Is there a formula debt to income ratio for determining whether or not to file?

[Debtor]

Is there some kind of formula or way to determine if one should plug along and try to repay their debt or just hang it in and file? If I presently have no collections or lawsuits it appears I have some time to breathe without paying my unsecured creditors. Would it be wise to use all my disposable income to pay down or pay off school loans now so that I will owe less or nothing after the bankruptcy?
Thank you,
Debtor

[CATCHMEIFYOUCAN]

You can always inquire with a debt management program. Just to see what you debt/income ratio is but dont agree on any repayment plan (debt mgmt programs most likely are rip offs (unless you apply with a legit program listed by the courts). You just want to inquire as your thinking of contemplating Bk. Depending how far you are into debt, if BK ends up being the end of the road, I would stop paying creditors and save your money for a lawyer, unless you are going pro-se.

Catchmeifyoucan

[TX Bluebonnet]

I sort of remembering hearing something about if you can repay your debt off yourself within 5 years then you may want to consider doing that instead of filing bk, taking into consideration that the longest payment plan in a chapter 13 is 60 months. I guess that's assuming that you don't qualify for a chapter 7.

Someone please correct me if I'm mistaken.

[Cali]

I agree if you can afford to pay the bills off yourself in 5 years and still function in life without hurting, then you should do it yourself instead of filing BK. But if you pay all the bills and still can't make it, you should really consider filing.

[HHM]

Not really a formula per se...

Do the exercise in this thread http://www.bkforum.com/showthread.php?t=11328
and see where you stand.

Also, a starting rule of thumb, you start getting into BK territory if your total unsecured debt is at or more than 2/3 your gross annual income.

[Phillymanhere]

Great question. For me, and I suspect most people here, deciding to file for bk was both an objective and subjective decision.

I'll start objective--I knew my credit card amounts were getting really high, really disturbing high and I think this is very relative. For me the debts approached my yearly salary. And I was using one card for monthly items so I can use my salary to pay off debts.

I visited a Consumer Credit Counseling Service and they did a bunch of calculations and came up with a monthly figure that I would pay for 5 years--I knew I could not pay that monthly figure, maybe 1 month out of the year, not 12 months out of a year.

Next I had a few conversations with a debt settlement company. They came up with a three year figure at a monthly payment I couldn't afford.

Somewhere along the line, I got to to the unthinkable: bankruptcy. It became clear that this was the best option, the only option that offered the possibility of real relief, and not fantasy (I'll get a payraise, get an inheritance) relief.

Now to the subjective--Bankruptcy felt right, almost immediately. But ... I had embarrassment, a sense of failure, yada yada.

I'm interested in politics and my first thought was, "damn, I can't run for office if I file."

It didn't take long for me to say, "What the eff do I care about what other people think? If I wanna run for office, I'll do like everyone else--get my staff to draft a statement explaining I hit hard times after my divorce, but have now recovered, and look forward to serving my neighbors, blah, blah."

Gradually, it hit me .... damn the shame! ... Let's say the worst and friends of mine who are lawyers find out I filed. So what? ...Part of recovery from this condition, it seems to me, is to accept where I am without shame and to concentrate on a better future.

Basically, bk was the only thing that could really settle my mind and allow me to think I could have a future. I came here, read tons of threads, then visited 4 lawyers. Will pay downpayment to lawyer next month .... will file most likely in July.

I am now totally clear this is the best thing for me. I'm sleeping better, I'm dreaming of a future; I'm rooted in the present. I'm taking better care of my health, exercising. So much energy got freed up when I decided on this ... Yes, I'll probably get scared t my 341 meeting. But right now, this isn't even a difficult decision. I'm proud of myself for facing up to reality, taking responsibility and deciding on the best step to take--a step that is completely legal, ethical (in my eyes) and created in the law just for people facing situations like mine.

Anyway, that was my process. Hope it helps.

[epiphany]

I am now totally clear this is the best thing for me. I'm sleeping better, I'm dreaming of a future; I'm rooted in the present. I'm taking better care of my health, exercising. So much energy got freed up when I decided on this ... Yes, I'll probably get scared t my 341 meeting. But right now, this isn't even a difficult decision. I'm proud of myself for facing up to reality, taking responsibility and deciding on the best step to take--a step that is completely legal, ethical (in my eyes) and created in the law just for people facing situations like mine.

Well said. I feel exactly the same way.

ep

[sunshine mary]

Philllyman we followed the same path it seems. It is so nice to think of a brighter future for myself and my family...I felt the burden lifted once I made the decision to file. I wish I had done this a long time ago !!!