Ok here it is ..I got married 6 months ago to a wonderful woman. I knew before that she had alot of debt, to the tune of $75,000 CC and $50,000 SL. Her credit score last I checked was in the mid 700's. She recently got a new job making $65,000 a little less money than berore but Will be making alot more in the future. We do not own a home yet andour savings has dwindled due to rent and CC bills. We currently do not really own anything.. She Leases a BMW(her old company leased if for her and made the payments) theres about a year and a half left on the lease. I currently drive a 94' Jaguar paid for. I am helping her with her bills somewhat but its getting rediculous. Most of the debt was incurred over 10 years ago while she was in college and doesn't really put anything on them now. Just her American Express. Would it make sense for her to file bankrupcy for the CC debt...Im dying over here and this board hellped me Alot..
What is your combined income, and how fast could you pay it all off, if that were your main goal? What average interest rate are you paying, and could you get that rate lower as you pay it down? With FICO above 700, it sounds like all debts are being paid. Where do you want to be several years out? BK would not be an instant solution, and if she has high income she might still have to pay off a portion. What is impossible for one person to pay off in a lifetime, could be possible for another to pay off in 2 to 3 years. If that is your target date for having good credit for buying a house, if you paid it all off, you would have very solid credit. Would that be any worse than declaring BK and then spending 2 to 3 years trying to reestablish credit?
We have a combined income of about $130,000. Currently we are just paying the bills not really saving anything. Her SL payments are about $550 /mo. She's paying that fine...the CC 's are whats killing us ...Its all old debt most before she met me. Payments are about $1,500 - $1,7000 / Month. We still have rent, car food Where not really saving anything. Im sure there are a few ppl that could pay off $75,000 in CC debt at 15% in 2 -3 years but it hasn't worked over here ... Also would my name be attached to her bankruptcy. We currently do not have any joined assets or bills...
Sounds like you have enough money to pay off all your bills in a reasonable amount of time. It would take at least as long to build up good credit after declaring BK. It seems that what you really need to do is figure out a budget, and stick to it for a few years. Include a certain amount for savings in the budget. Also since you have 700's scores, you should be able to shop around the CC's and use 0% or low % balance transfers to move CC debt into lower interest demanding accounts. Keep doing it and you will be ahead of the game and would have avoided BK as well!
I agree with the others that it's probably best to try to pay off your debts. You have a good income. You may have to give up some things for a while, like cable TV or going to the movies or eating out all the time. I don't have time to re-type a lot, so let me refer you to this thread where I tell how I paid off about $77K of debt. If you have to, get a second job for a while. 7-11 or McDonald's. But ALL of that income goes to the bills. My husband filed bankruptcy when he divorced his ex, and he's lived to regret it. A dozen years later it still finds ways to haunt him.
OK, I will answer teh questions they did not. She CAN file BK but it will be a 13 not a 7. With scores in the 700s, BK would ruin most of what you would like to do with your life so in YOUR particular situation, I would not recommend it. As long as you are not joint on ANY of the bills (including your lease on the apt), her BK will never hit YOUR bureau. However, ANY joint debts and it could find its way there and would be a b*tch to remove. I did not hear the words "kids", so there are only the 2 of you.... So here is where I will get a mite blunt with you.... SO you understand why... As you see, my name shows 5 kids (teenagers! UGH!). I have a mortgage on a house built 18 months ago, 3 car notes, 3 cc's, etc......I earn about the same as your wife. (oh and because of CARELESS teenage drivers, $409/month in car insurance!!!! I am not married. I get no child support. (deadbeat) Here is the blunt part...given the information you provided ($130K income, leased BMW, SL of $550 and $14-1700 in cc payments), I would say that your main issue is your standard of living. chuck the BMW and get a fairly new, but used INEXPENSIVE car. (Let someone else take the depreciation hit!) Find a reasonable apt, not the gated, upper crust luxury one. Kill all but basic cable. Learn how to cook (I know DINKS ((Dual income no kids)) eat out FAR more than necessary because they are too tired to cook!). Find free entertainment for your 'night out'. (here you can catch a free movie or concert on the beach during the summer!) Every meal you eat at home saves you $20-40... put that on a cc. Add up the reduction in living expenses. Put that on the cc's. LOCK UP HER CARDS UNTIL THEY ARE PAID! You will be surprised at how fast you can actually pay these off. Finally, she needs to learn from this. She needs to be involved in what the budget is and why. Have her calculate all she purchased. Then calculate what it really cost by the time she pays off all the credit cards. Then have her calculate how long it would have taken to have the SAME items if she simply waited and paid cash! This is what I did to myself when I was 23 and staring down at huge debt. I learned that it would have taken me 6 months to pay cash. Instead I was stressed, it took 3 years and cost me 3X the original amount! DUH! Add one more lesson. She gets NO NEW clothes or other uneccessary things until her debt is paid. No, she cannot have channel no 5.... Caress body spray is only 4 bucks. No designer makeup.... Cover Girl is 1/10th the cost. Fake nails are OUT unless she wants to get the stick-on ones you can get at Wal-Mart for $5. (I get complimented on my nails all the time! This is what *I* buy.) Another thing I learned is that Payless high heeled shoes last just as long as the designer shoes, only they cost 75% less! Yes, it dents the ego at first. I graduated from a NYC prep school. I would not have been caught DEAD in a KMart, WalMart, Target, etc. I went to a private college as well. My first lesson in "it just doesnt matter" is when I could no longer afford "designer" diapers for my daughter. I was short of funds. I realised that Huggies cost twice what the "Smiles" brand did at the Commissary. Once you put them on her butt, nobody knew or CARED what type of diaper she had! LOL Besides, it was going in the dumpster later anyway! I reevaluated my position on WHY I demanded on designer. Take another look at your budget....take out the mental scissors and start cutting. If she complains, simply point out who put you both there in the first place! Mom
I can completely understand that some peoples situations are completely different than ours. But we do not live in a "gated" community, we live in an upstairs apt on LI. Rent everywhere on LI is rediculous. The BMW as I stated was a bonus from her old company and they payed the lease. When she left there for the new job it was in her name and was stuck for a year and a half. Wen the lease is up obviously we would get a different car. The payments on the CC's are all for old debt 5 years and before she only uses he amex now and aside from about 3 outfits for her new job she does not buy nes clothes. Currently on the books she is making $55,000 I am making about $35,000 I have my own buainess. The only reason I asked if it would help is because its all old debt, we currently are not saving anything so in 2-3 years we may have some of the CC debt paye down but no closer to buying a house. An average house on LI is about $450,000 and thats in an average(not nice)area. And would need work...
The debt may be old, but a delinquency or BK would be new. The period it would affect your life would start now, not 5 years ago. When you have your debt paid down and are able to look at buying a house you can look at where it makes sense to do it. That is a separate decision. Debt increase compounds, so does debt payoff, savings, or investment. The hardest part is the first stage until the balance tips.
I understand your predicament in more ways than you know. My parents and sister live in Levittown and I am well aware of the COL which is why *I* live in FL! I have filed BK twice. Just for the FYI - BK7 in 91 over a custody battle that cost me $72000. When I filed for divorce, I had good credit and max of all my debt was only $12000. BK13 when the next spouse turned out to be an alkie addict. So I have had my own share of knocks. There IS light at the end of the tunnel. 18 months out of the BK7 I bought a house zero down VA. I just bought the house I live in 18 months ago. The BK13 was 5.5 yrs old at the time, I had followed the advice of everyone on this site for 18 months and my scores neared 700 when I applied. Never lose hope. Even if you do resort to BK, you can recover, but I would consult an atty first. BK can be bad for some....... My brother and his wife filed BK13 after years of declining income. After the BK was filed, his wife lost her job after one of their cars was totalled as well. (Makes getting a new job hard!) They couldn't get financed on another vehicle, etc. The BK atty wanted more $ to modify the plan. Things got very bad for them and my brother was near suicide. He and his wife made the decision to sell their house. The equity paid off the bulk of the remainder of the BK and they are almost out of the woods. They currently live with her mom to get out of debt and start over again. Your decision has to be based on what is best for you and your new wife. At $400K + you are looking at saving for half your married life before being able to purchase a home. Don't forget the astronomical property taxes in your area as well. I think my parents pay around $7K per year. That is going to add to the cost of buying.
Re: Re: Could bankruptcy help There are situations when a BK can be reported by a CRA for more than 10 years - for example: A lot of employment applications ask "Have you EVER declared BK?" The same goes for mortgage applications. Also that information is available if you are ever investigated for a security clearance The info always remains a public record and anyone can look up the BK rolls at any time in the Federal Court System. Just because it is gone from a CR in 7 or 10 years does not mean it is gone. If someone wants to find ou the info, they can!
Re: Re: Could bankruptcy help Actually, a BK can only be reported by a CRA longer than 10 years when the situation meets the criteria spelled out in the FCRA - applying for a job of $75K or more, a mortgage of $150K or more or life insurance of $150K or more. NO other exceptions. On job apps, where it asks if I *ever* filed BK, I simply leave it blank. I have never been asked about it and I have never been denied employment because of it. I think that it is none of their business. I won't lie so I just don't answer.
Re: Re: Re: Could bankruptcy help It haunts you in many other ways. Even though the debts have been discharged, JDBs (Junk Debt Buyers) will buy them for pennies on the dollar. They (illegally) reage it and put it on your credit report. Then name of the original creditor is concealed enough that it's not obvious what it is. You pull out your bankruptcy papers. That creditor (the one they list as original) doesn't appear. There is a lot of time and effort into getting it cleared up. This has happened the last two times we've refinanced. The only way to get it cleared up is to mention that it was discharged in bankruptcy. What??? You didn't answer yes to that bankruptcy question? Now you've got even more problems. Just remember, because the law says it can only stay on for 10 years doesn't mean it will happen that way. And, as someone mentioned, it can only be reported on your CREDIT report for 10 years. Any good investigator could find it in public records. Maybe you want to run for office someday. No problem. Then out comes a reporter looking for the scoop and reports that you filed bankruptcy. Nothing wrong with that, you say? Let your opponent spin it for a while and see.
Re: Re: Re: Could bankruptcy help No I didn't answer the BK question. Later, if they say "hey, you didn't answer that!" they would be accurate. They could not say that I lied on the app because I didn't lie. The real truth is that MOST employment apps don't ask. Most employers don't really care or check. One's that might would be those that put you in a position to handle money. I don't so that doesn't concern me. Run for political office?! Not on your life! I like my skeletons where they are!!!! In the closet! LOL
Re: Re: Re: Could bankruptcy help Someone also mentioned security clearances. If you ever go for a job that requires a security clearance, they will check public records as well as credit, so they will find the BK. How much it hurts depends on the level of clearance you're going for and how you answered the question about bankruptcy.
