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Real Money Problems - Bankruptcy vs Debt Consolidation
For a multitude of reasons including job loss and plain bad budgetting, we are 50K in cc debt. I pay the bills and have finally realized that we need to do something drastic to make things change. We have gone to a lawyer regarding bankruptcy but our income is higher than the mean income for FL so we are not sure if we would qual for chapter 7 or 13. I know that both would totally ruin our credit but have heard many bad things re: 13. The worst being that there is only 55% success rate. So I spoke to a good friend who knows someone who helps with debt negotiations etc. But he charges $700 up front and then $300 a month and he says at the end of 15 months we shoudl be able to get rid of debt by using 401K loan. Anyway, all options are dismal but I was just wondering if anyone has been through this. Any thought, advice, etc would be greatly appreciated.
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Re: Real Money Problems - Bankruptcy vs Debt Consolidation
What HAVE YOU DONE so far to attack these debts? Have you gotten 2nd PT jobs, sold items you no longer need or use, down sized your lifestyle, cut non essential spending?
Track your spending - EVERY DOLLAR - then categorize and from that make a budget
You need to know exactly how much is coming in and how much is going out.
STOP ALL EATING OUT, no new clothes - wear what you already have, sell your car and/or home if you can and live with one car or buy something cheap and afforrdable. Rent for less than it costs you to live in your current situation.
Gifts - only to children and keep it VERY modest.
NO vacations, or personal luxuries until this is taken care of.
Read TOTAL MONEY MAKE OVER by Dave Ramsey.
Post your current budget - income, expenses, debt - including % rate and minimum payments,
Under NO CIRCUMSTANCES should you touch your 401K. No way. Although it can be done it is a very risky move .
Since you have a good income available to you, this is going to be more of a lifestyle adjustment required to pay off the debt, I would guess.
What HAVE YOU DONE so far to attack these debts? Have you gotten 2nd PT jobs, sold items you no longer need or use, down sized your lifestyle, cut non essential spending?
Track your spending - EVERY DOLLAR - then categorize and from that make a budget
You need to know exactly how much is coming in and how much is going out.
STOP ALL EATING OUT, no new clothes - wear what you already have, sell your car and/or home if you can and live with one car or buy something cheap and afforrdable. Rent for less than it costs you to live in your current situation.
Gifts - only to children and keep it VERY modest.
NO vacations, or personal luxuries until this is taken care of.
Read TOTAL MONEY MAKE OVER by Dave Ramsey.
Post your current budget - income, expenses, debt - including % rate and minimum payments,
Under NO CIRCUMSTANCES should you touch your 401K. No way. Although it can be done it is a very risky move .
Since you have a good income available to you, this is going to be more of a lifestyle adjustment required to pay off the debt, I would guess.
Ditto PPs about reading Dave Ramsey and seriously scaling down your lifestyle. It will be hard but you can do it. Start today.
I repaired my credit, the credit card offers poured in right when bankruptcy was approved (June 2010) so I paid my credit card bills on time and credit score increased, it did not affect me getting FHA mortgage loan or affected the interest rate in October 2012. The bankruptcy does appear on credit report for 10 years but I've had no issues with credit or being denied of anything.
I did speak to someone regarding debt consolidation but I passed the 'means test' for bankruptcy chapter 7 and went that route instead, it was less expensive and I honestly just wanted to forget about my debt and start over new.