Should I file for BK?

[Tyler19]

I owe 17K in my name. My girlfriend and I have been paying on it together. We can afford the monthly payments and afford everything else we need no problem. It will take us forever to pay this debt off though. Together we owe greater then 20K. Some day we want to have a family and buy a home. I'm 21 she is 20.

What are your opinions on my situation.

thanks.

[lrprn]

I owe 17K in my name. My girlfriend and I have been paying on it together. We can afford the monthly payments and afford everything else we need no problem. It will take us forever to pay this debt off though. Together we owe greater then 20K. Some day we want to have a family and buy a home. I'm 21 she is 20. What are your opinions on my situation.

A few questions for you to answer first to help us help you sort things out, Tyler....
- Are you in school?
- If you are in school, when will you finish and will you increase your income when you get your first post-school job?
- Is some of the $17K you owe student loans?
- Are you working now? If you are, how much have you made from every income source over the last six months?
- What state do you live in?
- Is your official residence in the same state you live in now? (I'm wondering if perhaps you are a college student and are in school living away from home?)
- Do you own a car? If you do, how much equity do you have in the car?
- Do you own any other assets? (A house, for example, or other property)

If you will answer these questions, it will help us help you better. Bankruptcy might be a good option for you, or it might not. We'll do our best to help you figure that out if we can.

[Tyler19]

okay here we go!

- Are you in school?
Not in school, Never went to college.

- If you are in school, when will you finish and will you increase your income when you get your first post-school job?
no

- Is some of the $17K you owe student loans?
none.

- Are you working now? If you are, how much have you made from every income source over the last six months?
I would say about Gross$7,500 Net$6000

- What state do you live in?
Michigan

- Is your official residence in the same state you live in now? (I'm wondering if perhaps you are a college student and are in school living away from home?)
I lived in Michigan for 19 years, moved to Virginia for 2 years, and now I just moved back to Michigan in June

- Do you own a car? If you do, how much equity do you have in the car?
Do not own a car.

- Do you own any other assets? (A house, for example, or other property)
No Assets, No savings... nothing

All of my debt is on 2 credit cards, 1 GE money-bank card ( was for a bed ) , and one dell card for my computer.

Thanks a lot.

[keepmine]

IMO, you're problem is lack of income and not the debt itself. Even if you file bk, you won't be able to support yourself on a gross of $1200/month.
First thing you do is stop using those cards and then, get better jobs or start looking for some pt work.
Many of us here bk'ed over some huge multiples of $17K. Save the bk for when you may really need it.

[JRScott]

You're both pretty young. Are you healthy?

Your debt to income ratio is very bad for a long term solution. If you are healthy though you both might could take on additional jobs and knock out the debt.

However if one or both of you suffer from medical or health issues that might not be possible.

Ultimately it is up to you if you need to file bankruptcy. Just keep in mind once you file for a chapter 7 you cannot file again for 10 years. So you'll need to make some life adjustments to keep you from the same situation again.

Do you have a mortgage or rent?

How much of your take home pay is the mortgage or rent?

You mention no car, so how much do you spend in transportation each month you think (either cabs or public transportation?)

How much are your utility payments (including like internet and cell phone, land line phone, electric, gas, water, sewer etc)?

The problem with a bankruptcy is that unless you can show that you have less than 100 dollars left a month after allowable expenses you'll be forced into a Chapter 13 not a Chapter 7.

[Lindsay]

I wouldn't file bankruptcy for such a low amount. You should probably go to the Dave Ramsey's site and try to get your income up by working some odd jobs, delivering pizzas, ect and do his debt snowball. You are so young and you may end up in a mess down the road and be unable to file BK because you already did on a small amount.

[JollyGG]

I agree with everyone else who said that you need to increase your income.
I also agree that an immediate solution is to get a second job and start working on that debt.
However, I don't belive that a second job will be a good long term solution. You need a better primary job. You need a carreer.
Take an personal inventory of your skills and interests. Try and match possible carreers with these and then figure out what you would need to do to get into each carreer on your list. Do you need more school, an apprentiship, an entry level job into the carreer you want, ect. Then decide on the carreer path that will be the best fit for your goals and situation and go for it.
Don't work a job for the rest of your life. Find a carreer. You are still young enough that you have time to find the right fit, but you are old enought that it is time to get going.

If you do decide to file for bankrutpcy. Make full use of the clean slate you will have to plan your future.
With no major debts, and nothing tieing you down you can plan whatever future you want.

[Boscoe]

Don't waste your time with Dave Ramsey. He's an idiot.

[lrprn]

Thanks for answering my questions, Tyler. Keepmine and JR Scott have already told you that the real problem in your situation is you aren't earning enough and I agree. $12,000/year take home pay is barely above the US poverty level $10,210/year for one person's income in the lower 48 states - http://aspe.hhs.gov/poverty/07poverty.shtml

Right now you appear to have no big ticket assets (no house, no car) for your creditors to go after if you decide not pay your non-secured debt. However, since you are living in Michigan now, Michigan does allow wage garnishment up to 25% - that would be disastrous for you.

I suggest that you set up meetings for free initial consultations with 3-4 bankruptcy lawyers in your area. It's really the only way to find out reliably if filing bankruptcy will help you or hurt you more at this point.

Keep us posted about what you find out, ok? And keep asking questions - we'll help you sort things out as much as we can.

[JollyGG]

As to the questions about weather or not you should file based on the debts you already have. There are really two simple ways I think you can tell.

1. Stop using your credit cards TODAY. Can you pay your bills? Can you pay all of your debts? Try it for a few months.

2. Write all your income and debts down. Your spreadsheet should look like this:

Income

Rent
Utilities
Groceies
Phone / Cell phone
cable
transportation costs
Other monthly bills

Periodic bills that need to be budgeted for each month.
Medical bills (expecially for ongoing conditions)
Car repairs
Tags for your car
Insurance
ect.

Subtract you income from your monthly expenses.

Now add together all of your debts.
List the total amount owed. List the montly payment due.

After you subtract your montly expenses from you income do you have anything left to pay your debts? Can you realistically trim your budge anywhere to find the money if it is not there? Can you increase your income enough to pay your debts? Can you find enough money to pay your debts more than the minimum payments? Can you pay your debt off within the next 5 years?

If the answer is no then bankrutpcy is probably your best option. However, as others have said make sure that that is your only/best option because you can only file every 10 years.

[emaretta]

I would definitely not file for BK.
This solution should be your absolute last.
Right now I agree with everyone else. You need to find a higher paying career.
In the short term, use the pyramid pay down budget on your credit cards.
Order your credit cards from highest interest to the lowest.
Take the highest interest card and say the min monthly payment is $75. Start paying an extra $100 to it to make it $175. To find an extra $100, really tighten up your budget. If you're unable to find an extra $100 a month then find a second job or a higher paying one.
Once that card is paid off, take that $175 and apply it to your next card. So if that min payment is $50, start paying $225 on that card.
Keep applying this payment schedule to all your debts until they're paid off. You should be debt free in less then 3 probably 2 years. It takes discipline but you should be able do it.
Most of us here found our lives financially unbearable with a lot more debt than 17K and with houses on the line, cars, families, etc. We either had unexpected medical bills, addictions, divorces and were unable to meet even the monthly minimums and were facing foreclosues, and being hounded by creditors because we were months behind on payments.
If we come across as filing bankruptcy is your road to freedom, it is only when there really isn't other way. For someone like you, you still have many options open to you.

Good Luck!

[Tyler19]

I see most of you said look for a better job income. Michigan's economy is horrible. I have no college so almost any place I go that pays decent wont even interview me. I cant afford to go to school with the current debt I have no. I cant really afford anything except for my bills and maybe a few extra things per month. I have definitely learned my lesson with managing money and I have learned a lot. I know that I will never get myself into a position I am in now. I have no assets no savings no college and can not get a nice paying job plus I'm in debt 17k+. If I ever get stuck paying for my own rent or an emergency happens I'm screwed. Right now it would take me about 4 years to pay off my debt.
I'm trying to look at this as a business standpoint. If it took me 4 years to pay off the debt would i be better off in 4 years with a bk or with no bk.

As far as the person who said something about the wage garnishments, how does that work and where could I find some info on that.

Thanks.

[leftyf]

Tyler,
Get the H out of Michigan now...I'm in Ohio and things are pretty similar, though not quite as bad. Unless you have some very pressing need to be close to family, head for AZ, NV, or anywhere on either coast. Florida is pretty good also. The factory-belt is no place to be, especially if you are not educated. The Midwest is soon to be a third world country. Rather than complain about the economy, I'd make the move asap while you're young. And no, I wouldn't file bankruptcy at your age with a relatively small amount of debt. I was in the same amount of debt at your age (in 1990 dollars) and got out of it rather easily...I know it doesn't sound easy, but it is quite possible with hard work and a few lucky breaks which may just come your way, I hope.
Good luck and sorry for the editorial.
Lefty

[CindyLou]

Info on Garnishment: Are you at or near minimum wage? If so you might be ok right now just not making payments while you decide what to do with the debt. Of course I wouldn't do that without the advice of an attorney. You will have to decide what is the best course of action for you. If you decide that filing is the best thing for you and you want a fresh start then that is what you decide. We all file for different reasons. I agree that if you file now you can't file again for 10 years, but if you know that going in then you are fully informed you you cannot get yourself in this position again. Take our advice and go see three attorney's for free consultations and see what they say. Welcome and keep us posted!!

Michigan Wage Garnishment

Federal statute limits withhold up to 25% of disposable earnings per week, unless the debtor's earnings are at or near the minimum wage, 15 USC 1673, in which case no withholding is allowed.

Time Limit: Garnishment writ expires 91 days after issuance, MCR 3.101(B)(1)(a)(ii). A new writ must then be issued and served.

Stay of Wage Garnishment: Courts may grant the debtor an "installment payment order," MCL 600.6201, MCR 3. 104(A), which bars wage garnishment, provided that the debtor pays as required by the order. Such an order does not prevent garnishment of bank accounts or income tax refunds. MCL 600.6245, MCR 3.101(N). Some courts nevertheless do not allow any garnishment while an installment payment order is in effect.

[Tyler19]

I have thought about moving back to Virgina but the problem with that is. I have my debt still, and the cost of living is out of my league even with a higher pay. Id still be in the same boat. I'm honestly considering filing bk so I can start fresh, and then move back out east, or maybe Chicago.

thanks.

Tyler,
Get the H out of Michigan now...I'm in Ohio and things are pretty similar, though not quite as bad. Unless you have some very pressing need to be close to family, head for AZ, NV, or anywhere on either coast. Florida is pretty good also. The factory-belt is no place to be, especially if you are not educated. The Midwest is soon to be a third world country. Rather than complain about the economy, I'd make the move asap while you're young. And no, I wouldn't file bankruptcy at your age with a relatively small amount of debt. I was in the same amount of debt at your age (in 1990 dollars) and got out of it rather easily...I know it doesn't sound easy, but it is quite possible with hard work and a few lucky breaks which may just come your way, I hope.
Good luck and sorry for the editorial.
Lefty