Question Should i File for bankruptcy?

[DigitalEG]

My wife and I have about 20-24k in CC debt. She is unemployed and we have 3 children. We dont have any money in savings as we live paycheck to paycheck currently. With the looming economic collapse seeming inevitable I am thinking that we should file for bankruptcy so we can start saving or investing in some gold/silver or saving to secure our financial future instead of paying off this debt. Im thinking with whats coming its probably a better idea to have actual money instead needing good credit to borrow..since we have no plans to borrow any money anytime soon.....

Also, the vast majority of our debt is in my wifes name with her credit cards. Do we have to file together or can we just file for her and i wont have that on my record?

[FairyPoor]

I know we had to really think about it. We are still in the process and are very scared, but know it is the right thing for use to do. I would sit down and go through everything and see what you think is best for you and your family. We still are very nervous, but knew it is our only way to a better future.

[LadyInTheRed]

Welcome to the board, DigitalEG.

You haven't provided enough information for anyone to opine on whether you should file BK. Do you have any assets with equity? If so, what is the value of your equity in those assets? What is your annual income? Are you able to meet your living expenses and make your debt payments without incurring additional debt to make ends meet? Could you pay off your credit card debt in 5 years if you didn't file bankruptcy?

The fact that you'd rather save or invest in preparation for an economic collapse instead of paying your debt is not a good reason to file bankruptcy. You should file bankruptcy only if you are in fact bankrupt.

[DigitalEG]

Welcome to the board, DigitalEG.

You haven't provided enough information for anyone to opine on whether you should file BK. Do you have any assets with equity? If so, what is the value of your equity in those assets? What is your annual income? Are you able to meet your living expenses and make your debt payments without incurring additional debt to make ends meet? Could you pay off your credit card debt in 5 years if you didn't file bankruptcy?

The fact that you'd rather save or invest in preparation for an economic collapse instead of paying your debt is not a good reason to file bankruptcy. You should file bankruptcy only if you are in fact bankrupt.

The only assest we own is our car....From what i understand i can still keep the car if i continue making payments. My annual income is 35k. Yes we make payments, all of my pay check goes into paying bills, at the end of the month we have practically nothing left. We are not going into more debt tho.

Please note i have 3 children, all of them under 4 years old. Im only interested in doing this to start to build some wealth for our family to survive with the upcoming hard times that we are about to experience. Right now we are just getting by and thats going to be harder and harder to do once inflation starts going through the roof and 5 years is too long for me to wait. Practically all of our debt is under my wifes name, so im thinking about her filing alone if my state permits it.

[lillymarlene]

Welcome to the board, DigitalEG.

Could you pay off your credit card debt in 5 years if you didn't file bankruptcy?

The fact that you'd rather save or invest in preparation for an economic collapse instead of paying your debt is not a good reason to file bankruptcy. You should file bankruptcy only if you are in fact bankrupt.

I agree, if you can pay off your debts within 5 years without bankruptcy, you should do that. Then later you could start saving. I think bankruptcy should be used as a last resort. For example, when you really have accumlulated so much unsecured debt you'll never pay it off, or you have a huge medical bill and now your medical condition is stable.

[LadyInTheRed]

Im only interested in doing this to start to build some wealth for our family to survive with the upcoming hard times that we are about to experience..

Again, not a good reason to file bankruptcy, IMHO. You don't have a crystal ball. Nobody can say for sure whether the economy is going to get better or worse. You also can't say exactly how a worsening economy will effect your family. What if you file BK, then lose your job and incur additional debt? You won't have the option to file BK again for several years.

Right now we are just getting by and thats going to be harder and harder to do once inflation starts going through the roof and 5 years is too long for me to wait.

Supporting a family of 5 on your income is very tight. How would you feel about tearing up your credit cards right now? When you say you have enough to pay your bills, are you including auto insurance, car registration and maintenance and other things that come up once or twice a year, or do you pull out your credit cards for those things? If your car breaks down or a family member gets ill, would you be able to pay car repair or medical bills without pulling out your credit card? These are the issues that should lead you to consider bankruptcy, not your predictions for the US and/or world economy.

Because your income is under median for a family of your size, you would most likely qualify for a Chap 7. However, you say you have enough to pay your bills and then have practically nothing left at the end of the month, which means you have something left. If you file Chap 7 you will get over the first hurdle of the means test without a problem. But, if your schedules I (income) and J (expenses, not including your credit card payments) show you have something left, the trustee could object to a Chap 7 based on a totality of circumstances. They would argue that you have disposible income to fund a Chap 13. Because of your low income, a Chap 13 would be a minimum of 36 months. So, to amend my earier question: Could you pay of your debt in 3 years?

Either you have some unusually low expenses, or you are cutting very tight corners. Because you are well under median income, a decent attorney should be able to prepare a Chap 7 petition that will easily get you discharged without any totality of circumstances objection.

If you thought the economy was going to improve, would you consider bankruptcy? If not, I don't think you should file, even though I think there are good reasons for you to do so. If you had started your post by saying, "I support a family of 5 on $35K a year and am struggling to pay my credit card debt. There is no way I can continue to survive this way. I'll be paying this debt forever," you would sound like an obvious candidate for BK. But, when you say you are scraping by without incurring additional debt and want to file BK so you can stop paying your credit card bills and invest in precious metals to prepare for inflation, my answer is different.

In MA, you can keep your car in a Chap 7 as long as you don't have more the $7,500 in equity.

A married person can file alone, but it may not be advisable. This is something you should discuss with an attorney. One consideration is whether MA is a community property state.

[mountanddo]

I don't know how you've been living if you are supporting a wife and 3 small children on 35k a year. You must eat ramon every night! I made about 30k the last 2 years and it wasn't enough to pay my 20k in credit card debt and live much of a life. I would talk with a couple of attorney's and see if it is possible for just your wife to file alone. I would hate to see you get into a situation within the next 8 years and not have BK to fall back on.

[shark66]

The way I see it...

a) On $35K/year in Mass you're not going to be able to put away much of anything, but

b) That's one more reason to stop feeding the bloodsuckers so if I were you I'd just

c) Stop paying everything and anything debt-related that is your wife's name, since she appears to be collection-proof at this point in the game.

That's how I'd play it. No need to file just yet.

My $0.02 only...

Good luck to us all.

[DigitalEG]

We wont be using anymore credit cards anytime soon, and dont as of now. we learned how to live tightly over the last year or 2. Yes, that includes all bills. I might have 20-30$ left in my account at the end of the month. Whatever scrap we have left we put into savings to buy the kids xmas presents. But we would be in a serious bind if we suffered an unfortunate event that would cost us decent amount of money.

Everything is in my wifes name, they are her credit cards. I only have 1 credit card under my name and its for only a 500$ limit. We do have low expenses now because we had to move into her parents home in july because we were going broke.

[Drazil65]

Hello and welcome. Could her parents help with the kids so your wife could get a job? at least a part time job to help? You are fortunate you are not running the risk of eviction (or at least I assume not) and the parents are not going to let the kids starve so take comfort in that. This is a temporary solution and you will be back in your own place soon enough. Take advantage of the fact that if you could put some money away by having your wife work (bank her paychecks no matter how little they are) it would give you a fresh start as well. If you think she is going to file alone then stop paying her CC now and bank that money towards your own place. Goof Luck.

[BKAttyMI]

Sounds like it would be worth it for you and your wife to visit with a few bankruptcy attorneys in your area for free consultations.

Again though, filing bankruptcy is not a way to "build wealth". You may have a problem with your schedules because of your low monthly expenses living in your in-law's home. Visit an attorney to discuss your options.

[dman]

$35k year, family of five, living in parents' home...sounds pretty much a no-brainer to me. I'd stop the talk about wanting to stop paying bills so I can buy gold.

I'd sit down and see what the family budget would look like if you were discharged from bankruptcy. Would you be able to make ends meet? Would you move out into your own home/apartment (it's fine if the answer would be no btw, as long as the in-laws don't mind!)? If you'd be in a decent situation, I might recommend to go ahead and stop paying the credit card debts (and any other debts that would be discharged...non-dischargeable debts like student loans, consult an attorney first!). Go ahead and save up for a deposit on an apartment if you want (don't forget deposits for utilities too). Once you're all settled in, you could file bankruptcy then (there'd be no question about low living expenses...because you now have to pay rent, electric, water, etc.). Regardless of whether you get an apartment, look at other areas that you are probably not giving enough attention/money to. If you had the money, would you have better insurance? More doctors/dentists visits? More trips to the barber? A better, more reliable car? It's likely that even without the credit card bills, you won't have enough left over to fund a Chapter 13.

If you decide to file, I'd recommend doing so sooner rather than later, especially if your wife expects to get another job in the near future. A Chapter 7 where you're only bringing in $35k/yr with a family of five would probably attract less attention than if your wife suddenly got a job and your yearly income jumps to $70k.

Another note. If only one of you files, remember that they look at an INDIVIDUAL's assets, but they look at a HOUSEHOLD's income. So if your wife has most/all of the debt and little/no assets, it's almost a no-brainer for her to file alone (at least on paper). But do talk to her about it...while it may make better financial sense for only one to file, it may make more emotional sense for you to file along with her.