Advice

[ConfusedChi]

I have met with an attorney and I am able to file under Chapter 7 and was wondering if anyone can give me advice on whether or not to proceed with this.

I am able to keep my car (which was my biggest concern--since I need this for my line of work). I am 28, have about 26K in credit card debt, 87K in Student Loan debt, and a Condo which currently has no equity thanks to this market.

I eventually want to go back to school and do not want to keep worrying about making money to live. I am employed but after all my bills are paid, have nothing left over. Seems a BK will give me a fresh start but I am afraid of the consequences I will face in the next several years.

Any thoughts or advice would help. Thanks

[frustrated7]

It is highly unlikely that you would be able to discharge your student loans in BK. That is something your attorney should have told you.

I can tell you that I wish I had filed BK many years ago instead of waiting all this time. I would be in a much better position had I done this years ago, but I didn't know much about BK and was terrified to do that. So I spent the past five or so years making minimum payments and never making progress.

Others on this board are likely to be more help than I can be.

[Trixie007]

There's not really enough info to go on here... What's your income? Are you keeping the condo? Do you just have no equity in the condo, or are you upside down? Is your income stable? Can you get a hardship deferral on the SL's to try to tackle the cc debt?

If you are currently making it, but just scraping by, do you have the ability and/or resources to work another part time job to boost your income? You don't say if you have kids or if that would be possible... Sorry, I have more questions than answers.

You are young, and 28k isn't too outrageous to be able to pay off in 3 years or so if you could generate some more income... and you may need the BK card down the road if things get worse.

[lrprn]

...have about 26K in credit card debt, 87K in Student Loan debt, and a Condo which currently has no equity thanks to this market.

First of all, your student loans will *not* be discharged if you file Ch 7 bankruptcy. Since you are not completely disabled and won't suffer severe hardship if you continue to pay your student loans, you don't meet any of the very rigid criteria that would allow this to happen.

You can discharge the 26K in credit card debt in Ch 7. However, filing bankruptcy is not to be done lightly.

I am employed but after all my bills are paid, have nothing left over.

Here are some important questions to ask yourself before pulling the bankruptcy trigger:

- If your credit debt is completely discharged, does it free up enough income monthly to start making a real dent in your student loans? They are the big financial gorilla in your room at the moment, and they are going to take years to pay off unless you take a job that allows some or all of them to be forgiven (for example, you join the military).

- Once the credit card debt is gone, can you live on what is left over WITHOUT EVER using credit for at least a year? You won't have reasonable credit again for at least a year, maybe two, of on-time payments after your Ch 7 bankruptcy is discharged.

- You said you want to go back to grad school in the future, and you can get additional student loans after filing bankruptcy. However, carrying the heavy student loan debt you already have, how long will it take you to pay off even more? Here's a link to a student loan calculator. Plug in your current loan figures and first find out how long it will take you to pay off the loans you already have - http://apps.collegeboard.com/fincalc/sla.jsp . Then add in how much more you have to borrow to finish a graduate degree.

Now....please share what you found out and if you think filing Ch 7 could still be the best answer for you in the long run.

[ConfusedChi]

There's not really enough info to go on here... What's your income? Are you keeping the condo? Do you just have no equity in the condo, or are you upside down? Is your income stable? Can you get a hardship deferral on the SL's to try to tackle the cc debt?

If you are currently making it, but just scraping by, do you have the ability and/or resources to work another part time job to boost your income? You don't say if you have kids or if that would be possible... Sorry, I have more questions than answers.

You are young, and 28k isn't too outrageous to be able to pay off in 3 years or so if you could generate some more income... and you may need the BK card down the road if things get worse.

My Income is 40K, I am keeping the condo. I am not on the mortgage, but am on title (which is a good thing), and right now there probably is no equity on there. I am renting this condo out now and am -$300 on my mortgage vs. rent.

My income is stable (I work on salary). And I am also a real estate agent. But it is tough right now(I was doing Real Estate before I got the day job). With me wanting to go back to school and having to take prerequisites, I am not sure if I can do another job. After school, with the profession I am targeting, I can make a ton more than what I am making now. But this program requires 2 years of just school and no work also..

I have had 1 SL servicer give me a reduced payment plan, am on forebearance on another ($40k at 3.25%), and making regular payments on another (no more forebearance allowed--I have used all allowed time).

In terms of my cc, I was able to close one of them (11K) and they put me on a payment plan for 5 years at 2%APR. Another(8K) closed today and they put me on a payment plan 0% APR for one year. The remaining credit card, I cannot do anything with.

Thanks

[ConfusedChi]

First of all, your student loans will *not* be discharged if you file Ch 7 bankruptcy. Since you are not completely disabled and won't suffer severe hardship if you continue to pay your student loans, you don't meet any of the very rigid criteria that would allow this to happen.

You can discharge the 26K in credit card debt in Ch 7. However, filing bankruptcy is not to be done lightly.

Here are some important questions to ask yourself before pulling the bankruptcy trigger:

- If your credit debt is completely discharged, does it free up enough income monthly to start making a real dent in your student loans? They are the big financial gorilla in your room at the moment, and they are going to take years to pay off unless you take a job that allows some or all of them to be forgiven (for example, you join the military).

- Once the credit card debt is gone, can you live on what is left over WITHOUT EVER using credit for at least a year? You won't have reasonable credit again for at least a year, maybe two, of on-time payments after your Ch 7 bankruptcy is discharged.

- You said you want to go back to grad school in the future, and you can get additional student loans after filing bankruptcy. However, carrying the heavy student loan debt you already have, how long will it take you to pay off even more? Here's a link to a student loan calculator. Plug in your current loan figures and first find out how long it will take you to pay off the loans you already have - http://apps.collegeboard.com/fincalc/sla.jsp . Then add in how much more you have to borrow to finish a graduate degree.

Now....please share what you found out and if you think filing Ch 7 could still be the best answer for you in the long run.

Thanks for your response. Please look above to my response to the other questions others had.

I a fully aware I cannot discharge my SL debt and that is ok with me. If i do pull the trigger, I will be able to live off the money I would be paying the credit cards with monthly. This would just require control, which I should have had anyway.

The program I am trying to go back to school for requires full time attention, and I cannot be employed during this time. It would be just too tough. I will be though, if successful, be able to make more money (2-3X more than I am now--medical field) In some cases, the amount I owe now on the CC is 75% of the tuition I expect to pay.

I am not sure if BK in the long run is the best thing. I really am confused.

Thanks again.