In May 2000 I left a job making $20/hour due to severe stress. I was close to a nervous breakdown and fearful of going "postal." I have spent the past 18 months temping and working part-time jobs while looking for a permanent job. I have maxed out my credit cards and I'm running short of money. I contacted the local CCCS office and they cannot help since I have a deficit of $700/month. I am current on all my bills, have good credit and no late payments. I currently owe three credit cards nearly $32,000. I also owe $16000 on a car that's worth $11500. I have few assets other than clothes, furniture, books/CDs, a computer, TV and a boom box. I do have a 1989 Toyota Corolla that's paid off, but my 70 year old Mom uses it and she lives two hours away. I also share a one bedroom apartment with a roommate to cut expenses and I carpool with coworkers to cut transportation costs. I don't have any tax liens, lawsuits, etc. However I will owe a 10% tax penalty next April for a refund I requested and received in August 2001 from my former employer's retirement fund. I needed the money to continue to survive a little longer. I just accepted a new position last month, but it only pays $11/hour. After months of temping, sending out resumes, interviewing like crazy and getting tons of "Thanks, but No Thanks!" letters, I was getting desperate and my COBRA health insurance coverage was about to run out. I do like my job and my coworkers are great, but it's a bit hard to deal with the 45% pay cut. I have avoided the idea of bankruptcy for many months and have tried my best to cut expenses and earn more money. However after working seven days a week without a day off for eight months, I simply couldn't handle it anymore and I had to quit my part-time job. I also realized that in order for me to pay off my bills in the next five years, I would have to work 60+ hours or keep looking for another job. Based on the current job market, my outlook doesn't seem promising. I've been reading and doing tons of research on the Internet and I'm in the process of locating a bankruptcy lawyer. However the one thing I am most curious is how others have prepared themselves for bankruptcy. I am heartbroken that I will destroy my good name and good credit, but I don't have a choice. However I am determined to do what I can to rebuild and start over again. I have already pulled my credit reports, all my bank statements for the past year and all my credit card bills for the last nine months. Is there anything else I should do? Also...should I go ahead and apply for secured credit cards (I am considering Sterling, First Consumers National Bank and Orchard Bank) prior to declaring bankruptcy while my credit is still good? Any advice would be greatly appreciated... Cynthia
Cynthia, I would avoid bankruptcy at any cost. You can start by cutting up the cards and paying the balances down. While you working at your $11.00/HR job try to pay the minimums and keep searching for better paying jobs. It may seem like there is no hope, but your life with a BK under your belt will be far worse. You will not be able to get any decent rates for the next 7-10 years depending on the chapter you file. If need be find a roomate or two to cut housing expenses.find them. If you set up a strategy both short term and long term to get your finanacial health back you will do fine. If you need help setting up a strategy call a local not for profit social service center and they will help you. Please reconsider the BK, the effects will be far worse then you might imagine. Best of luck to you. Sean
I agree with Sean. Try to avoid bankruptcy if you can. You also may want to contact your current creditors and ask them if they have any hardship programs. Many will suspend your charging privileges until the balance is paid and will reduce your interest rate or accept a smaller minimum payment. Try that first. Good luck!!
------------------------------------------------------------ It's impossible to pay off a balance if you have a $700/month deficit. Even if all my credit card minimums were dropped to $0, I would still have barely enough to make my car payment. Not to mention the interest would continue to accrue on the account making it even more impossible to pay off the debt. When I spoke to the CCCS they told me that if a debtor cannot pay off their debts using their program in five years, they should consider bankruptcy. Since I will run out of money to pay my credit cards in January, I don't see the logic of waiting until the creditors come knocking on my door
Well, it sounds like your mind is made up. I'm sorry to hear that. I can assure you that your life post bankruptcy will be far worse than you can imagine. Try your local, county, and state government agencies they may be able to offer short term financial help to get you back on your feet. Credit Counseling from a social service or welfare agency is different then the wage earner plan because they show you what you need to do and then you do it.
Why don't you sell the car? You are in the hole $16,000 for a car that is worth ~$11,000. Cut your expenses and pay the $5,000 slowly if you can? You are already carpooling, why not take public transportation to the grocery store, gym, etc. It is tough, but I lived without a car for 3 years and took the bus to and from work. I know it can be done. You may have to get up earlier to do that, but it will be worth it in the end.
Just want to say I understand what you are going through. While my situation was a little different, I remember having bills I couldn't pay, being afraid to answer the phone, etc. It was an extremely difficult period. I, too, was in it because of something out of my control. I am no where near qualified to give advice, but I will tell you what I did. I did BK7. I don't know if it was the 'right' or 'wrong' choice, but, I did what I had to do. It was the only way to get 'back on my feet', legally, and as ethical as possible. Since then (this was 3.5 years ago), I have bought a house (rate is a little high, but it's a great tax deduction), obtained a car (normal finance rate), and obtained 6 decent credit cards with about 11k in credit available. I also learned a valuble lesson and now plan extremely well for any financial situation that might occur. BK was what it advertised. A way to 'Start Over'. A way to get my life back in order, to get back in control, and to feel better about myself. I know there are pros and cons to all your choices. And please don't take this as an advisement to file- I just wanted to tell you my experience. I also just wanted to say that it will be 'OK', you will get through it. This is a good board for you. There are a lot of good people here who can offer good advice and support. Wish you the best.... Shawn
Hmmmm....I'd have to contact Mazda credit to see if they would be willing to work with me. Guess I wanted to hold on to the car since public transportation in this area is iffy at best and I managed to snag 0% financing for 48 months at the time. Getting rid of the car would save me ~$500 in payments and transportation costs. That would only leave me $200 in the hole unless I can get the credit card companies to renegotiate the payments. My Capital One and Aria cards are already low interest (9.9%), but MNBA is nearly 22%. Let me call my CCCS counselor on Monday and see what she can do with the credit card companies. If everyone can wait their turn I might be able to pay off everything in five years. My next question....How would working with the CCCS or working with the creditors be viewed compared to Bankruptcy on a credit report. I'm getting conflicting advice basically comparing CCCS or negotiating with creditors as no better than declaring bankruptcy.
Erica- I am sure the bank has the title for the car- you can't sell it without that. That's probably not an option. Good idea though. Depending on the company, you may be able to do a 'Voluntary Repossesion' in which you could pay the difference between their delcared value and the payoff. These can 'sometimes' be worked out without the chargeoff/repo notation and be rated as 'no rating- debt settled'. Shawn
Sean- Why do you say the post BK life is 'far worse that they can imagine?' I really don't believe that is true. I am in no way promoting BK, it should definately be a last resort, but I don't think it's 'that bad.' I filed BK7 3.5 years ago. I had my first post BK CC less than three months later (I have 6 now). I had a house (164,000 house, 8k down) 1.5 yrs later. I am not sitting in a pretty good financial position with mid-level scores.- much better than I was the day before my BK, thats for sure. I am not trying to argue, I just don't think we should totally scare the poster away from BK. They sound like they are under enough stress already. Shawn
She can sell it for what it is worth and use the money to pay on the lein. She can then talk to the finance company and see what they can do for her. As long as the money goes to the car debt, she should be fine.
But, the bank is holding the title. The title will be marked as 'lien held by xxxx'. The poster does not 'own' the car, the bank does. They can't sell it. I am sure there is also information in the finance contract that says the same thing. Plus... Nobody is going to 'buy' a car that they can't have the title for. If the poster was not to pay the 'difference', the car would be reposessed from the buyer. The buyer would also not be able to resell the car until that lien was paid. Shawn
Depends on the bank. The car is the 'security' for the loan, so she would have to get a 'personal' loan and have the lien released. That's pretty hard to do, she would have to have a good relationship with the bank...there would be no 'security' for the loan. Even if she could, I wonder how much that would help. She's in a pretty tough spot. Again, it was a good idea...don't want you to think I was knocking it. Shawn
Thanks Shawn for the vote of support!! This has been a difficult decision. I've always taken pride in having good credit. I was so proud of myself when I was able to buy my first home on my own in 1994 and I had no debts, a nice nest egg and always paid my credit card bills in full each month. That seems like a lifetime ago. Now my house is gone (sold it when I moved 150 miles to accept a new higher paying job...that would later push me so close to a nervous breakdown that I resigned), I have $32,000 in credit card debts and my nest egg is long gone. I gave up my apartment to move in with a roommate and I don't remember the last time I went to the movies or rented a video. Thank God for libraries and Barnes & Noble (love spending my weekends reading books in cozy chairs). Thanks again Shawn!!
Supershawn, Are you going to tell me your interest rates are prime with a 3 yr old bankruptcy? Who are you kidding. Her life for the next 7-10 yrs will be far worse than she could ever imagine. Besides the high APR's, she will not be approved for any kind of loan from a traditional lender, plus the stigma attached to BK and the answering that has to go along with it on job interviews, background checks, or financing attempts. I firmly believe she should not file, just quit living beyond her means. As you stated I'm not arguing, just stating facts that are known already throughout the industry.
Plus.....paying a shister lawyer money that could go toward reducing her debt she's already incurred.
Cynthia, You have my heart with you right now. Although I am only 17, I couldn't imagine what it would be like to be so far in debt. I know the feeling when I am $500 in debt. It's terrible. You basically feel like shit and ask "why should I go on like this." If I were you, I would contact a lawyer and get advice from them. See what they think you should do. Also, Bill Bauer would be an excellent man to consult with. He could definitely help you work through this trouble. I am not saying you shouldn't file bankruptcy, but if you can avoid it, do so. It sounds like you have good credit. I am sure it is difficult to find a good paying job. You could try stopping by a local workforce development office and getting some employer's names who are hiring. It's your choice as to what you want to do, and we are all here to help and support you in this difficult time. Good luck, and God Bless!
