Question about whether to file Ch. 13 or not...

[lvceline]

Hey there guys,

I need some opinions about my situation. I know only I am able to decide, but at this point I'm frustrated with my position. I have quite a bit of unsecured debt. It's all in credit cards. It's about 22k total and I've been in debt for years. I'm not going to pretend like I have good spending habits, because I don't, but most of the money I pay in credit cards each month is minimum payments and of course most of that just goes to interest so the balances aren't dropping.

Here's the real dilemna: I can afford to pay on all my cards and have never missed or been late. I just keep paying what I need to pay to stay out of trouble but meanwhile they never really get lower. I feel like I need some relief. I feel like I've long paid any principle on all my cards and I just keep paying on interest. Does anyone think that filing Ch. 13 and getting a hold on the interest and percent paid back would be a smart thing. I don't have a mortgage and like I said, I can make my minimum payments, I just am treading water here, and I feel like possibly filing Ch. 13 would get some control over things. Any opinions? I dont' want to get to the point where I need to file because I've lost my job or I can't make my payments. Any comments are appreciated!

[astrosfan]

A Chapter 7 would eliminate that credit card debt immediately. It sounds as if you could pay the 22k if you were to get on a budget. Bankruptcy, in my opinion, should only be used as a last resort. You don't want to ruin your credit for 7 to 10 years if you're able to pay your bills.

If I was in your situation I wouldn't file, but instead pay it down.

[lillymarlene]

22K doesn't seem like that much, especially if you are still working. Could you possibly negotiate with them to get the interest rate lowered? I wouldn't file in your situation, since you never know, some day you may really need to. You're allowed to file chap 7 every 8 years. Anything could happen, for example, a large unforseen medical expense.

[mountanddo]

I think the answer is "it depends" and really is your personal preference. I too, have about 20k in CC debt and was just paying the minimum payments and still using the cards because in order to live and pay the minimum I had to use them. The balance never seemed to get lower, only higher. At the rate I was going I was never going to pay those cards off. I certainly won't claim to have good spending habits either. When I lost my job, I had to stop paying for them because I could only cover my basic living expenses with the job I got to replace the one I lost. It's been a year since then and I have just been served a summons. Having someone come knocking at your door on a Saturday morning is enough to wake anyone up that is hoping everything will just go away. I spent years paying on CC never getting anywhere close to paying them off and not having any money left over for the things I really should of been using my money on. Now I'm in a situation where I have to file and my car is on it's last legs and once it dies, I'll be taking the bus because I can't afford to replace it.

Maybe for some people 22k in CC debt isn't a lot depending on how much you make but for someone making 15.00/hour it basically takes your whole paycheck to cover the monthly payments. If you keep paying only the minimum payment you will never pay them off. I'm assuming you are only making the minimum payments because that is all you can afford which leads me to believe you don't make 100k a year.

This is only my opinion but maybe filing chapter 13 rather than a chapter 7 might be something worth looking into. Only you can decide.

[keepsmiling]

You'd need to give more background as to income and expenses to get more informed opinions. It is kind of a small amount to pull out the big guns for. If you don't have to BK yet, I'd explore other options first.

You might want to consider stopping payment and then trying to settle. Your credit will be trashed but maybe would take less time to recover. How many cc's are we talking about here? The fewer you have, the better the chance they will settle.

Or perhaps you could do the Dave Ramsey thing ( I know, I know...) and cut back in other areas, pick up a second job, whatever, and get it paid off. I don't think they will negotiate interest rate, unless you can get a balance transfer offer... I know they are still out there for a select few. Call and ask. Hopefully you aren't continuing to use them.