new here...and lots of debt. help..

So, basically, you just don't feel like paying your bills.

Be careful. A judge may not be impressed at all if you come before him/her asking for bankruptcy for $60K in debt on a $75K salary.

Also...a boat as a second home??? That's a new one. You could be ending up with another debt not dischargable in bankruptcy...an IRS tax bill!

 

Re: Re: new here...and lots of debt. help..

If you say the loan is worth $20K, and the car's retail value is $25K, then you can very well trade the car in with a dealer, and get something much less expensive. Heck, you can get a $10K car, and still be very happy with its reliability thus not jeopardizing your income. So between that, and getting rid of the boat, you'll likely be fine without bankruptcy.

 

Re: Re: new here...and lots of debt. help..

Well, I'm sure they're hoping you will hold high balances and they can bill more finance charges. Paying the credit cards on time are always good.. paying a lot more than the minimum is even better (not implying you don't.. just saying..)

 

Re: Re: new here...and lots of debt. help..

If it has certain "facilities", it can be considered a 2nd home. Our RV is a 2nd home.

 

Re: Re: new here...and lots of debt. help..

how did you rack up so much credit card debt?? if you were making 75k, was that not enough for living expenses? do you have any other toys u might be able to sell?

 

Maybe someone with BK experience can verify. With that sort of income, isn't it possible to get thrown into Chapter 13?

Then you end up paying a percentage of those bills + bad credit.

 

Re: Re: new here...and lots of debt. help..

You're the one who asked people to post alternatives to BK. That's exactly what they are doing.


Sell the boat now before it depreciates further. If you need a boat ride for emotional health, rent one for a weekend.

Sell the truck now before it depreciates further. Use the $5000 toward a used reliable truck. The pre-owned market is a buyer's market.

Consolidate as many CC lines as you can into the minimal, but leave all the lines open. Call CC retention departments and PFB the executive offices to get the jacked rates back down to below 9.99%. If you truly haven't been late on these cards, that shouldn't be much of a problem.

Make sure that your credit reports don't have a public record on file.

 

Re: Re: Re: new here...and lots of debt. help..

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Ok that's different then. You didn't specify you *had* to have a 3/4 ton truck.

Nah..not really. You could possibly negotiate with the creditors. For instance, if a person informs a credit card company that they are looking at filing for bankruptcy, the credit card company is likely to be willing to negotiate down the amount owed (better than them getting nothing) and set up a payment plan to get it paid off soon.

I don't know however, how payng a fraction of what's owed will affect the credit reports, but someone else here might know.

Since your student loan is in deferment now (not sure for how long), that's $27K you don't have to worry about right now.

Anyway, just saying that the bankruptcy will likely haunt you for 10 years, and there's a chance that you'll clear this stuff before then on your own.

 

Re: Re: Re: new here...and lots of debt. help..

Sometimes frustration assists personal growth. If you're going to elect NOT to BK, then do take stock of anything that meets any of the following criteria:

1) You can live without it.
2) It didn't fulfill your consumerist yearnings the way you thought it would.
3) You can sell it for twice as much as something else you can buy (for now) that will do the job 80% as well.
4) It's been sitting in the garage for 2 years.
5) It's a boat.

eBay is a beautiful thing. You may be surprised what you can stir up.

(This advice is grounded in my own experience and may not be good for you. However, whether you find this advice good or bad, don't let it "strengthen your frustration" as you put it -- you've asked for suggestions from total strangers, and we're spending valuable time providing that.)

Doc

 

Re: Re: new here...and lots of debt. help..

Based on my personal (not expert) experience with BK7, I'll humbly offer the following:

1) Our attorney told us to stop paying creditors even before we filed. I decided to keep current on all accounts until after the day we filed. Now, (6 years later) after getting (most, still fighting) accounts from BK7 updated to "Included in Bankruptcy" with the CRAs, a lot even saying "Included in Bankruptcy/NEVER LATE", I think I made the right choice on keeping current until filing. Also, we have been current with EVERYTHING since bankruptcy discharge. With the bankruptcy, we find doing documentation work with major item (car, mortgage) lenders is a necessity to avoid higher interest rates, and it's a lot easier to explain credit report entries that are 'IIB/Never Late" than "chargeoffs", "late pays", "collection accounts", etc.

2) Debts, especially the truck (which you say you need), can be "reaffirmed" during the BK process. You continue to pay as always or have some reaffirmation agreement with the creditor with an agreed upon payment schedule. We "reaffirmed" on a vehicle loan (just paid like always) and with Sears (they claimed a security interest in refrigerator, washer, drier) we executed a reaffirmation agreement with a fixed payment. The result was we maintained two positive tradelines in our credit files throughout and past the BK process. Discuss this with attorney IF you get to that point.

I'm NOT selling BK as what you should do, just offering a little detail on what's involved in case you face that bridge.

On the personal opinion side, I would think the boat would be a good candidate for "liquidation" (no pun intended).

Good Luck !

P.S. An interesting development was we just received a notice from Sears that they will no longer enforce a security interest in their credit accounts. They used to be well known for doing that in BK cases.

 

Re: Re: Re: new here...and lots of debt. help..

LOL! That sounds like Sears.

 

Re: Re: Re: new here...and lots of debt. help..

What PsychDoc said.

wajaba

 

Re: Re: Re: new here...and lots of debt. help..

First of all, I agree that the BK will haunt you for a long time. For employment or loans above a certain amount, they can check back much longer than the 10 years. My husband filed a BK, and eleven years later had trouble trying to get a job because they checked and found the BK. It can haunt you forever.

Second, how long it takes to get it all paid off is up to you. I got stuck with over $75K in unsecured debt in a divorce. I didn't even have money to live or get my car repaired without using credit. Then they started jacking up rates. But I am now within $2K of having everything below 8%. Sounds like you're already there. If you can keep up payments, it will save you a lot.

GEORGE explained the best way to do it. When I finally realized how bad it was and that I had to do something, I started by making a spreadsheet of everything I owed. Creditor, balance, minimum payment, and interest rate. Sort by interest rate. Figure out how much above minimum you can pay every month. Pay minimum on everything except the highest interest rate. On that one, pay the minimum plus the amount extra you have identified. You have to consider this a required payment, however. Don't go spend the money somewhere else.

If you get any extra money (tax refunds, work you do on the side, etc), put it all on the highest interest rate bill.

When that bill is paid off, add the additional you were paying PLUS THE MINIMUM on the account you just paid off to the next highest interest rate. I put a column in for actual payment amount and added it there. So, as you pay off bills, you pay more per month on the next one but the same total amount over all. Some people think that they should pay off the smaller balances first so they can see progress. But that still takes longer. I just made a total at the bottom for the total balance, then a line for the secured debt, subtract for unsecured debt. You can put in the number from the previous month and subtract to see the change. That's how you know you make progress.

Once you pay off an account, you only use it for things you can pay at the end of the month, like gas that you'd buy anyway. It doesn't count in the debt calculations.

Don't close the cards, just put them away. You need the limit to keep your ratios down.

If you can balance transfer to a lower rate, do it.

Update the spreadsheet every month. The bill that gets the extra may change from month to month, but only the highest rate gets the extra in any month.

It's by "rolling" the minimum from the paid off bill to the next highest bill that helps this go faster.

You can have a good time and still save money. Rent videos and watch the movies at home, where you can make your own popcorn a lot cheaper. Go to a little less expensive restaurant for dinner. Take your lunch instead of buying.

If you can pick up side work, do it. Use all the money for paying the bills.

You don't have to give up everything, but you might have to make some sacrifices. Take it from someone who's been there, you'll feel better in the long run.

I'd also think about selling the boat. But since you're getting a tax deduction on it, you may need to do more analysis on that. However, have you thought about renting the boat out? Since it qualifies as a home, I think you could probably do it as a rental property as well. That would give you more income, you could also deduct depreciation. There is a limit on how many days you could "occupy" the property, but time you're there do to maintenance doesn't count. You may want to talk to a tax professional first. But you could always rent another boat for a few days if you need it.

Just some thoughts. As I said, I had over $75K debt. At the time, I made about $50K a year. I also inherited some money in the meantime, and put that towards bills. But I think you can do it. I personally feel much better about myself knowing I paid what was owed, whether it was actually mine or my ex's.