30k in credit card det.... Bankruptcy?

[ERB]

I need an opinion on eliminating this kind of debt. Thinking of bankruptcy.

2 credit cards. 1st has approximately 20k, 2nd approximately 10k.

I own my house, paid off 15 years early last year. Going through a divorce. Wife doesn't want anything from me other than child support.

Tired of making minimum payments and occasionally making extra payments without seeing any headway.

Advice please.

 

[speed dawg]

I need an opinion on eliminating this kind of debt. Thinking of bankruptcy.

2 credit cards. 1st has approximately 20k, 2nd approximately 10k.

I own my house, paid off 15 years early last year. Going through a divorce. Wife doesn't want anything from me other than child support.

Tired of making minimum payments and occasionally making extra payments without seeing any headway.

Advice please.

You might ought to consult Dave Ramsey. Bankruptcy, while seemingly the easy way out, ruins your credit/reputation. I think I would get disciplined and pay the credit card off. If not it will follow you the rest of your life. Take some responsibility, it will help you in the long run. Pay the small one off first, get it snowballing. If you can pay off a house, you can pay off those cards.

If you're going through a divorce, cut out all expenses except a gym membership. Work, pay the debt down, eat, workout like a madman, sleep. You'll wake up in a year, you'll be in shape, with no debt, and no bad marriage.

 

[ERB]

Found the Dave Ramsey site, thanks.

 

[l_e_g_e_n_d]

Lots of missing info.

1. What state do you live in?
2. What is your annual income?

If your individual annual income is above 50K in most states, you are shvt out of luck in qualifying for a Chapter 7.

Most states have a homestead exemption between $100K - $150K, whereas if you file a Chapter 7 bankruptcy, your home is safe to the extent of the exemption amount.

For example:

Scenario 1: You have no mortgage. You are single. Your house is worth $120,000. Your state's homestead exemption is $150,000. You file a Chapter 7 bankruptcy to extinguish your credit cards. Your house equity is safe.
Scenario 2: You have no mortgage. You are single. Your house is worth $300,000. Your state's homestead exemption is $150,000. You file a Chapter 7 bankruptcy to extinguish your credit cards. Your house equity is not safe.

Big difference.

You don't want to file a Chapter 13 bankruptcy, as depending on your financial statement, you may still pay back most of your credit card debt in the filing.

If you have more equity in your house than the state exemption allows for Chapter 7, I suggest: Debt Settlement. Stop paying your credit cards. Wait 6-9 mos. and settle the cards. Most cards will settle between 25-50% of the total balance. If you don't have lump-sum monies to settle, you can work out a payment arrangement with the creditor on the settlement. It is easy: Like shooting fish in a barrel.

If the creditor sues, ensure you go to the local courthouse and answer the complaint. Attend each and every court date. You WILL settle in court.

Your credit score in a Chapter 7 bankruptcy will drop 200-300 points. Your credit score in a debt settlement (because you stop paying these creditors) with approx two credit cards will drop 50-100 pts. Either way, your score will recover in three years. Choose your poison.

Don't debt-settle or file a Chapter 7 if you plan to refinance (pull cash out of your house) or buy additional property requiring a mortgage in the next three years. In this case, refinance/buy property first, then settle credit cards after.

Good luck.

 

[Bible_Belt]

Whatever you do, avoid "credit counseling." That program was started by Visa. They think of bankruptcy like church people think of abortion. Their sole purpose is to talk you out of it.

Bankruptcy is the law. If anyone doesn't like it, tell them to write their Congressperson. You are exercising the rights afforded to you under the law. Here's a link to get started: http://www.mdb.uscourts.gov/content/understanding-bankruptcy

You'll want to get all three copies of your credit report. Then make two lists, one of your debt and another of your assets. Everything you own is valued at yard sale value.

If you choose to file, it's not that hard to do yourself. Most people don't really need a lawyer; it's only if your creditors show up and start arguing against your filing, and that rarely happens. If you bought a large-ticket item recently on a store credit card, like say a washing machine at Sear's on a Sear's card, then expect them to show up at your hearing and ask for the washing machine back. There's no fighting that. I've been to BK court in Florida and Illinois, and at both of them, attorneys are basically not allowed to speak. The trustee asks you questions, and you answer. It's the same with or without a lawyer. The lawyer is mostly just providing a paperwork service.

And even when the truth hurts, do not lie. Disclose every asset you have. Lying, either with false papers or in court to the trustee, even when you really think you're going to get away with it, is still felony perjury, and a great way to win an extended stay at Club Fed.

 

[Tenacity]

I need an opinion on eliminating this kind of debt. Thinking of bankruptcy.

2 credit cards. 1st has approximately 20k, 2nd approximately 10k.

I own my house, paid off 15 years early last year. Going through a divorce. Wife doesn't want anything from me other than child support.

Tired of making minimum payments and occasionally making extra payments without seeing any headway.

Advice please.

Need to provide WAY more information such as your gross income, your state as well as your credit score. Bankruptcy isn't always the answer, you might want to look at a P2P loan to consolidate the credit card debt into a lower interest rate and a longer term, which reduces down your payments.

 

[LiveFreeX]

Another good way would be to move down to Mexico for a couple years, then when you are back, call the credit card company and offer them a couple thousand bucks to close up the account. I have a friend who was a pro at this, apparently after 7 years they will take any money at all to wipe your account clean.

 

[Desdinova]

Another member here @Vulpine wanted to wipe out his student loan debt. He put all his stuff in storage, got multiple jobs, and live in his car for a few years. His expenses were like $200 per month. He paid off all his debt, stuffed away a bunch of money, and bought himself a piece of land.

It may seem extreme, but he's got his life working for him now. I wished I would have done the same when I was in debt and child-free. It would be one hell of an experience.

 

[ERB]

I have decided to pay the debt. I racked it up, I'll pay.

Speaking to a few people and reading replies here, way to much trouble to try and "dodge" it. My house has good value, make good money, have assets.

Question is now what card to concentrate on first?
20k card is open, not sure if interest rate right this moment. 14.25%, just looked it up.
10k card is closed and interest rate was lowered to 4%. No payment due dates and no late fees anymore.

My guess would be make min payments on 20k and make 1k payments to the 10k card. Thoughts?

 

[Bible_Belt]

A free consultation with a bankruptcy attorney might be in order.

Do you have equity in the house? Only do this if you are 100% committed to paying off the credit cards, but you will get a much lower interest rate by trading your unsecured debt for secured debt. Do a cash-out refi and pay off the cards. Then, for the love of God, don't run them up again.

 

[ERB]

House is payed off. My guess it's value is 220k.

 

[Bible_Belt]

Borrowing against your home and paying off the 14% card would cut, I'd guess, 10% off the interest, saving you $2k a year. The risk is that if you lost your job, you would risk losing your home. But hell, if that happened, you probably couldn't afford the taxes and upkeep, and would lose it anyway.

The best loan deals come from independent mortgage brokers, who don't work for just one single bank. Credit Unions often have good deals for members. You can also get quotes off of lendingtree.com - they are surprisingly competitive.

 

[Billtx49]

Lending tree is a good answer if you get a good rate with them. Pay of the cards and just have the one long term payment with them. The card payoffs may increase credit rating also.
Just avoid the card run ups until loan is paid off.

 

[samspade]

I need an opinion on eliminating this kind of debt. Thinking of bankruptcy.

2 credit cards. 1st has approximately 20k, 2nd approximately 10k.

I own my house, paid off 15 years early last year. Going through a divorce. Wife doesn't want anything from me other than child support.

Tired of making minimum payments and occasionally making extra payments without seeing any headway.

Advice please.

I was in the same boat. Find your biggest monthly expense (besides debt) and reduce it. For me it was rent. Your house is paid off, so it would probably be something else. Or you could sell your house and move somewhere smaller - which also might enable you to sell some items you don't need, like furniture.

I reduced my rent and utilities from around $1400 to $300. I had to suck it up and compromise my living situation, but I've cut my debt significantly in 18 months.

Finally, if you can join a credit union, do it and apply for a personal loan. It'll still come with interest, but it'll be lower (more like 9-10%) and you can make big payments to one lender. Another alternative is transferring your balances to 0% interest cards - just don't use those cards. Good luck!

 

[yuppee]

can you get a refinance of your house, using the cash out to pay off the credit cards? far better to pay 5% than 20+%, right? once done, destroy the credit cards and learn some self-disipline, man. Sheesh

 

[speed dawg]

Bankruptcy is the law. If anyone doesn't like it, tell them to write their Congressperson. You are exercising the rights afforded to you under the law. Here's a link to get started: http://www.mdb.uscourts.gov/content/understanding-bankruptcy

A free consultation with a bankruptcy attorney might be in order.

Man, you are seriously advising this guy to choose bankruptcy. Over 30K dollars. That is friggin' stupid advice that will ruin his credit and reputation. You can't just erase that sh*t.

OP....only way I even begin to think about bankruptcy is if it's like 500K or more. I mean, I just bought a van yesterday and owe 19.5K on it. Should I file for bankruptcy?

 

[Bible_Belt]

I erased 19 grand in credit card debt in 1999 with Chapter 7. In 2008, I helped a girlfriend erase $35k in credit card debt. Each case cost just the filing fees, a couple hundred bucks.

The "bankruptcy will ruin your life" idea is brought to you by mastercard and visa. It doesn't actually work that way. What does ruin your credit is maxing out your debt ratios with credit card minimum payments. Even if you are never late and still maintain a high numerical score, no one is going to give you any credit if too much of your income goes to service debt. What happens after you file bankruptcy is that suddenly your mailbox will fill up with credit card offers. Of course, the interest rates are high, to offset your newly lowered credit score, but there is no offsetting debt ratios. Once you're mired in debt, your credit is fvcked anyway, and at that point, bankruptcy gives you better credit, not worse.

 

[yuppee]

bankruptcy is a wonderful tool, if used wisely. IF however, you do the same stupid shyte after bankruptcy that got you 35k into debt the first time, you'll REAlLY be screwed. So wise up, dummy.