Need some solid advice - bk or not?

[soulcontrol]

I need some solid advice to find out if going BK is right for me.

I recently lost my small business which was my only means of income. The business was a sole prop and carries a debt of about $50K between Business Line of Credits and Business Cards. I have tried my best to make the minimum payment but since my business is gone I can't maintain these debts. The total minimums for the two cards are about $600, which I can no longer maintain.

I have other personal debts, which include two other credit cards, best buy card, car lease and a mortgage. I have recently been getting some work as an independent contractor and have been able to manage these other payment by the skin of my teeth.

My question : Since I am no longer making payments to my Business Cards should I stop paying all my credit cards? I don't mind ruining my good credit (as I have no choice) but will maintaining my other cards/debts help maintain my credit? If not then, why pay any of my credit cards? Should I consider going BK?

I would greatly appreciate any advice. I want to speak to a BK attorney but looking to get as much feedback/opinions prior.

Thanks

[MSbklawyer]

I need some solid advice to find out if going BK is right for me.

Thanks

If your business was a sole proprietorship, you are almost certainly personally liable for those debts. If you default on some credit cards but not others, your credit rating is going to be damaged regardless of whether you stay current on other credit cards.

You should consider bankrutpcy. But you should also consider whether there is a way to avoid it. It's not something you should do lightly.

What are the prospects of your business picking back up? What kind of employment prospects do you have?

Whether to file bankruptcy is largely a financial decision, but not purely. There are human factors to consider too.

[logansdad]

File

[soulcontrol]

If your business was a sole proprietorship, you are almost certainly personally liable for those debts. If you default on some credit cards but not others, your credit rating is going to be damaged regardless of whether you stay current on other credit cards.

You should consider bankrutpcy. But you should also consider whether there is a way to avoid it. It's not something you should do lightly.

What are the prospects of your business picking back up? What kind of employment prospects do you have?

Whether to file bankruptcy is largely a financial decision, but not purely. There are human factors to consider too.

Thanks. Well, I own an apparel company and it will take atleast 2 - 3 years to pick up again. So, it will be some time before I can actually pay those debts off. I am not as considered about my personal (non business) debts.

My thought was that Wells Fargo will try to settle the business debts. If I can negotiate a reasonable amount that I can manage, I prefer to settle it and rebuild my credit. However, if that will not help and keep my credit down for 7 years then I might as well go BK and start with a clean slate. Unless, my assumptions of BK are incorrect.

I just assumed the following :

No BK : Bad Credit = Higher Interest Rates but with debt.

Or

BK : Zero Credit = High Interest Rates (If any) and ZERO debt.

Are there any other factors I am not considering?

Thanks again

[MSbklawyer]

I just assumed the following :

No BK : Bad Credit = Higher Interest Rates but with debt.

Or

BK : Zero Credit = High Interest Rates (If any) and ZERO debt.

Are there any other factors I am not considering?

Thanks again

No, as counter-intuitive as it sounds, bankruptcy can actually help a credit score in some situations. It radically lowers your debt to income ratio. A person who is not paying their debts because they just can't, but has a high debt to income ratio looks worse on paper than a person who is not paying their debts because they don't have to because of bankruptcy, but has a low debt to income ratio because their debts have been discharged.

Now, that being said, don't use bankruptcy to give you the opportunity to incur even MORE debt. Stay out of debt. I hate to sound like Dave Ramsey, but the only debt you should owe is your mortgage. And you should pay that off as quickly as possible.