We are in serious debt and I have no idea what to do. We are now living on credit, which started several years ago before job losses, medical issues, etc. Until a few years ago, our credit score was in the upper 800s so I still wasn’t worried. We are due a fairly large inheritance which would pay off our debt, but it is tied up in court and may be for years.
I don’t think credit counseling may work because, as I understand it, they help structure your debt so it can be paid off in 5 yrs. Even with zero percent interest we couldn’t do that.
I don’t know anything about filing bankruptcy; specifically, are we willing and able to keep our house and 2 cars so we can work? I’m also worried about the 7 yrs. following bankruptcy, but if our inheritance comes through during that time, can we still pay off our creditors in full and erase the bankruptcy? How do we find the best bankruptcy lawyer?
I really need answers that focus on giving us guidance to get out of our predicament, not about how we got in it (which would make more sense if I was willing and able to share some details). We have always been frugal (buying clothes at good may, etc.), so no lectures please.
We haven’t missed some payments yet (I’m having to use money from my 401k to manage everything), but our interest rates keep going up. We need to do something now before our situation gets worse. Help!
David M, we both work! How do you think we could manage this long if we didn’t?! I was laid off in a corporate buyout before 21 yrs. with my previous employer and took a k/yr. pay cut to get a job. I merely make k, so that is significant, but I had trouble finding equivalent pay. (Now I’m happy just to have a job in this economy.) I work in the oil services industry and my husband for the airlines. Neither industry is doing well, so 1 of us losing our job is a real possibility.
Incidentally, we don’t have cable and many other luxuries. We don’t even have a washer, dryer or dishwasher. They price too much in electricity, so we never bothered fixing them when they broke. Our central A/C went out late summer. We live in TX, so it may have to be replaced, but we bought 2 window units to get by for now.
Sorry, I noticed a typo above. Our credit score was in the upper 700s, not 800s (I wish!).
Ed Atun 9:02 pm on February 9, 2010 Permalink |
Bankruptcy would work in this case..
Judy 9:02 pm on February 9, 2010 Permalink |
Bankrupcy could end up your only option if you are in that deep. You can usually exclude your house, and one car anyway, from the bankrupcy – then you have to continue making those payments, of course.
Good luck.
Real Estate Guy 9:02 pm on February 9, 2010 Permalink |
you need to talk with a BK lawyer and ask these questions. Usually the first meeting is free.
Make sure to bring ALL the information with you. Bills owed, etc.
David M 9:02 pm on February 9, 2010 Permalink |
Get a job and work like the rest of us?
Peilthetraveler 9:02 pm on February 9, 2010 Permalink |
2nd job, cut costs as far as your food bill goes by living off rice and beans (you could save up to 500 per month just by doing that), maybe cut cable(that will make you bored enough that you will constantly want to be working just to have something to do)
Bankruptcy is probably not the best thing to do right now especially since you will be getting a large amount of money soon. Pay what you can. If you have alot of equity in your house, why not refi and pay off some bills? Then its structured over 30 years and not 5 and you can put the money back into the house when you get your inheritance.
aidenislove 9:02 pm on February 9, 2010 Permalink |
ok, if you really know how to control your spending and can stick to it, then the first thing you need to do is try and get more credit cards and call to ask for higher limits. Don’t use a single dime of the increase. You should then do a balance transfer to take advantage of as many rate promotions as you can. You pull from the smallest card possible and even try to free it up completely. Then you can juggle it back onto that card with their transfer offer and so on.
When you do this be sure that your credit card holds a maximum transfer fee (usually $199) Paying the $199 and getting a better rate is still usually better than paying the high finance charge every month. Another option you can do, if you are done charging up your cards is to just stop paying them. Yes your credit will suck afterwards, but you’ll be able to use your money again. You’ll get offers in the mail to pay off your balance at a fraction of the balance. Just be sure to hold on to your favorite card and continue being up to date so that you’ll at least have one handy in good standing. Be sure it isn’t the same bank as another card you’re going to default on or it’ll get defaulted on too even though you remained current. If all you have is the credit card debt then I’d just stop paying them before I’d go filing for bankruptcy.
Judy 9:02 pm on February 9, 2010 Permalink |
There are gvt programs that are allowing home buyers to restructure their mortgages. I saw it on TV this morning.
They won’t give you money, but they will make your mortgage a normal 30year fixed at a normal rate.
Make sure that the website you look at ends in .org
Paula M 9:02 pm on February 9, 2010 Permalink |
First….STOP touching your 401K!!!!!!! You don’t use retirement money to pay consumer debt…
If you don’t have enough money to go around….you have to prioritize…
Food
Housing
Electric
Car/Gas
Then if there is money left….pay minimums until the money runs out til next month……LEAVE the 401K alone…
Second, call the Chapter 7 Trustee’s office and get a list of the REQUIRED financial education classes to take….You can’t even file until you have finished an approved class….