Drowning in debt

[captk]

My only income is from Social Security and a pension. Can I file chapter 13?

[shipo]

Yes, or a Chapter 7. I strongly suggest you contact a few attorneys and schedule a consultation.

[Carmella]

One of my friends filed Chapter 7 and she had only social security and pension. I agree to see an attorney and find out your options.

[CottenSch]

If you are drowning in debt and can't pay your bills, you need to act quickly to rebuild your credit. You have a number of solutions available, with bankruptcy as a last resort. We recommend reading the publication Surviving Debt, Counseling Families in Financial Trouble, put out by the National Consumer Law Center.

[shipo]

If you are drowning in debt and can't pay your bills, you need to act quickly to rebuild your credit. You have a number of solutions available, with bankruptcy as a last resort. We recommend reading the publication Surviving Debt, Counseling Families in Financial Trouble, put out by the National Consumer Law Center.

I really don't understand folks who opine "...with bankruptcy as a last resort"; that makes zero sense. The fact is, most folks wouldn't be on this web forum if they were solvent and had a reasonably good shot at paying back their outstanding debt. Failing that, my opinion is, "bankruptcy should be the first option". Why? Two main reasons (there are many others):

1. As others will recommend (and have repeatedly recommended), bankruptcy is the only way to assure your debts are discharged when not paid in full.
2. Bankruptcy is pretty much the only way to assure you won't need to pay taxes to the IRS on the unpaid part of the debt.

[justbroke]

I went through six-figures of my 401(k) trying to stay afloat. Like others, I was programmed that bankruptcy was "a last resort." Now, I like most of Ramsey's stuff, but telling people that bankruptcy is the last resort is not helpful. Sure, it's the nuclear option but no one should consider using their 401(k) to preserve their credit. It is only robbing your future to fix your debt mistakes in the present.

I believe that the reason why the debt management companies will continue to say that bankruptcy is the last resort, is because they want to be your second or third choice. The first, unfortunately, is that people dip into retirement savings to stay afloat. Okay, I think that's good for maybe six months. But after six months dipping into retirement is just extending your retirement date (or shortening your retirement years). The second, is debt management. They make money and many people end up in bankruptcy anyway. I think of debt management as a pause. It can save some people from bankruptcy, but who would have ever expected COVID-19? Things happen.

I'm not advocating filing bankruptcy at every disappointment or loss of income. I'm just suggesting that it's not always the last resort! Each individual must balance their financial picture and their financial future. When you're 20-something and get in debt, there's not much in that 401(k) anyhow. When you're 50-something and debt knocks on your door, the choice is to never retire or dip into that 401(k)? Hardly a choice in the latter years.

[Franco]

My only income is from Social Security and a pension. Can I file chapter 13?

Research Bankruptcy Attorney's in your area, read reviews, trust me on this! Most offer free consultations, take advantage of that. Most Chapter 7's you will pay the Attorney up front anywhere between $1,500-$3,000. Chapter 13's it will be higher most likely but not much, most offer to pay them off in the Chapter 13 plan. I can be wrong, that's how my State/Attorney's are.

If you want to save property, vehicles, etc, Chapter 13 might be the way to go. If you want to just get rid of debt, and fall under the Median income level, you're good to go with a Chapter 7. Keep in mind EVERY State is Different so a Good Attorney is the way to go.

Don't listen to anyone that says Bankruptcy is horrible, the last resort, you're going to hell for it, LOL just do it and get on with it. Look at it as a business decision Period.

Good Luck and Godspeed!

[Carmella]

BK was basically the last resort for us, but I wish the stigma, etc was not blocking us from realizing it SHOULD NOT be the last resort. If we understood better we could have been out from under the debt much earlier and had our fresh start at a younger age. My husband will be year out from full retirement age and I will have almost 10 yrs to continue working. I wish we knew sooner so we would have more time with our working income instead of dealing with my full income, but my husband's lower retirement income. I just hope it ends up to be higher than what we are living on now during BK. If we understood it better we could have been in the position to make some home repairs/upgrades instead of spending years paying on credit cards where the interest was so high that our payment hardly brought down the principal we could have been making a BK payment that we knew would be done in 5 yrs!

Live and learn.