Bankruptcy

[DrWahoo]

Has anyone considered this ? It seems at this point we have two options DH joins the military (Air Force) or we declare bankruptcy. I guess there is a third option stick out until training is over and try to clean up our debt, but with student loans I don't see how that will be possible.

[Meenah]

Stick it out if you can, good luck.

[MissCrabette]

It's easy for me to say you should stick it our but I'm not in your position. But I will say that, while bankruptcy sounds like a quick solution, it will follow you for years to come. If you think you'd be ok joining the military, that might be something to look into. Otherwise, try to set up a meeting with a reputable credit counseling organization. I cannot emphasize the reputable part enough. Lots of people have destroyed their credit because some organization promised them they could stop paying their creditors and that they'd take care of everything.

I contemplated it, but never to the point of actually even articulating the idea to dh. We were fortunate enough to have his parents who were willing to help us out at some very low points. We are now at the end of training, and while we're NOWHERE NEAR debt free, we're on the road and have a plan.

It would be best if you can find a way to work through it. Bankruptcy can really dog you for years and years to come, and they've just changed the rules to make it even tougher.

[Michele]

I believe bankruptcy doesn't get rid of student loans...so if that's a big part of the debt, it's not worth it.

[Vanquisher]

We contemplated it, but not seriously. Just push through as best you can. Go through your stuff and have a garage sale, sell stuff on eBay. Make meal plans and stick to them, cut your food budget. Live very tight for a while. You would have to if you went through bankruptcy as well. Consider downgrading a car to an older one with really good gas mileage or sut out one car all together. You'll pay less for car insurance, gas, taxes, etc. Get rid of any extras you can. Go through each one of your bills. Every one. What can you sacrifice? How's your phone bill? Could you go to cell phones and no home phone? Vonage? What kind of internet service do you have?

Call every credit card company you have and ask them to lower your interest rate.

Consolidate student loans and put them on economic hardship deferment if you haven't already. If you can't defer, put them in forbearance!

If you have medical bills, call and make lower payment arrangements.

Have your spouse eat at the hospital (there is always free food to be found in a hospital) as much as he can. Everything else should be brought from home.

Keep your house/aparment a little warmer in the summer, cooler in the winter. Make sure to turn off all lights when they aren't in use.

Cut out gift giving. Other people don't want to see you go broke. Tell them things are tight.

Find where you are spending all your money. Cut what needs to be cut. Then cut some more.

[planet]

Even in our worst moments we did not consider bankruptcy. The laws are such now that you will not be able to get out of either student loans or credit card debt (thank you MBNA contributions to the Bush Administration!) so if those are your biggest worries I don'tthink you should have chapter 11 on the table.

As Heidi said, cut back and cut back some more. Most companies want their money badly enough to work out whatever payment plan you can afford. Start talking to creditors. Good luck. Poverty sucks.

[DrWahoo]

Thanks guys for the responses.

[Meenah]

I know it sucks, but you are not alone!!!!
Luanne

Otherwise, try to set up a meeting with a reputable credit counseling organization. I cannot emphasize the reputable part enough. Lots of people have destroyed their credit because some organization promised them they could stop paying their creditors and that they'd take care of everything.

I agree completely, especially on the emphasis of reputable. I think this is worth a try before either of the other options -- just to discuss. I know about this via MIL and it really saved them. By some stroke of luck, they did go to a reputable place.

This might be a helpful place to start:
http://www.smartmoney.com/debt/advice/i ... btdrowning

[DrWahoo]

Thanks nmh for the article. We are in alot of debt, but have enough money to survive. We don't have any credit cards, just alot of unpaid utlity bills from a few moves and medical bills. I don't think we can even get a credit card to consolidate our debt.

Does any one have any experience with a credit counselor ? What did you have to bring ?

If you go to the Oprah web site she had an interesting show recently on the "debt diet." I didn't see the show but it got so much press I looked it up on the web. I think Heidi made some great points about cutting back. Also, I agree, forget about bankruptcy - - changes in bankruptcy law mean its not a helpful option. Check the web site for some credit counseling options. In addition to cutting back on spending, another thing to think about is increasing money coming in. One interesting part of the oprah show was that some financial pro calculated that it took the average american family who was in decent financial shape TWO years to end up in serious financial trouble after they switched from two incomes to one. I don't know what your daycare costs are relative to your income potential but you might want to look into part time work or even caring for some additional kids in your home. Also, the oprah web site might have some credit counseling recommendations or perhaps some suggestions on the discussion boards . . .

Good luck!

[Stella]

Okay, just my two cents...
If you can figure out a plan an your own or with a financial advisor, do that. Credit repair agencies sometimes seem like they can help but I hope you aren't planning on buying a house anytime soon with it on your credit report. When I worked for the mortgage company, we had a couple of situations where it was VERY difficult to get their loans approved because of these agencies being on the reports. My boss always told me, "No matter what, don't go to them."
Do you own your home now? Can you get an equity loan to pay off your consumer debts?? It'll make your credit report look much better and you'll get a better interest rate.
When I was in a bit of a "pickle" I went and got a loan to cover my credit cards and paid off everything and now I just have this one payment with a much lower interest rate.
Just some other ideas....

[MissCrabette]

Stella, I was certainly not suggesting she should go to a credit repairing agency. I meant she should consider a credit counseling organization, have a talk with someone who can go over some numbers with her. The moment they talk about you making payments directly to them, and not paying your creditors, that should raise a red flag. All they should do is look at your financial situation and advise you.

[Stella]

Christina, I must have misread/understood. Sorry! :!
I think that some of the companies that we are talking about like Ameriprise Financial offer a free first meeting, so it might be worth it to check out something like that. They might ask you to pay (I have no idea, does anyone have a financial advisor?) but in the end it might be worth hiring someone if you feel you are really stuck right now.