should I file?

[Medport]

My debt is "only" about 17.5k all in credit cards. But I only make around 30k, and have mortgage, car lease payment, high student loan payments and a home equity loan. I have been contemplating this for about 6 months and finally spoke to an attorney a couple months ago. He told me to stop paying the credit card bills to save up to pay him. That's what I did and also recently got a small bonus and raise at work. I'm thinking it was bad advice as now my credit has taken a major hit and balances have went up due to late fees and interest increases.

Now I'm figuring maybe I could squeak by by getting a hardship program or something, but problem is with best possible scenario it would still take at least 8 years to pay the credit cards off. Also I have no health insurance and if I filed I could probably afford to get a cheap plan. I could also start paying extra on my home equity if I filed as I've only been paying the interest the past 6 years and it will come due in about 4. I'm not sure what will happen at that time, but know I need to start paying it down as much as I can and can't afford to if I don't file. I know I should'nt have gotten the new car last year and could dump it and/or the house, but think its better to keep them as I need a car and the lease is for only 2 more years. I just turned 40 and don't want to start over at my age with a new mortgage in a few years either, but it would make things easier as the home equity is eating up all the equity of the house and it needs a lot or repairs and the taxes, insurance and water are very expensive for the size/age of the house IMO.

Anyway, I guess my main questions are: does it sound like I should file and if so include the house and/or car? Also the attorney I talked to is'nt listed on BBB. I met him at a realtor's office in the town I work in, but his main office is supposedly in IN. He wants $1299 to file and that sounds about right and I turned in my paperwork a couple weeks ago, but have yet to pay him. I do have the money to pay it off right now. They said I can send a payment in to the main office, but I'm a little leery as they don't send a receipt or anything. How do you know for sure he is legit? His ad is in the phone book and he has a web page and states he has been in business for 22 years. Is there another place to look to confirm this info? thanks for any advice.

[BobWang]

You stated on another forum you were not going to file bk.....

[Medport]

I certainly did not, although I have not totally decided yet. I keep having second thoughts and some people are trying to talk me out of it. I was thinking of trying the hardship or extended payment options, but the more I think about it and do calculations, it still does'nt seem to add up in my favor. Of course filing is'nt that good either and I keep finding more cons to it too. There are just too many variables to make the right decision and whatever decision I make may turn out to be the wrong one. I got to do something though as the phone calls and letters are getting really annoying. Now they started calling on
Sunday!

[backtoschool]

I certainly did not, although I have not totally decided yet. I keep having second thoughts and some people are trying to talk me out of it. I was thinking of trying the hardship or extended payment options, but the more I think about it and do calculations, it still does'nt seem to add up in my favor. Of course filing is'nt that good either and I keep finding more cons to it too. There are just too many variables to make the right decision and whatever decision I make may turn out to be the wrong one. I got to do something though as the phone calls and letters are getting really annoying. Now they started calling on
Sunday!

Please ignore negative trolls that are not posting anything of value.


I think that 17.5 in debt is on the low side for filing bankruptcy, but it is a large amount of debt in relation to your income, so it probably makes sense to file. You will have to reaffirm the car lease if you file. Your student loans will not be discharged in the bankruptcy so no help there. I think you should check into consolidating your loans with the federal direct student loan income contingent program. Your monthly payments will be a lot less that way, since the payments are based on income.

[MeLLE159]

You need to read the stickies...Im filing because I know without a doubt that I cant afford to pay the bills without being given fresh start. You dont have med ins getting sick in a bad way can basically ruin your life. Do you have $? The bottomline is if you can make all your payments and not have any money left you may need a fresh start....

[Medport]

Thanks for the posts. I already checked into the income contingent program through my lender and they said it would only reduce my payments by about $70, but almost all of it would go to interest and they look at your income every year to adjust it. Maybe it is different if you call the direct number at the FinAid site instead of lender my current loans are through? I'll have to give that a try.

As far as paying the bills, I just "supposedly" got a raise but I have'nt actually seen how much it will go up. If I figure what I should be making at my main job, I will be just about breaking even without the credit card min. payments, which were about $350 before I stopped paying them. I do have a prn (as needed) job that I usually work 2 days a month and if I work those 2 days, adds about $225 for the month. So I would still be a little short adding that in. Although if you figure in the 2 extra paydays a year (as I was figuring it per month and I get paid every 2 weeks), that would add about $175. So theoretically I might be able to make the min. payments esp. if I can get a hardship program, but this is without figuring in expenses that always come up such as oil changes, clothes, medical, tires, anything breaking or needing replaced in the house or car, ect. Also it would take at least 8-10 years to pay the credit cards off optimistically and that's only if I did'nt use them at all. And like I mentioned before, if I did'nt file I would'nt be able to get health insurance or pay any on the principal on my home equity loan and I have to start paying on that soon.

So after analyzing the situation again, it still looks like I have no choice. Of course a better paying job would help, but in this area, LPN positions may pay $1-2 tops if you can find them. I was thinking of relocating to a higher paying area, but that is'nt very realistic as I would have to sell the house and take a loss and I'm sure cost of living and housing is more expensive in the cities that advertise that they pay double what they do here.

[backtoschool]

Thanks for the posts. I already checked into the income contingent program through my lender and they said it would only reduce my payments by about $70, but almost all of it would go to interest and they look at your income every year to adjust it. Maybe it is different if you call the direct number at the FinAid site instead of lender my current loans are through? I'll have to give that a try.

As far as paying the bills, I just "supposedly" got a raise but I have'nt actually seen how much it will go up. If I figure what I should be making at my main job, I will be just about breaking even without the credit card min. payments, which were about $350 before I stopped paying them. I do have a prn (as needed) job that I usually work 2 days a month and if I work those 2 days, adds about $225 for the month. So I would still be a little short adding that in. Although if you figure in the 2 extra paydays a year (as I was figuring it per month and I get paid every 2 weeks), that would add about $175. So theoretically I might be able to make the min. payments esp. if I can get a hardship program, but this is without figuring in expenses that always come up such as oil changes, clothes, medical, tires, anything breaking or needing replaced in the house or car, ect. Also it would take at least 8-10 years to pay the credit cards off optimistically and that's only if I did'nt use them at all. And like I mentioned before, if I did'nt file I would'nt be able to get health insurance or pay any on the principal on my home equity loan and I have to start paying on that soon.

So after analyzing the situation again, it still looks like I have no choice. Of course a better paying job would help, but in this area, LPN positions may pay $1-2 tops if you can find them. I was thinking of relocating to a higher paying area, but that is'nt very realistic as I would have to sell the house and take a loss and I'm sure cost of living and housing is more expensive in the cities that advertise that they pay double what they do here.

I think that consolidating your loan payments with the federal direct loan program will offer you the lowest payments. There are several income based repayment plans for student loans, and the one with the lowest payments is only offered through direct loans, the federal program. You can transfer your loans to direct loans and consolidate them so that you can be on that plan.

I think bankruptcy may make sense for you if you understand that you will not be able to file again for a long time, and that you are using up your chance to file on a relatively low amount of unsecured debt, so that if you ever have huge medical expenses or something that you cannot handle in the next 8 years, you will not be able to file again. Since a great deal of your debt is a heloc and your student loans, filing chapter 7 is not going to remove anything but the credit card debt. With that said though, it sounds like you have done your research and I think that bankruptcy will offer some relief. (but not total relief as mentioned above).

[Cristo]

Is your house worth less than what you owe on the first mortgage? If it is then you might be able to file a Ch 13 and strip off the HELOC.

One way or the other, you need to do something. Having health insurance is very important, and in my opinion, more important than paying the credit cards, especially since you have already missed payments. If you have missed more than one payment on the cc cards then your credit is probably close to toast anyway, so filing for BK will not make it much worse.

You budget should include money for house repairs etc. If it does not then you will not be able to make the cc payments for long anyway since something is bound to need fixing.

Of course, having said all that, you don't really need to file for BK now if nobody is suing you, you can just ignore the calls.

If you are not sure about your lawyer you might want to get a free consulation with a couple of others. It's not too late if you have not paid him the fee. I saw 5 before I decided on one.

Good luck.

[Medport]

Good advice Cristo. The lawyer did'nt think the Ch13 was advisable as I don't want a long drawn out payment plan that would'nt really save me much in payments anyway. Maybe I should look into talking to another lawyer too. I already turned in the paperwork, but haven't heard anything from them, although they are probably waiting for me to send a payment in. I guess I can ignore the calls for awhile longer, but they are getting annoying and now I'm getting letters saying they are about to close my accounts and raise interest rates to the maximum permanently unless I send a payment in right away. I wonder how long you can go before they start trying to call your work or garnish your wages?

[Silver26]

You wont be sued for wages for a while, Definitely get some other consults and tell them you want all your options. Is your house going to be another problem down the road being an interest only setup? I would hate for you to file and then have issues paying your mortgage in 4 years.

[Medport]

No, sorry I did'nt clarify. I had only been paying the interest on the home equity loan as that is all I could afford for the first 6 years. I recently started paying an extra $20-25 or so, but I know I will have to start paying at least $200 extra a month to get it close to paid off in the next 4 years. I'm not sure what will happen if its not paid off by then, but I'm sure if it is only a couple thousand it will be much easier than if its at the current almost 13k. The interest on that is variable, but only about 3.75% right now. My regular mortgage is fixed at 5.7% and I've never missed a payment or been late on that.

[Cristo]

Yes, find out all your options. I found that the credit cards called like crazy when I first was late on payments, but now, after being over 30 days past due, I only get a couple of calls a day. If you talk to them they stop calling for that day at least. It gets easier as you go. I just told them, I would really like to pay but I just can't. If they keep going I just hang up.