initial consultation is usually free.