Question Should I file Chapter 13 or just pay on my own

[Jimedwards]

I'm still in the process of consulting with several attorneys but it appears that I might only qualify for Chapter 13. My biggest issue for filing is $45,000 in credit card debt. I am a renter ($800 / month) and have $100K in student loans that I know I can't discharge. Other than that, no issues.

I make over $100K annually and am wondering if I should avoid filing Chapter 13 and just try to renegotiate my APR and pay the debt down on my own.

I can put about $1,000 to the CCs per month. Granted, I'll probably pay $15,000 - $20,000 in interest over a 5 year period assuming I am NOT able to renegotiate my APR - BUT I will have paid the cards of in 5 years and avoided BK on my record. (Luckily, I keep getting 0% transfer offers and have been doing the shuffle. I just need to cut the cards and get my ass on track.)

Any insight or thoughts would be greatly appreciated. Thanks

[kornellred]

If you can actually manage to follow through on your plan to pay down your unsecured credit card debt, then by all means try to do that. However - that would require that you not use any available credit. Things are always going to happen - the car needs tires, the refrigerator stopped functioning - dozens of random expenditures will pop up. The temptation to use available credit will be enormous.
It will dawn upon you, eventually, that you are just shoveling money into the creditor's coffers and not receiving anything of value in return. You will begin to see that Chapter 13 is one way of enforcing discipline, if you cannot manage the discipline on your own. You will not be depriving creditors of any money - you have probably already given them far money than they have given you.

The bottom line is: you are going to pay your debt, one way or another. If you can float your debt indefinitely because you make a decent dollar, you can exploit the system legally. If the thought of being in debt bothers you, then you apply the aforementioned discipline or file for Chapter 13 protection.

[Pjmax]

Something else to consider while making your decision, a BK 13 remains on your credit report for 7 years from filing, so that's only 2 years past your 5 year time frame should you choose BK.

[Jimedwards]

You will begin to see that Chapter 13 is one way of enforcing discipline, if you cannot manage the discipline on your own.

Thanks. A little discipline can't hurt.

I've been staring at my budget for weeks and I just don't see where I can cut. Most of my expenses go to divorce lawyers, child support, travel expenses ($800-$1,000 a month) to see my child (his mom took him half way across the country), student loans, etc. that are all unavoidable. There is nothing left for me to spend at the end of the month.

I guess I can stop going to see my kid.

[TXskyblue]

My thought is that if you could pay off 45K in credit card debt by yourself, you would have done it already.

I think a ch 13 would probably be the best avenue for you. 45k debt with an income of 100k means you'll likely be 100% payback. You end up paying less back than you would have if you did it yourself because the credit card companies don't have to oblige you. They can rack up fees and interest charges through the wazoo.

[LadyInTheRed]

If you can stop using credit cards and pay off your debt in five years, I think you should do that. But, if your expenses are too high to live without credit AND payoff the debt in that time, go for a Chap 13. You aren't likely to get your creditors to agree to rate reductions, but it can't hurt to ask.

[Drazil65]

You could also reduce your travel expense by going back to court to have your ex (since ex is the one that took your kid so far away) pay for half of the expense to see your kid. That way you are only responsible for half of the travel expense.

Bottom line is you are looking at a lifestyle change and learning to live on a cash basis. A 13 could help you do that a little easier than on your own I am afraid, most people that come here do not have that kind of self control. Good Luck.

[Jimedwards]

You could also reduce your travel expense by going back to court to have your ex (since ex is the one that took your kid so far away) pay for half of the expense to see your kid. That way you are only responsible for half of the travel expense.

You read my mind, lol. I'm in the process of doing this right now. The legal fees and trips out of state for court are killing me. :-(

[Jimedwards]

Thanks LadyInTheRed. I probably need a good kick in the ass so i do not get into this situation again so I'll probably file Chapter 13.

[LadyInTheRed]

Thanks LadyInTheRed. I probably need a good kick in the ass so i do not get into this situation again so I'll probably file Chapter 13.

A 13 is definitely a good structure for developing good habits. Will probably save you money too.