I made quite a few mistakes at an early age and now I'm about $10,000 in debt, at the age of 21. I am currently a full time college student in a small town, where its hard to find a good job and go to school at the same time. I had a job but lost it about 3 mos ago. I fell behind on my car payments and before I knew it would even happen yestrday my car was repossessed. I was trying to get rid of it because I was paying more than it was worth (its a 97 ford aspire, POS, I bought it when I was 19 w/out consulting anyone) but it wouldnt sell. I have the 15 days to decided what I can do. I don't want the burden anymore of paying for the loan as well as full liability insurance. Could I possibly negotiate with the bank to put it down as a voluntary repo (which it pretty much was) and not get as bad a strike on my report? When I was about 19-20 and not in school, I managed to charge about $6000 on 2 credit cards (ironically a good % of that is for car repair on the aspire, like a new tranny 6mos after i got it) and currently I am behind on those payments as well. Those were running me about $130/month minimum payments, which means they would never get paid off. Basically, finishing my education asap is my top priority. I would need to find a full time, higher than minimum wage job to pay on my debts, which means I would have to reduce my school work to part time, and it would take longer and risk the chance of exhausting my financial aid before I finish school. I'm really at toss up between current debts and bettering myself so I can get a good job in the future. Should I file for bankruptcy? Ive thought about it, I dont have a house or anything the bank could take from me except a good credit rating. I figured by the time the statute of limitations was up, I would be around 28, and hopefully working a good job. My parents can't help me much, and I seem to have inherited their inability to manage money. Any advice would be greatly appreciated. I feel like a really naive kid that made some big mistakes.
Well, I sure wish I'd filed bankruptcy with the start of my credit problems when I was your age. I'd have a much higher score now and no chargeoffs. Now I'm 26 and just now able to start handling these problems. And I only owed 1/2 what you do. I also got my car repossessed, but thanks to a relative, got it redeemed & stayed way over my head in car payments for the next 3 years. I just paid the car off last month & am starting to rebuild my credit. Good luck!
Doesn't matter What kind of "repo" or what kind of "charge off" it is, its bad. You don't seem to have the concept that you've ruined your credit for 7-10 years already. My only advice might be to stop school, pay off your debts at least to a level that will preserve your credit rating, and then go back as you can afford it... Sooner or later bad credit will bite you in the ass, like student loans, financing, even jobs these days check your credit... if there was any possible way to keep my old debts from becoming permanent charge off's/etc i would have done it knowing what i know now.
BK is a last resort, and certainly not something to consider with only 10k in debt. You'll be dragging that ball and chain around for the next ten years. Can't you get some student loans? Or work and go to school. I worked full time and went to school full time. You won't have much of a life, but when you get done, you'll be in a much better position. On your car, you should call and see if you can work out a new payment plan. If the bank has to sell your car at auction they are not going to get much for it. They will be pretty motivated to help you work something out.
I disagree. The system is broken, and paying this stuff over time will trash your credit for a lot longer than 10 years. You will have paid out all that money, and will not have gotten an education. Bk does not keep you from getting jobs. Unpaid collections do. I really don't believe in advising people to just dump all their debt, but I can just picture what your future is going to be like. Without a degree, you're doomed to low-paying jobs (unless you're an entrepreneurial genius). You will do just as well if you flush that money down the toilet. The debts will continue to grow because of high fees and interest. Your debt will get bigger in spite of your payments, and you won't be able to keep up with it. Then it will be collection agencies and more bad credit. If you qualify for bk (I think you will), get out from under now. Learn your lesson, start over, and get on with your life.
That, although in a way the "easy" way out, seems to look like a good option. I can imagine if I quit school and subject myself to being a slave to paying off debts that are a result of my youthful stupidity, I will only be stressed and very unhappy. I have learned my lesson, understand now what I need to do to not fall into this again. I don't want my car back because it is a financial burden that costs more than it is worth. It is too bad that car dealers will sell to anyone who qualifies for a loan. No matter what, I know my credit will be bad for up to 10 years. What types of jobs check credit history? I am weighing the possibilites of filing BK and starting over, or attempting to repay the debt and risk something happening where I can't afford to continue (like a medical problem or other situation) thus putting me back to the same problem. If I decided to file for bankruptcy, where can I start? I live in PA. Will I need a lawyer? How much does it cost? Any website recommendations? I have a friend in a similar situation, however she has a child as well. She wondered if BK will affect getting government student loans. I have student loans right now, and I would like for them to be the only debt I have when I graduate school. Thank you all for you're help. I wish everyone the best of luck. I wish I would have had someone advise me before I made these mistakes.
I agree, but for pete's sake...don't turn around on your "fresh slate" and rack up more debt. Learn from this the first time around and then by the time you have graduated and are well established in a job...all of this will be a distant nightmare. L
I agree with Breeze. I was 22 when I was carying around alot of debt. Although I was handling it OK, I went WAY over my head when my mom died and I got stuck with the funeral costs. That was when I was 23. At that point, I was faced with your dilemma. Do I try to fix everything over the next 3-5 years and STILL show a bunch of trash on my CRs or do I file the BK while I'm young and be in the clear by the time I'm 30? I chose to file BK. I just turned 29 this month. I now make close to $70K a year thanks to my education that I stuck with, my scores are now in the 600's, and my BK will fall off in a few years but it's not killing me like I thought it would when I filed it. If you're in way over your head, file now and give yourself time to survive it.
Go talk to a lawyer. Don't use the big bk clinics that advertise on TV and have big ads in the yellow pages, get one who just lists it along with real estate and other stuff. They are the ones who will pay attention to individual situations, and answer you questions with patience.
I would not file bk over 10K in debt. It isn't worth it. Nor would I stop going to school just to pay this off. You are better off staying in school and paying what you can. Finishing school and finding a decent job that much sooner will put you in a better financial position than deferring school while working a minimum wage job to pay off this mountain of debt. If you can't handle the debt, forget it and move on. In four years, the derogatories won't have that much impact and in seven years, they will be completely off your report. Bankruptcy will stay on for ten years. You might try consumer counseling to negotiate lower APRs and payments to try to make this work.
I think the problem is that no one is educated about credit and debt. In fact, I doubt that the credit industry wants kids to be educated. Then they wouldn't get those 19% car loans - kids would have better sense, they would save up and buy an older car until they got on their feet. College kids wouldn't want their credit cards, or would at least be prudent about their use, they wouldn't run them up buying pizza and paying for concert tickets and spring breaks on Caribbean beaches. The credit industry is greedy, and wants you in debt. That is why they want to reform the bk laws, so you can't get away from them. Schools teach about history, English, politics, other cultures - they even teach about sex, drugs, and smoking. Why don't they have required classes in budgeting, credit, and basic bookkeeping for individuals? Makes absolutely no sense. I guess they think that's private
Quit school?? Unless you are just truly not interested pursuing a degree- don't even think about quitting school! I was in a very similar siutation to yours when I was 21, except that I was way over my head in debt before I decided to go back to college. Despite overwhelming anxiety about my financial straits- the inevitable collections, charge-offs and general worries about unpaid debts and rapidly declining credit- I know I am way better off now having competed my degree (at least happiness wise). That was almost 7 years ago - I am just now recovering from my previous credit problems. Bankruptcy is an option- I probably would have bk'd if I had known then what I know now. Bad credit is a seven year sentence anyway you decide to go- don't despair you are 21- believe me, 28 isn't that far away. If you quit school just to pay bills- you will likely regret that move for much longer than 7 years.
One more thing- I do have to agree with Lizardking to some extent. But I would say, if you decide not to pay... don't pay anything- stop cold and keep the statements showing when the lates began (in case you need to dispute the reporting time limits in 7 years). When I first ran into trouble, I tried to pay bills for two more years, usually missing every other payment, paying below the limit and I even attempted debt counseling (which I couldn't keep up) as a result of sporadic attempts to pay- the reporting time for many of my credit cards (that were eventually charged off) was extended for 2 more years. Just a note from my personal experience.
I agree with lizardking,pick your lowest limit card with the latest renewal date,keep paying on that one,keep a gas card if you have one. Get caller id and an answering machine. Be polite to your creditors,but firm,you will probably get some judgements filed against you, but it will be a long while before your salary would be subject to garnishment given the Federal exemptions. If you don't think you can handle the grief, do as Breeze says, file BK. UNDER NO CIRCUMSTANCES DO YOU WANT TO DROP OUT OF SCHOOL !
As far as jobs go- the last company (biotech) I worked for did a credit check (when my credit report was at its worst) and I was completely worried about it. I was upfront with the HR person and told her flat out that my credit was a complete train wreck- she said they really don't care as long as I don't owe the government money (student loans, IRS) or have a bankruptcy on record... so if you are concerned about job related credit checks, I think bk is a more dentrimental mark.
I think their logic is that if you cannot get anything on credit (due to BK) and are on a cash-only diet you are more likely to steal?
January 2002 was a record month for BK filings in the U.S. It is WAY to easy to say the hell with it and file. Every BK costs us all money, and it will cause a trainwreck in your personal credit life. Bad credit is a lot easier to recover from. Who on this board hasn't had a chargeoff deleted with a couple of letters. On the other hand, anyone had a BK deleted before the sentence was up. Maybe a few, but your odds are better at winning the lottery If someone is young, presumably healthy, and reasonably intelligent, there is nothing stopping you from getting back on the right track. School and employment are NOT mutually exclusive. It might be in your town, but there are a couple thousand other cities across the country that are desperately short of labor. Another note, you can't always find a job where you live, but you can find a school anywhere. Go where the jobs are, then find a school.
Here's my two cents worth....possibly three cents... From a completely emotional standpoint, I abhore the notion of bankruptcy when it is connected to careless financial management, overspending, gotta-have-it-now, let-me-live-beyond-my-means, don't-worry-about-the-future, charge-everything-up-to-the-limit....well, you get the picture. Even in your situation--again this is coming from an emotional standpoint, so don't get mad at me or throw a curse my direction or anything--you chose your debt, and you now have the choices of working full time and repaying that debt--or, going to school (being a college grad of yesteryear, I'm all for the degree, so--don't get me wrong). HOWEVER, from a practical standpoint, if I had my "credit stuff" to do all over again--I would have handled things a lot differently. Short history lesson (for those who've seen this episode, skip down a paragraph or two); 1) married in 1993, 2) wife's ex goes out and files Ch 7 3) we (actually--the wife) files Ch 13--can't afford all the bills (hers, mine, the ex's) the way things were, but we're gonna take the moral high ground you see and pay people back 4) my bills (mostly student loans and a couple of credit cards) become delinquent in the middle of all this--but, being naive and stupid, we figure its better to be late than not pay at all--and we're gonna live frugaly (sp?), within our budget--because we're gonna pay people back you see; 5) Ch 13 discharged 1996--my credit cards and student loans are up to date--and we're ready to rock--people will fall all over themselves extending US credit, because look at what we did. WRONG, WRONG, WRONG--god-bless-my-receedin'-hair-line WRONG. If I had a chance at a "do-over"? Chapter 7, hands down--my cc's and student loans would have never been late--we could have lived better in those intervening years (don't get me wrong--no one was starving); more $$ would have been in our pockets/bank accounts--and--most importantly our credit reports/scores would have been much better, much sooner-- I've seen people on this very board (and I'm not judging here--so no tomatoes in my direction please) who have filed Ch 7's and gotten them off their bureaus in what I estimate to be record time--and sometimes even when they're still there, they will have FICO's my credit report will not see for another year or two (if then)-- To do again? Ch 7 as soon as I could get write the check for the retainer. Again--that's the practical side of me speaking. And in the end, that's what matters I suppose(reluctantly), because, I can tell you this bit of wisdom--curling up with your "morals" and "sanctomoniousnous" (is that a word?) at the end of the day sucks when you learn that paying people back, even late, means nothing positive. And--the negative sting lasts a lot, lot longer than walking away. Gotta take a breather-- *whew* Cheers-- David
Well said, but don't get mad if I still disagree a little. No question chapter 13 is a bad bad way to go. If you're gonna be a bear, be a grizzly. Go 7 and start over. But I stand by my earlier statement, 10k is not worth going bk at such an early age. work your way out of it, then start filing disputes. You'll be back to healthy credit in a year or two.
