[baddebt]

I'm a regular member here that is posting under this handle so as not to be target of criticism.

I am in debt of about $25K - $30K and considering filing for bankruptcy. I am in credit card debt from school, a period of unemployment, and because I am following a dream of being self-employed.

I feel that I need to file bankruptcy so that I may be able to get ahead. As it stands I feel that a chunk of my small income is going to creditors. I have a small income because of the small business that I own. I think if I can get rid of some of this debt that I may be able to breathe a bit more.

How would a bankruptcy affect my ability to own a house in the future? Could I finance a house under my business once the business takes off? Honestly I don't know what to do.

[Doofy]

Don't know how it is there but here in the UK fling for bankruptcy will affect your ability to get a mortgage and your ability to get a business account at the bank. If I were you I'd be looking at ways to improve your business.

What's your business? Where are you at with it?

[Ozmodiar]

How many credit cards? Are any of them outstanding? Is all of the debt just from credit cards? How old are you? Not asking to be snarky, I feel it's relevant information.

Even though you probably have bad credit right now, filing for bankruptcy will utterly destroy it. However, depending on your age the advice varies from "yes you should do it" to "no, you're too young to do that." But, if it's all credit card debt, then the answer is no.

You won't be able to buy anything that has secured debt (like a house or a car) without a cosigner for a long, long time if you file. Have you looked into the debt consolidation services offered by your bank? I would start there.

Best of luck.

[His Dudeness]

Bankruptcy doesn't utterly destroy your credit. Mine was discharged in September of 2001 and I am on my second new house and fourth new car.

[Ozmodiar]

How much did it affect your credit? Are you getting remotely decent interest rates on the house and cars?

[His Dudeness]

Yeah, the cars I got good rates on and I just bought a 235k house at less than 6% through the VA.

[Ozmodiar]

Wow, good for you. Do you think being a veteran had anything to do with it?

[His Dudeness]

Well, getting it through the VA is great. But after a bankruptcy is discharged, it's like you're starting over. I bought a new car afterward and I didn't get a great rate, but I knew it was coming regarding that. But over the years, it gets better. I've had four credit cards since then, all of them having 300 credit limits. All are paid off and closed and I have two more right now and combined between the both of them, I owe 800. Not too bad.

[Ozmodiar]

Well that's cool. Enjoy the new house.

Oh, and did you ever find those guys that peed on your rug?

[His Dudeness]

Yeah, they're hanging out back.

[baddebt]

To answer some the above questions:

-It is all credit card debt.
-None of the cards are in bad standing. The cards are always paid on time.
-I am in the late 20's early 30's age group
-I have been in business for a little over 2 years. I want to grow the business but I need more money. I can't make more money because I need to grow the business.

[baddebt]

Originally Posted by His Dudeness

Bankruptcy doesn't utterly destroy your credit. Mine was discharged in September of 2001 and I am on my second new house and fourth new car.

Did it take 7 years for you to get it discharged?

[Goldfinger]

Another piece of evidence that the entire concept of getting yourself in huge debt to pay your school is just insane. School should be free (government funded) end of story. How do they expect to you build op a life if you can start by paying off debts ?

If you're even thinking of doing it, do it now before the new bankruptcy laws go into effect next month.

[Doofy]

Originally Posted by baddebt

-I have been in business for a little over 2 years. I want to grow the business but I need more money. I can't make more money because I need to grow the business.

There are almost always ways and means around such obstacles.

• What is your business specifically?
• Where are you at with it? (how many customers, where are you getting customers from, etc..)

If you don't want to put this info out publicly, PM me. I'll see if I can figure out some suggestions on how to bump your profits up a bit.

[baddebt]

Originally Posted by screamingFit

If you're even thinking of doing it, do it now before the new bankruptcy laws go into effect next month.

New law? Next month? I need to google that. I wanted to make a decision at the first of the year. More stress.

[baddebt]

Originally Posted by Doofy

There are almost always ways and means around such obstacles.

• What is your business specifically?
• Where are you at with it? (how many customers, where are you getting customers from, etc..)

If you don't want to put this info out publicly, PM me. I'll see if I can figure out some suggestions on how to bump your profits up a bit.

PMed...

[Millennium]

Originally Posted by Goldfinger

Another piece of evidence that the entire concept of getting yourself in huge debt to pay your school is just insane. School should be free (government funded) end of story.

Up to a certain level, it is. How much education a person needs depends heavily on what they want to do with their lives, and even then there can be a large amount of variability. Education is a key to success for many, but it is not the only path. Too many people nowadays take degrees and never end up using them; they take the degrees because it's Just What People Do. Why do this?

By the way, this particular case does not seem to be a matter of student-loan debt, and I don't know of anyone who's managed to pay that much tuition on credit cards (and believe me, I know people in even worse situations than this. This is, in many ways, a shame; student-loan debt would be far preferable because of the lower interest rates.

Now, on to baddebt: do not declare bankruptcy unless it cannot be avoided. As it stands now, if your credit cards are always paid on time, your credit may actually be pretty good; find out about this. Assuming it's remotely decent, see if you can get a debt-consolidation loan from a reputable financial institution (a bank or credit union would be best). This may or may not reduce the amount you have to pay initially, but even if it doesn't then the interest rate will certainly be lower, so you won't be paying as much for as long.

You may also want to consider a credit counseling service. Most companies will be more willing to work with you if they find out you're using one of these. Again, do some research and use the one which seems best for you.

But in any case, bankruptcy is like taking a nuclear weapon to your finances: it'll destroy your debt, but it'll destroy a whole lot of other things in the process. As such, it's something to be avoided unless there is truly no other way. I don't think you're quite at that stage. I understand that things look grim, but you're not out of luck just yet.

[His Dudeness]

Originally Posted by baddebt

Did it take 7 years for you to get it discharged?

No, it took a total of about 6 months once we got an attorney. It takes 30 days once you see a bankruptcy judge for it to be discharged.

[His Dudeness]

Originally Posted by baddebt

New law? Next month? I need to google that. I wanted to make a decision at the first of the year. More stress.

I think the news laws put the decision of Chapter 7 or 13 in the hands of the bankruptcy court.

[Eriamjh]

People who file for bankruptcy are p*ssies, IMHO. They use it as a tool to avoid payment of debts they willingly took on, but just don't "feel" like paying back because it means they might not be able to spend their money on more toys for themselves.

$25K is nothing. Instead of avoiding it, talk to a financial advisor on the best way to pay it off. If you are a college student, then welcome to the real world. Everyone has debt in some form or another. Stop driving a new car and get something used so you can send more money to the creditors.

Bankruptcy is meant for people who cannot possibly get back on their feet after medical bills or other disasters have slammed them down? What's your excuse?

Sorry. I have no sympathy. I've always paid my bills. I've never been happy with them, but I accept my responsbility to society. I think bankruptcy is a coward's way out. It has its purposes, but just becase you have debt doesn't mean you can throw it away. You should use it as a last resort.

[ghporter]

Except for the venom in Eriamjh's post above, he's right. A financial advisor is the first place to go-not a bankruptcy attorney. Most credit card companies are more than willing to work with customers to restructure or consolidate balances-it's better for them because they will actually get paid, and better for the customer since it shows a willingness to work on the debt instead of throwing in the towel.

And is your business incorporated? If not, what were you thinking?!?! ANY business can run into problems, and NOT incorporating is just asking to get your butt in a sling. DO IT RIGHT NOW. Once you're incorporated, you can even start looking for government grants to get your business on track. With a two year track record, you probably can get quite a bit of help. Start with a call the the nearest office of the Small Business Administration.

Bankruptcy really should be a difficult thing to do. It should be the ultimate, truly last option. It sounds like all you have is a plastic dependency problem, which a good credit counsellor and some time talking with credit card companies can remedy fairly easily. Don't go for the apparently "easy way out" when it isn't either easy or truly a way out. Been there, done that, still working on correcting errors in my credit records almost twenty years later.

[baddebt]

Originally Posted by ghporter

Start with a call the the nearest office of the Small Business Administration.

[Kvasir]

Just as an aside, remember that as of Sept. 1, the federally mandated free annual credit report service has been enacted for the entire country.

go to https://www.annualcreditreport.com/cra/index.jsp - you are entitled to one free report per year from each of the big 3 credit agencies (although I notice if you want your FICO score, you have to pony up a few bucks). As another post mentioned, as long as you have not been negligent with your monthly credit card payments, your credit may actually be fairly good - that may put you in line for a debt consolidation loan at a reseanably rate (better then the interest rate on those cards at least).

[Ozmodiar]

Well everyone has pretty much covered what needed to be said, but let me reiterate:

1. All credit card debt? Don't file.
2. That young? Don't file.
3. Credit may actually be good? Don't file.

Good luck!

[baddebt]

I've got hope...thanks!

[sworthy]

I worked at a small law office that did a lot of bankruptcies...

If you're still seriously considering bankruptcy, ask a lawyer for a bankruptcy worksheet that details the levels of assets you're allowed to keep while still declaring chapter 7 (remember, values are "garage sale prices", the value of your clothes, furniture, etc is a lot less than you'd think)

If you don't have a lot of assets, declaring bankruptcy is a fairly painless process. It gives you a second chance - just remember that it's your last. Declaring bankruptcy multiple times is a bad idea.

Also, you probably know this already, but school loans (and alimony) are the two types of debt that you can't get out of.

It's been awhile since I worked with this stuff directly, but feel free to PM me if you have any more questions.

[buffalolee]

Before banckruptcy:
Average interest on a loan with good credit= 5%
Ability to buy a house = very good

After banckruptcy: 15% - 20% for a loan
Non-existant unless at a high interest rate

Don't declare bankruptcy unless you are willing to live with the consequences. Borrowing money in the future will be a lot harder and costlier. Short term gains != long term consequences

[jasonsRX7]

Focus all your efforts to pay off the card with the lowest balance first, and pay the minimum payment on the rest. Once the first card is paid off, do the same on the next lowest balance card.

[Cody Dawg]

FACTS:

1. You cannot discharge student loans through bankruptcy
2. You will now be forced to file a Chapter 13 and not a Chapter 7 due to the new bankruptcy laws passed that make it extremely difficult to file for a complete discharge. The most likely venue now is just a repayment plan that is overseen by a federal magistrate with a payoff period of between 2 to 4 years.
3. Bankruptcy attorneys are now going to be held accountable - legally - for bankruptcies so you will pay more for a bankruptcy and have less of a discharge.
4. Most credit card companies, if you tell them that you are going to file for bankruptcy, have a special department that will discharge some of the debt and lower interest rates (or eliminate them completely) so that they recoup more of their fees and don't have to deal with a bankruptcy.
5. Do NOT sign any contracts with any company that "reduces debts or reorganizes debts" if you are going to file for a bankruptcy. They most often make you ineligible for a bankruptcy - it is in the fine print - and make a bankruptcy more difficult.
6. When you get ready to see an attorney run an Experian credit report and another, different, credit report and make sure you have ALL of your debts listed. You may find something else on there that you were not aware of which can be reorganized for bankruptcy.

I suggest that you see a bankruptcy attorney (my next-door neighbor was one and is now a federal bankruptcy judge) before you make any decisions and by the way, see a GOOD one. Don't go to some cut-rate attorney. It's VERY important.

Good luck!

[bstone]

Originally Posted by Eriamjh

People who file for bankruptcy are p*ssies, IMHO. They use it as a tool to avoid payment of debts they willingly took on, but just don't "feel" like paying back because it means they might not be able to spend their money on more toys for themselves.

Not completely true. Recall, if you miss a payment you get "ratejacked" to an insane interest rate of 29.99%. Often this occurs not as a result of you sending in a late payment but the company screwing you.

Additonally, this can occur do to "high utilization" of your cards, which lowers your FICO score and thus puts you at a lower standing with the credit grantors.

[ghporter]

Originally Posted by Cody Dawg

FACTS:You will now be forced to file a Chapter 13 and not a Chapter 7 due to the new bankruptcy laws...

Chapter 13 used to be the "better option" anyway. It shows "a willingness to repay the debt," while putting all sorts of things on hold, and preventing things like foreclosure.

With that in mind, it's still not a "good option." Consolidating debts and negotiating lower rates on them is a much better way, it usually costs nothing, and it does not leave a negative mark on your credit history.

[Kvasir]

Another thing to note. Every time an unsolicited credit offer or insurance offer arrives in your mailbox, that means some agency accessed your credit report. The frequency with which your credit report is accessed affects your FICO score - too frequent access can lower your score.

So, opt out - https://www.optoutprescreen.com/?rf=t and stop those unsolicited access to your credit report (plus it stops that unwonted crap mail from showing up in your post box - especially since the last thing you need is yet another credit card).

[baddebt]

Originally Posted by Kvasir

So, opt out - https://www.optoutprescreen.com/?rf=t and stop those unsolicited access to your credit report (plus it stops that unwonted crap mail from showing up in your post box - especially since the last thing you need is yet another credit card).

Done!

[saddino]

Originally Posted by Kvasir

Another thing to note. Every time an unsolicited credit offer or insurance offer arrives in your mailbox, that means some agency accessed your credit report. The frequency with which your credit report is accessed affects your FICO score - too frequent access can lower your score.

This is not true. Your credit score is generally only affected if you apply for credit, such as filling out one of those unsolicted credit offers. Those mass mailings, in and of themselves, do not affect your score a whit.

See this article for more info on credit scoring myths.

Nevertheless, opting out of mass mailings is still a good idea so you don't 1) tempt yourself and 2) don't have to deal with as much junk mail.

[wdlove]

I'm sorry to hear about your situation baddebt. Sounds as though you have got very solid advice. I wish you the best of luck. Seeing a lawyer is very important.

[SirCastor]

If you can pay your bills now, continue to do so. Credit can be a rough thing, but widdle them down. I know you're in quite a bit of debt, but bankruptcy is not a good idea. I worked in the Morgatge industry for a little while. We wouldn't touch anyone who had declared bankruptcy in the past 5 years.

Additionally, on an opinion note, I think too often in our culture we're using bankruptcy as an easy fix. It was designed to help people that were really in trouble. A way to give them a chance to start over because otherwise they're going to prison, and losing everything. It doesn't sound like you're in that situation. Sure you're not very happy with your current situation, but if you can take care of yourself, and pay your bills, you're doing pretty well. A lot of people have that problem.

Because you're a small business, you may look into the various grants the government has available to help folks like you. I haven't researched them, but they may be able to give you that growth you need to earn some more money, and pay off your debts.

[Kvasir]

Originally Posted by saddino

This is not true. Your credit score is generally only affected if you apply for credit, such as filling out one of those unsolicted credit offers. Those mass mailings, in and of themselves, do not affect your score a whit.

See this article for more info on credit scoring myths.

Nevertheless, opting out of mass mailings is still a good idea so you don't 1) tempt yourself and 2) don't have to deal with as much junk mail.

Well, I don't wholly buy that article's claim. About 16 or 17 years ago, I did try to take up one of the pre-approved offers that came my way, via unsolicited mail. My "pre-approved" offer, was refused however, and the official written reason was "excessive inquiries in credit report" (or something to that effect). My credit record, other than these numerous, unwanted hits on my report, has always been, and is, flawless (I'm 42 - got my first credit card when I was 18).

So, they may not literally alter your FICO score, but they can affect how creditors evaluate your status (I know, "soft" inquiries are not supposed to count against you, but seems the overall number of them can, if it gets"too big").

[Niakoro]

Here's a crazy idea.. Have you talked to a bankruptcy attorney? Most will offer some free advice based on your specific circumstances... I'm a lawyer, and I do this for my clients considering bankruptcy, and every other bankruptcy attorney I know does the same... Hell, I'VE gone and gotten free advice from an attorney on the same issue...

A licensed attorney is more likely to give better advice than strangers on a computer forum...

[turtle777]

Originally Posted by jasonsRX7

Focus all your efforts to pay off the card with the lowest balance first, and pay the minimum payment on the rest. Once the first card is paid off, do the same on the next lowest balance card.

Not a good advice.

Focus on those cards with the highest interest rate first. Make minimum payments on all cards, then put every dime you can afford in extra payments towards the card with the highest interest.

-t

[turtle777]

Originally Posted by Kvasir

So, opt out - https://www.optoutprescreen.com/?rf=t and stop those unsolicited access to your credit report (plus it stops that unwonted crap mail from showing up in your post box - especially since the last thing you need is yet another credit card).

BEWARE !

Read this before you sign up:
http://www.gripe2ed.com/scoop/story/.../11/11737/1557

-t

[Cody Dawg]

ghporter:

Chapter 13 used to be the "better option" anyway. It shows "a willingness to repay the debt," while putting all sorts of things on hold, and preventing things like foreclosure.

With that in mind, it's still not a "good option." Consolidating debts and negotiating lower rates on them is a much better way, it usually costs nothing, and it does not leave a negative mark on your credit history.

True! Especially since they will force you to pay the debt ANYWAY - and then you will have repaid the debt AND you will have a bankruptcy on the record.

kvasir: Thanks for the link. I appreciate it. Every single day I receive like 20 credit card in the mail. I'm sick of it.

[Kvasir]

Originally Posted by turtle777

BEWARE !

Read this before you sign up:
http://www.gripe2ed.com/scoop/story/.../11/11737/1557

-t

Why? It works just like the author says:

---
"What had gone wrong? I went back and studied the OptoutPrescreen.com website again. Well, OK, they had said that "you may continue to receive certain pre-approved offers for several months," and it had been about eight weeks. Perhaps I was just being impatient, but why was I getting more junk mail than ever?"
.
.
.
"But then, just about exactly two months after I signed up at the OptoutPrescreen site, the pre-approved offers stopped coming. It's almost like someone turned off the tap. Over the last few weeks, I haven't gotten any junk mail clearly marked as a pre-approved offer."
---

That was my experience too, when I signed up a few years ago. It took awhile for the junk mail to stop flowing, but it certainly did. It's been more than 2 years since I've received a "pre-approved" credit card offer or unwanted insurance offer. And I no longer have any inquiries on my credit report other than those I have knowingly approved (eg. switching cell phone services a year ago, that kind of thing).

[turtle777]

^^^

The OptoutPrescreen privacy policy would be a concern to me.

-t

[Kvasir]

Originally Posted by turtle777

^^^

The OptoutPrescreen privacy policy would be a concern to me.

-t

The web site is owned and operated by the CRCs (and is part of the Federal mandate, which includes providing the telephone and postal opt-out services). These companies already can, and do, exactly what the privacy statement says. You're opting out does not change the disclosure of info amongst the CRC's or thier direct affiliates - they do that all the time already (eg. a landlord checks your credit with Experian - within 24 hours, the record of that check is shared with the other 3 CRCs).

By opting-out, you are telling them NOT to share that information to anyone outside of the CRCs themselves.

In fact, they have to disclose the information collected, to be sure all 4 CRC's know you have opted out.


""Optoutprescreen.com or the Consumer Credit Reporting Companies, may also disclose any of the information collected, as described above, to affiliates of the Consumer Credit Reporting Companies, which are companies that are related to one of them by common ownership or affiliated with one of them by common control, or to the associated consumer reporting companies who utilize a nationwide consumer reporting company system and that may have information about you."

[Cody Dawg]

The fact is that ALL of our private information is rarely "private" any longer.

Especially since when you call most of the credit card companies and you're giving your private information to people in OTHER countries.



Talk about a national security breach!

Why not look up Condoleeza Rice's private information - especially if you're in India or Pakistan? They've got it, I'm sure!

[jasonsRX7]

Originally Posted by turtle777

Not a good advice.

Focus on those cards with the highest interest rate first. Make minimum payments on all cards, then put every dime you can afford in extra payments towards the card with the highest interest.

-t

You know, I hear people argue both ways, and I can see paying mainly on the highest rate card if the rate is substantionally higher than all your other cards. But if it's not, then the sooner you get one paid off, the sooner it comes off your credit, and the sooner you can apply that payment to another card.

I mean, if you had one card with a $5000 balance, and one card with a $800 balance, wouldn't it make more sense to get the lower balance one paid off so it doesn't linger on and on while that $5000 balance is getting paid off?

Plus, you're able to see actual results sooner and feel like you're accomplishing something, and be more likely to stick to it.

[Cody Dawg]

I paid off $80K in debt on loans and car debt about two years ago. It was the best thing I've ever done. I have no credit cards now, no loans, nada. I pay basic bills and I have one credit card for personal use and one for business use and I don't use the personal use credit card at all and the business card is paid off by the company and that's that.

Getting rid of debt is painful, but worth it.

[turtle777]

Originally Posted by jasonsRX7

You know, I hear people argue both ways, and I can see paying mainly on the highest rate card if the rate is substantionally higher than all your other cards. But if it's not, then the sooner you get one paid off, the sooner it comes off your credit, and the sooner you can apply that payment to another card.

I mean, if you had one card with a $5000 balance, and one card with a $800 balance, wouldn't it make more sense to get the lower balance one paid off so it doesn't linger on and on while that $5000 balance is getting paid off?

Plus, you're able to see actual results sooner and feel like you're accomplishing something, and be more likely to stick to it.

If you have similare interest rates on several cards, then your next move is towards those cards that max out the limit. Any card that utilizes more than 40-50% of the credit limit will have a negative influence on your credit report.
Just getting rid of the debt on one card does AFAIK NOT influence your credit score. The number of credit card balances does not go into the equation, but the utilization and payment history.

-t

[Scandalous Ion Cannon]

My buddy filed for bankruptcy 3 years ago. He got a credit card after 2 years.