Please help!!!!

[Jamieleigh88]

Hi everyone. My husband and I have come to a conclusion to file Chapter 13. We have our first visit to our attorney in 2 days. I had no idea about filing bankruptcy so for the past week or so I've really been trying to do my research. My husband technically is just filing, I look at it being both of our credit but it's just his. We first discussed debt consolidation or settlement but after all the horror stories and reading more on Chapter 13 I think it is a better fit for our situation. Ok a little background- I'm 24, my husband is 29, we started out on our own very young at 17,18 and immediately started usiing credit cards, nothing crazy though. We purchased our home March of 2008, perfect credit everything was going great. We have always had debt but over the years it just seems to have gradually building, I know because of our stupidity. I just want relief and not get a stomach ache going to get the mail, or checking our bank account. And seeing the "Make minimum payment paid off in 10, 14, 17 years" on our credit card bills and that not changing in the past 5 years I'm just stressed, and feel like we will n\ever see the light at the end of the tunnel. As of now, his credit score is around 670-690 and never miss a payment on anything. But that is why we're working, to pay our bills. I don't have $260 to fix the car, I don't have $310 to fix the lumbing under the kitchen sink because we have to pay everything else. As of right now, we are in roughly $20,000 in cc debt. We owe $51,000 on our home, $500 mortgage payment which is so low that we should have no problem to pay. Never been a day late on one payment, but I just can't take it anymore. We want to have children like now but can't because of our financial situation. My husband makes about $43,000 a year. I am a waitress and make maybe $16,000-$20,000 a year which on paper it shows I make maybe $12,000. We have a $320 a month car lease. We should easily be able to afford all of our basic bills but... because of all the loans and cc's just can't. Right now we spend roughly $1000 on our cc's and loans. I know we will have a payment filing chapter 13 I am just hoping it won't be too high because what's the point then? Our whole goal is to be debt free, be comfortable and have a savings which we don't other than his 401k which has maybe $20,000 in it. We are young, with no guidance and no parents to turn to for help or advice. Please, any help or tips or whatever would truly be so appreciated! And also, when we go into our attorneys office and tell him we want to file chapter 13, is he going to look at us like well your not behind on your bills, you have a good credit score so you don't need to file. We literally live paycheck to paycheck and I'm just sick of it. Anyone know maybe a clue as to what our payment would be? $3800 a month take home for the both of us, $2500 goes out in bills each month, $1000 of it in cc's. Also we only have maybe $10,000 equity in our home if I calculated that correctly. Thank you for listening to me ramble!!

[159515951]

We also had perfect credit when we went and saw an attorney. It really doesn't matter how good your credit is if you're buried in debt up to your eyeballs. You can't possibly afford to take on any additional debt, so the value of your ability to get a loan is pretty much moot.

The monthly payment will be dependent on the money you have left over at the end of the month after accounting for all reasonable expenses. The worst case scenario is a 100% payback plan, where you'll essentially pay all of those credit cards without interest until they're paid off. The payment period typically ranges from 36-60 months, so assuming you don't have any debt other than the credit cards, your monthly payment for a 100% plan would be $555 (36 months) to $333 (60 months). In either case, that's less than the $1k/month you're spending right now just to maintain the debt.

You can reaffirm the car lease and have it become part of your plan, which typically makes a difference in the monthly plan payment as well. It may or may not be the above amount plus the amount of the monthly lease payment depending on a number of factors (e.g. is it a 100% plan?). We chose to surrender our leased car and buy something reasonable with cash ($3,800 "beater"), and it was a good decision in our case. Just know that if the lease ends during your Chapter 13, you're going to have to go through the exercise of getting the court's approval to take out a loan for another vehicle unless you have cash saved up for same.

I assume you're planning to keep your home, and you should with a payment that low. Your mortgage is likely longer than the Chapter 13 (> 5 years), so you will probably continue paying the mortgage outside of the plan payment. This is all based on my experience, and I'm sure some of the rules vary by state, district, etc.

Good luck!

[lillymarlene]

Hi, I'm 25/48 months into my chapter 13, and I agree with you. To some people $20K debt doesn't seem like much, but it is if you have difficulty keeping up with it. Sometimes I wish I had filed over 20 years ago when my unsecured debt was only $12K instead of letting it blossom to $200K. I think you're on the right track. Chapter 13 is a whole lot better than forever playing the old balance transfer game.

[Logan]

I think you should be calling Dave Ramsey rather than a BK attorney. You really need to take a look at your budget and spending habits because ch.13 won't be any easier than tightening your budget.. I bet you could easily knock down that credit card balance by 5K or more in a year without much of a lifestyle change and from there paying that down would be a piece of cake.

Logan

[btbeme]

A married couple should be able to easily and comfortably live, save, invest, and play on your estimated income of $63k a year in just about any city in the nation. And doubly so if your mortgage is indeed only about $500 a month.

What you seem to have is a budgeting problem.

That said, I am not completely convinced that a BK is a good fit for you. Chances are that a Ch 13 will simply do what an honest effort on your own part will do - force you to make a tight budget and pay down your debts. The difference is a Ch 13 will own you for the next 3-5 years, whereas a SERIOUS effort at debt paydown will allow you some flexibility. There are very few times that I would suggest considering a debt consolidation program, but this is one of those times.

You have the income. You have small bills and expenses. The only thing you don't have control of is your debt. I hesitate to recommend a BK for such a small amount of debt. That seems like a big hammer for a small nail.

I did some quick calculations... Using some well-documented strategies endorsed by some well-know public figures in the financial advice industry, I believe that you could - with some serious focus and will - be completely debt free in about 5 1/2 years. That includes paying off your mortgage in full. No bankruptcy could give you that.