Credit card companies are getting better in dealing with debt discharged during bankruptcy. I know they charge heavy interest but getting creative to get it out of bankruptcy filers.

Anonymous wrote:

Anonymous wrote:You are thinking Op would do chapter 7 but I think chapter 13 is going to be much better if she wants to keep her car, retirement etc. chapter 13 is reorganization of debt and you still end up paying some of the debt including CC. Creditors have gone smart about it and it’s not as easy as it looks. Dealing with lawyers and paying them is another concern.

Not to mention, it's debt she incurred and is responsible for...the whole "just declare bankruptcy" advice is insidious and a sign of what a crap nation the US has become. But might as well be like dear leader I guess? Trump is such a shining example of responsibility.

It’s fine. Credit card companies charge so much because they understand that many many people are not going to be able to pay off their debts. It is 100% part of their business model. I think something like a half a million people declare bankruptcy every year. Most of that is individuals, not businesses. Something like one out of every 50 people declare bankruptcy.

Anonymous wrote:You are thinking Op would do chapter 7 but I think chapter 13 is going to be much better if she wants to keep her car, retirement etc. chapter 13 is reorganization of debt and you still end up paying some of the debt including CC. Creditors have gone smart about it and it’s not as easy as it looks. Dealing with lawyers and paying them is another concern.

Chapter 7 is fine for OP. She has almost no assets. No house, I’m sure no savings or investments, no expensive art or musical instruments.

If she sells the car and buys something cheap for cash she will be fine there too. I think about a $5000 worth of car equity will be exempt from consideration if you file a chapter 7 bankruptcy.

All you guys going on and on about how bad a chapter 7 bankruptcy is? I think you’re approaching it from your own mentality where you do have assets to protect, where you have a house you wanna keep. You probably have savings in retirement that you could use to pay off debt. You just are having trouble paying the debt. You may be younger, married, with higher income and less debt.

Sure, in that case restructuring the debt and working out payment plans, buckling down for a few years makes sense.

OP’s situation is very different. Her earning potential is low in the future unless she goes back to school.

Her health is poor, at 42. It’s not gonna get better. (“lose weight “is not very useful or actionable advice right now.)

She has very little to lose in filing for bankruptcy, section 7. She has no assets that she’s gonna lose. The only thing she’s gonna lose is an ability to borrow more money for several years. But she’s not supposed to be borrowing money anyway right? The biggest concern is if it impacts her ability to rent an apartment. But she’s a single child free adult. She can handle a little instability in her living situation. It’s not like she needs a place for her little kids to live. There’s always someone who will rent you a room and you can deal with a lot for just a year or two until you find yourself back on your feet.

And someone asked why it’s so important for somebody to buy a house or a condo? That’s because a key to retirement is having a paid for housing situation, a pension hopefully, Social Security, hopefully and a nest egg to give you some more income in retirement sure if you have a great pension and a great Social Security Benefit, and great retirement savings of your own, a paid off house or condo is less important than.

But either way, if OP spends the next 5 to 7 years, trying to pay down this debt that is equal to her current income, she’s going to end up starting her fifties with no down payment for a mortgage, no significant retirement funds started, and no ability to earn more income in a less physically demanding job. There’s literally nothing of benefit to her if she doesn’t discharge the debt.

OP mentions that her mother is very ill and on dialysis. I'm sorry to say this but OP, if you mom passes away, is there a plan for funeral costs? You don't want to get stuck even worse. Please make sure there is a plan that doesn't involve you going into even deeper debt.

Anonymous wrote:

Anonymous wrote:Do you really think she would be able to buy a condo with her income after declaring bankruptcy? I don’t think so.

One thing I am sure of is that if she stays on the course she's on now, she will not be in a position to buy anything in 7-10 years. It'll take her 5-7 years just to pay of of the car and the credit card debt! And she will have a hard time going back to school if she has to work extra hours to clear this debt.

So yes. Getting the debt discharged due to bankruptcy would allow her to go back to school, increase her salary, and start saving for retirement and a downpayment for a house or a condo. Yes, her credit rating will sink for a while; but it'll take her some time to save up the downpayment anyhow.

Plenty of people manage to buy a house even after bankruptcy. I'm reading that even to get a FHA loan, you typically just need to wait 2-3 years after a Chapter 7 bankruptcy.

https://www.fha.com/fha_article?id=305

I'm reading that for other types of loans, you can usually get a mortgage 4 years after a chapter 7 bankruptcy.

https://www.bankrate.com/mortgages/how-to-get-a-mortgage-after-bankruptcy/#how-soon

Yes, interest rates may be higher. But a bankruptcy is not the end of the world and it is exactly made for OP's situation.

OP’s situation is very bad and she would need money for a lot of other things and the only thing she can do is to increase her salary and may be suck it up and go to school.

Her situation isn't horrible. Her kids are grown, she earns enough to live on. But she's not going to be able to get ahead. And she can't earn a ton of money with overtime to pay down her escalating debt - she is in a physically demanding job, and is not in great health.

Not sure why buying a house or condo should even be a goal for OP. Millions of people rent. Always. Not everyone is cut out for homeownership. It's definitely not for people who are financially irresponsible.

Anonymous wrote:You are thinking Op would do chapter 7 but I think chapter 13 is going to be much better if she wants to keep her car, retirement etc. chapter 13 is reorganization of debt and you still end up paying some of the debt including CC. Creditors have gone smart about it and it’s not as easy as it looks. Dealing with lawyers and paying them is another concern.

Not to mention, it's debt she incurred and is responsible for...the whole "just declare bankruptcy" advice is insidious and a sign of what a crap nation the US has become. But might as well be like dear leader I guess? Trump is such a shining example of responsibility.

Chapter 7 or 13. This is going to be very messy at this age. Op should pay if she could and get out of this debt.

You are thinking Op would do chapter 7 but I think chapter 13 is going to be much better if she wants to keep her car, retirement etc. chapter 13 is reorganization of debt and you still end up paying some of the debt including CC. Creditors have gone smart about it and it’s not as easy as it looks. Dealing with lawyers and paying them is another concern.

Anonymous wrote:Do you really think she would be able to buy a condo with her income after declaring bankruptcy? I don’t think so.

One thing I am sure of is that if she stays on the course she's on now, she will not be in a position to buy anything in 7-10 years. It'll take her 5-7 years just to pay of of the car and the credit card debt! And she will have a hard time going back to school if she has to work extra hours to clear this debt.

So yes. Getting the debt discharged due to bankruptcy would allow her to go back to school, increase her salary, and start saving for retirement and a downpayment for a house or a condo. Yes, her credit rating will sink for a while; but it'll take her some time to save up the downpayment anyhow.

Plenty of people manage to buy a house even after bankruptcy. I'm reading that even to get a FHA loan, you typically just need to wait 2-3 years after a Chapter 7 bankruptcy.

https://www.fha.com/fha_article?id=305

I'm reading that for other types of loans, you can usually get a mortgage 4 years after a chapter 7 bankruptcy.

https://www.bankrate.com/mortgages/how-to-get-a-mortgage-after-bankruptcy/#how-soon

Yes, interest rates may be higher. But a bankruptcy is not the end of the world and it is exactly made for OP's situation.

OP’s situation is very bad and she would need money for a lot of other things and the only thing she can do is to increase her salary and may be suck it up and go to school.

Her situation isn't horrible. Her kids are grown, she earns enough to live on. But she's not going to be able to get ahead. And she can't earn a ton of money with overtime to pay down her escalating debt - she is in a physically demanding job, and is not in great health.

Do you really think she would be able to buy a condo with her income after declaring bankruptcy? I don’t think so.

OP’s situation is very bad and she would need money for a lot of other things and the only thing she can do is to increase her salary and may be suck it up and go to school.

Age 42, poor health, physically demanding job.

Debt due to overspending after divorce plus escalating loan balances.

Debt prevents her from getting more education (debt free) to increase her salary and get a job that is less physically demanding.

Working like crazy to pay off a debt at a relatively low income for 5+ years means giving up the opportunity to go to school, get a better paying job for that long as well; increases likelihood that illness or disability will further derail her plans to secure her future.

The best odds plan is to sell the expensive car you can't afford. Buy something cheaper. Yes there may be car repairs - or you might end up having to take public transport or even pay an Uber. It'll still be cheaper than $700/month for 5 years + high cost of insurance for a new car.

Once you have a paid for car, and a two year lease, declare bankruptcy and get rid of the burden of debt. Start with a fresh slate, and use the next two decades to put yourself into a better financial position. get a better paying job and start contributing to a retirement plan.

It 7 years or so, when you are 50ish, you can look into buying a condo or a small house where you can live in your retirement.

I doubt OP would be able to pay this in 3-5 years. She’s making minimum payments and it would take her 15+ years to pay this debt at the current rate. She’s also getting car refi so that would add another 7 years on her loan term. Her income potential is limited and this much credit card debt is going to take a while if close to minimum is paid. I am afraid with her health, things might deteriorate more.

Anonymous wrote:Credit card debt is more than one times annual salary!! Wow, that’s crazy! Op has auto loan on top of that. I did a rough calculation and her minimum payment would take about 25+ years to pay this off.

That is why some form of consolidation/lowering interest rates would be most beneficial. But OP has to change her attitude or nothing will help. Even with that it will take 3-5 years to get out of debt. And living frugally after that to avoid this situation again.

But OP thinks a $700/month car is something she could afford, even with all that debt, so there is a lot to process and change here.

Credit card debt is more than one times annual salary!! Wow, that’s crazy! Op has auto loan on top of that. I did a rough calculation and her minimum payment would take about 25+ years to pay this off.

Accc is a good advice or any other non profit credit management company.

I think OP should stick with her car and lowering the monthly payment makes sense. Car repairs are expensive and she should not have any unexpected expenses. Most important is to plug the leaks in spending and not extend yourself for future expenses.

I don’t see much for her to increase her salary since she’s already stretched by working 50-60 hrs/week.