sickening problem

[marstoad]

My wife and I messed up good. We almost owe $200,000 in credit card debt. Our options are limits. We make pretty good salaried (combined it is around 100k after taxes). We are debating using a CCCS, chapter 7 or chap 13. There are issues with all. The CCCS is making us give him 80% of our money and then we still have our house, car, daycare, heat, food, gas and all of that. We calculated it out and even after cutting out phone, cable, internet and all of that we were still $-500.

Then there is bankruptcy. I could file for one of those. I would be close to exceeding the minimum limits for chapter 7. Is chapter 13 any better then me calling up the cards and saying we are going bankrupt and what can they do for me?

In bankruptcy what happens if you have a joint account with some but you really have no power over it. Does it get taken in chapter 7. If we were to go bankrupt how would that effect our corporate and government cards?

Thanks,

mars

[SinkingFast]

Ch 13 has a big advantage over DMP plans. You have the protection of the automatic stay of the BK Code working for you. You only pay back the Creditors that file claims. The Trustee fixes the interest rate. Many plans don't even pay back at the 100% level. Once your 3-5 years is up, you're done.

In a DMP, they cram all your debt at their interest rates into a 5 year payment plan. Some Creditors don't participate leaving you to pay some outside your DMP on your own. There's no Automatic Stay protection. Creditors can call and harass you the whole way.

To help us help you better,.......... We need your State, family size, and Gross household income for starters. Do you have mortgage or auto loan payments. Owe child support or alimony.

[woeisme]

Unless your family size is HUGE and you live in a very expensive part of the country, I doubt you will be able to file for CH 7. If take-home AFTER taxes is 100K, you are going to have to probably file CH 13. It doesn't matter that your income is close to the amount, it's the combined income of your household that they use, so both partners salaries get calculated into it. If you have joint CC accounts, they will go after your partner if you declare alone. I agree that trying to deal with CCCS is not going to help, I went that route years ago and here I am filing CH 13 after 3 years of trying to pay it back that way. Good luck.

[nc73]

quit your jobs and file 6 months later, you will be below the median income

[WantToBeDebtFre]

Another thing to consider is how much equity you have in your home, car, etc. A Chap 13 would work good for you because then you know you'll be out from this debt in 5 years, max. If you don't file how long realistically will it take you to pay off $200K? You could still be paying on it 10-15 years from now or longer. If you do decide to file you'll need to adjust your lifestyle to live within your means and not use credit cards anymore - ever! That's what I'm going through right now. If you don't change then even if you file bankruptcy 10 years from now you could be back in the same situation.

[marstoad]

sinkingfast - CO, 3 (2adults, 1 child), $~156,000, mortgage - $1430/month, 1 car is paid off the other is $500 a month, no child support.

Thanks

[imbroke2]

Holy cow! You make that and still have $200K in CCs?! Somebody likes to shop don't they? We have 3 kids, mortgage $1716/month and and make about 100K less than you! What I could do with that salary!
Sorry, I guess I'm just jealous about the salaries, no answers here though. I'm thinking you'll be put into a 13.

[marstoad]

Yes, I understand that not many people are crying a river for me but none the less we screwed up. Keep in mind that we haven't been making these salaries for very long. The reason we owe that much is because we basically paid for school on our credit cards (7 years for me and 8 for my wife). Then I paid for a band for 4 years. Now we have both graduated and make a decent salary but can't get ahead. We are both going negative each month. I didn't even want to post this stuff because I can't even believe the situation I am in given the money we make but I am not sure what else to do and will take any advise. imbroke2 - what would you do with my money. My minimum monthly payments on the CC's is almost equal to our take home. Then we have mortgage, daycare, heat, insurance, gas and food. i drive a 10 year old car, my wife has a 4 year old car but nothing special, 1 nice TV, no boats, atv's or any recreational equipment.

Thanks

[JollyGG]

It sounds like you are a great canidate for a chapter 13 bankrupcty.

You already said that credit counseling won't work, you make too much for a chapter 7.

Other members have some great links that explain the various chapters of bankruptcy well. But here is a brief summary.

Your total income is figured. Then you are allowed a certain amount for living expenses based on where you live. X amount for clothing, X amount for food, ect.

Once all of you allowed living expenses are subtracted from your income you have a set amount of disposable income each month. That disposable income is paid to the courts each month for 60 months. That money is used to pay your creditors. Once the sixty months is over any remaining debt to the original creditors is wiped out.

It sounds like this may be your best option.

[B12]

It is probably easy to go into that much debt in schooling.

Wow, I hate to even bring this up, but student loans are not dischargeable but cc debt is.

[marstoad]

What are the major downsides to chapter 13? I have read a fair amount about it but will little things like my government credit card be taken away from me? How does a joint account effect chapter 13. I have a joint account with a relative that has a decent amount of money in it but I don't really have any right to it and it isn't mine. My name is just on it in case something were to happen to him.

I assume that calling CC companies and telling them your are probably going to file chapter 13 and what can they do for you only gets you so far? Or is that a legit option. I have tried to some level and they have reduced our rates a little but not even close to what I would consider fair.

[$$only4ever]

Most attorney consultations are free for the first appointment. I would suggest that you contact some attorneys. It sounds like your bankruptcy could be complicated without seeking expert legal advice. Good Luck.

[Boscoe]

I would say they are actually in better shape than if they had $100k+ in student loans to pay back. As was stated, student loans are NOT dischargeable, so if you paid for schooling with plastic, bk is one way to get rid of it.

Forget the DMP. Most people do not succeed with this, and some (ask lrprn) come out of it worse off than before.

Go see a couple of attorneys, find one you are comfortable with, tell them EVERYTHING and go for it!

[ohwell]

wow, I would think 13 is the way to go. unless wife quits her job and you guys wait for the 6 mos if that gets you under the median? I would consult some attys due to your situation.
good luck to you - at least you are making the decision to try improve your situation.

[treehugger1]

Mars, Don't worry about "messing" up to get where you are. You ARE here. Now you need to solve the problem and I commend you for doing so. I make $100K+ with ~$55K unsecrued, ~$77K student loan debt, and $20K secured. I don't even own a house.

You have some choices, BK 13 sounds as if it is a definite possiblity.

Here is a link to a different approach. I think the site is generally religous in nature, so the mods here can delete this is they feel that is appropriate. It is the story that intrigued me. This guy took a far different route:

http://www.boundless.org/2001/regulars/money_talks/a0000556.html