Chapter 7 or 13 Bankruptcy - need advice,thoughts,criticism

[Kristinmo]

Don't declare bankruptcy until spending is under control. 5 years ago you posted you were $25K in credit card debt and people told you to cut up your credit cards and asked you for your budget - you didn't have one. If you don't start with that you will just end up back in the same situation you are in now.

[8675309]

I was sympathetic until you started talking about buying a dishwasher, taking your car in, clothes shopping etc on credit....knowing you would be basically NOT paying for it when you file bankruptcy. That's theft and I would absolutely NOT do that.

[Deleted]

You're full of shit. Get out of here.

[Kristinmo]

Jul 6, 2017 16:12:27 GMT -5 anonnamus said:

Above all, I know this sounds messed up, but the one card I want to use the most is that stupid card that STARTED this whole mess for us. And how ironic, they decided to switch cards (haven't received the new one in the mail yet, 10+ days and counting). They are on auto-pay and we have paid more than half of what we owe them. But of ANY card, that one I have no reservations about maxxing. I feel like they started this with us.... so why should they not get "it" handed to them. I know, immature thinking. I'm mad and confused and upset.

And this is bullshit.  They didn't start anything.  You spent the money - that's what put you here.

[morecoffeeplease]

Jul 6, 2017 16:27:48 GMT -5 Kristinmo said:

Don't declare bankruptcy until spending is under control. 5 years ago you posted you were $25K in credit card debt and people told you to cut up your credit cards and asked you for your budget - you didn't have one. If you don't start with that you will just end up back in the same situation you are in now.

Yes, this.

I say this gently but moving balances around from card to card is not having things under control. You need to get away from that mindset before you decide anything because doing that again will put you right back in this position.

[knx9211]

I don't know much about bankruptcy but also don't feel like giving you thoughtful advice when you're blaming what is obviously your issue on a company. They did not do this to you. Not being able to play the shell game anymore is all their fault and how could they do this? Really?

[sapphireblue]

I think you should get some therapy.

Your post reads to me like someone who feels terrible about this situation, and there are some sentences that are taking responsibility, but there were far more things you said that made me feel like you aren't really fully owning that this is a situation of your own making.

That being said, it sounds very stressful and I am sorry you are dealing with it. I don't think you should declare bankruptcy though. Just buckle down, get your spending under control, and do the home equity loan.

[megstoo]

I agree about not going bankruptcy. You need to get the spending under control. My fear is that you file bankruptcy, wipe the slate clean so to speak and then start using the cards again getting back into the same vicious cycle.

DH and I are working through our debt issues now and paying as much as possible to the card with the highest interest rate and working down from there. What US Bank did isn't unheard of and it's not something you can really blame them for. That happened to us - Citibank took our credit limit down from 10k to 5k and actually that was a blessing since it go us to control things better. Granted our debt amount wasn't as much as you have.

I would also advise you to cut everything possible out.
Cable? cut it
Cell phones? change the plan
Eating out?
Gym membership?
Pool membership?
Car insurance - drop collision coverage on your vehicle especially if your DH has a company car I'm assuming they pay that insurance
Yard maintenance? cut it and do it yourself

You are going to have to find a way to free up money? What about either you or your DH picking up a 2nd job? DH and I both work full time and I ended up getting a part time job that's weekends only to earn extra money to pay down debt quicker. Sure it sucks I don't have my weekends free but you do what you have to do.

As for a home equity loan the worst thing you can do is tie your debt to your house. You're using your house as collateral. You shouldn't need to get into more debt to pay debt.

Do you have a budget?


ETA:  Oh hell if you asked for help before and did nothing and talked about buying more crap knowing you couldn't afford it than I have no sympathy.  

[mrssandro]

I don't mean this harshly but...



So you had 25k debt 5 years ago but you haven't changed your spending to live within your means? 

[pantsparty]

I agree you need to get your spending under control. You don't seem to be accepting of the fact that this situation is of your making. Sure, it was fucked up what the bank did - but it's more fucked up you kept transferring around credit card balances and pretending you had the situation under control. You were able to maintain a good credit score for awhile but that didn't mean you were making good financial decisions. It was a house of (credit) cards and it's not surprising this didn't happen sooner. Credit card companies can raise and lower credit limits frequently, it sounds like when your bank changed hands they reviewed your total debt and that's what caused the limit to be dropped substantially.

You need to stop using all credit cards and pay for everything in cash. You seem to be associating some type of pride with being a Discover credit card holder since 1999 - no one, I mean NO ONE cares about this. Rewards are nice but if you are not paying off your credit cards every month, you are over-paying for these "rewards" probably ten times over.

I don't have any bankruptcy advice, I'm not even sure how to tell you the right way to Google for a credit counseling service. But I'd try to get as many opinions as possible before taking that step. It's a huge one and one that will limit a lot of your choices for years to come. You want to be sure it's the right thing to do before filing.

[wildrice]

I don't understand why you wouldn't be able to pay for your house if you used your equity. Can you elaborate?

If you can use your home equity, I'd personally do that to pay off your CC debt before declaring bankruptcy. You'll still have a decent amount of equity left and it won't screw your credit for the next 10 years. Or even use SOME of the equity. If you paid off half the CC debt with it you could potentially put the money you're saving toward paying off the rest.

I think bankruptcy should be reserved for the most dire of circumstances- things like medical debt, long term unemmployment, etc. Racking up that much CC debt from overspending (IMO) morally should not earn you a get out of jail free card to get it paid off. I also think that if you are able to get rid of it with little consequence, you're unlikely to learn better habits. Even in this post you are not being truthful with yourself. Your problem did not start with missing a payment with US bank. Your problem started when you accumulated 85k in credit card debt. I realize that this not an easy problem to fix, especially not when your payments are making it so that you have to take on MORE debt. That's why I think using your home equity might give you some breathing room while still responsibly handling this debt and preserving your ability to access future credit. Though, to be honest, once this is all over with I don't really think you should be using credit anymore, anyway. Perhaps to get a modest car loan or something like that, but I think your days with CCs should be over.

[killercupcake]

Maybe I'm missing it but I'm failing to see how you missing one payment led to 80k in debt and a possible bankruptcy.

[UMaineTeach]

You need more than a $15 court ordered money management class. You need a series of classes, a system you can stick with to manage money, pay off debt, and end the CC rob Peter to pay Paul game, and someone to hold you accountable.

[pantsparty]

Jul 6, 2017 16:52:43 GMT -5 killercupcake said:

Maybe I'm missing it but I'm failing to see how you missing one payment led to 80k in debt and a possible bankruptcy.

The only thing I can figure out is if the credit limit was lowered to $1,500 and they missed a payment it triggered some type of penalties. Doesn't a higher interest rate kick in if you miss a payment? 

ETA: although of course the excessive spending is the root cause. 

[wildrice]

Also 5 years ago you were a SAHM. Are you working now? Are your kids in school now? If you haven't had any new ones since then, perhaps now that they are not at home all the time you can pick up some extra income to pay this down.

[wildrice]

Jul 6, 2017 16:52:43 GMT -5 killercupcake said:

Maybe I'm missing it but I'm failing to see how you missing one payment led to 80k in debt and a possible bankruptcy.

I think it brought down her credit score, which meant she's no longer able to shuffle the balances to new cards and thus the payments have gone up (because instead of 0% interest they are now accumulating the more typically 16-20%)

[knx9211]

Jul 6, 2017 16:52:43 GMT -5 killercupcake said:

Maybe I'm missing it but I'm failing to see how you missing one payment led to 80k in debt and a possible bankruptcy.

I thought jt was because her limit went down so she couldn't just keep doing the shell game of shifting the debt around.

[firelight1210]

I would definitely consider doing a HELOC (home equity line of credit) before doing a BK. Of course the lawyer is going to say you don't NEED to do that, but then, they want your business. Your credit cards are likely at a much higher percentage than what a HELOC would be (I'm thinking you're at minimum at 9-10%, if not higher. HELOCs where I work start at 4.25%). Depending on where you take it, the term would be from 15 to 25 years, and that would make your payments lower (you would be making one payment instead of however many you have to each individual credit card).

I understand your resistance to putting your home on the line, but honestly, I think you would have a lot more breathing room just by lowering your payment.

In my experience, BK should really be a LAST LAST LAST resort - and you have your home with potentially enough equity to get you out of this bind.

Good luck!

ETA - I work in credit union loans, so if you have any questions, I can try to assist you. Home loans will vary by state, though, so I'm mostly an expert on CA loans.

ETA 2 - and that's what I get for reading the whole thing and replying before there were any other replies. I do think you're shifting blame and need to take ownership. Trust me, I'm very sympathetic, since I was in a similar situation but you really gotta buckle down and face the music.

[killercupcake]

Jul 6, 2017 16:54:26 GMT -5 pantsparty said:

Jul 6, 2017 16:52:43 GMT -5 killercupcake said:

Maybe I'm missing it but I'm failing to see how you missing one payment led to 80k in debt and a possible bankruptcy.

The only thing I can figure out is if the credit limit was lowered to $1,500 and they missed a payment it triggered some type of penalties. Doesn't a higher interest rate kick in if you miss a payment? 

ETA: although of course the excessive spending is the root cause. 

Jul 6, 2017 16:56:03 GMT -5 wildrice said:

Jul 6, 2017 16:52:43 GMT -5 killercupcake said:

Maybe I'm missing it but I'm failing to see how you missing one payment led to 80k in debt and a possible bankruptcy.

I think it brought down her credit score, which meant she's no longer able to shuffle the balances to new cards and thus the payments have gone up (because instead of 0% interest they are now accumulating the more typically 16-20%)

Jul 6, 2017 16:56:32 GMT -5 knx9211 said:

Jul 6, 2017 16:52:43 GMT -5 killercupcake said:

Maybe I'm missing it but I'm failing to see how you missing one payment led to 80k in debt and a possible bankruptcy.

I thought jt was because her limit went down so she couldn't just keep doing the shell game of shifting the debt around.

Lol

So I'm not the only one who's lost.

#storytelling

[lpcats]

The problem here isn't that your juggling act fell apart because your credit card switched banks, it's that you've been living outside your means for years without, apparently, doing anything to change that.

[Aquatica]

Like another poster said, you need to get your spending under control, come up with a budget, and stick with it. Cut up all your credit cards and throw them away, pay your debt, and close the accounts.

I highly recommend listen to some Dave Ramsey pod casts and getting his book. He also has advice about file bankruptcy too.

[themysteriouswife]

This isn't a US Bank issue. This is a you problem. Stop shopping.

[followyourarrow]

Jul 6, 2017 16:52:43 GMT -5 killercupcake said:

Maybe I'm missing it but I'm failing to see how you missing one payment led to 80k in debt and a possible bankruptcy.

It didn't.  5 years ago she had $25k in cc debt.  Basically ignored it, played the shell game, racked up a bunch of interest, and kept spending.

OP, I would absolutely do the HELOC in your situation.

[shopgirl07]

I'm not going to touch this except to say, no, no, no. You absolutely do not use secured debt to pay for unsecured debt. Don't use a HELOC or home equity loan to pay off your credit cards. Worst that can happen to you now is your credit is shit. Worst that can happen to you if you do that is you lose your home AND your credit's shit.

[firelight1210]

Jul 6, 2017 17:13:32 GMT -5 shopgirl07 said:

I'm not going to touch this except to say, no, no, no. You absolutely do not use secured debt to pay for unsecured debt. Don't use a HELOC or home equity loan to pay off your credit cards. Worst that can happen to you now is your credit is shit. Worst that can happen to you if you do that is you lose your home AND your credit's shit.

I completely do not agree. A secured loan is number one a lower interest rate and safer - HELOCs are used for debt consolidation all of the time.

Can I ask what your basis is for this? You'd rather declare BK when you could take care of it with a HELOC? Hell, I've done loans to pay off CCs pulling out the equity in a fully owned car. It's always better to convert to secured.

[puppyluv]

I would not do a HELOC until you get a budget and get your spending under control. If you use a HELOC and then still keep spending, you could risk losing your house.

What is the 'very bad' thing you got caught up in because it sounds like that isnt resolved and is causing more debt which means your problems probably wont be fixed by bankruptcy or a HELOC.

[shopgirl07]

Jul 6, 2017 17:16:19 GMT -5 firelight1210 said:

Jul 6, 2017 17:13:32 GMT -5 shopgirl07 said:

I'm not going to touch this except to say, no, no, no. You absolutely do not use secured debt to pay for unsecured debt. Don't use a HELOC or home equity loan to pay off your credit cards. Worst that can happen to you now is your credit is shit. Worst that can happen to you if you do that is you lose your home AND your credit's shit.

I completely do not agree. A secured loan is number one a lower interest rate and safer - HELOCs are used for debt consolidation all of the time.

Can I ask what your basis is for this? You'd rather declare BK when you could take care of it with a HELOC? Hell, I've done loans to pay off CCs pulling out the equity in a fully owned car. It's always better to convert to secured.

I don't know if bankruptcy is the answer, that's why I said I'm not touching that. But this is a person who has completely out of control and unsustainable spending habits. I have no doubt that those habits will continue and they will face the real threat of losing their home. At least with bankruptcy this wouldn't happen. Plus, with their credit scores so low, and with so much debt, I doubt they'd even qualify for a HELOC or home equity loan.

[snipsnsnails]

Do NOT use your equity! You guys don't have a handle on your spending. You're going to end up losing your home if you do that! Do you have a working budget? To be honest, it sounds as if you're going to get over your head again because I can't see how 80k accumulated as rapidly as you say it did? Work on a budget and work a budget. Good luck.

Close friends declared bankruptcy after an extended job loss and medical bills. It was their best option and they're still renting (weren't homeowners at the time) while their credit rebuilds. They do follow a tight budget and do not use any sort of credit whatsoever, obviously.

[TR]

Jul 6, 2017 17:16:19 GMT -5 firelight1210 said:

Jul 6, 2017 17:13:32 GMT -5 shopgirl07 said:

I'm not going to touch this except to say, no, no, no. You absolutely do not use secured debt to pay for unsecured debt. Don't use a HELOC or home equity loan to pay off your credit cards. Worst that can happen to you now is your credit is shit. Worst that can happen to you if you do that is you lose your home AND your credit's shit.

I completely do not agree. A secured loan is number one a lower interest rate and safer - HELOCs are used for debt consolidation all of the time.

Can I ask what your basis is for this? You'd rather declare BK when you could take care of it with a HELOC? Hell, I've done loans to pay off CCs pulling out the equity in a fully owned car. It's always better to convert to secured.

Nooooooo, I'm pretty sure most people wouldn't advise trading unsecured debt for secured debt for exactly that reason shopgirl07 gave. When you can't pay it, they take your shit. 

[wildrice]

I want to know more about this thing you alluded to that you got in trouble with. Are you talking about an addiction? Because I do feel like that falls into a different area than just overspending, particularly if you are clean now and have been for a while. You mentioned overspending AND this thing you didn't clarify, so I'm not sure if I'm fully understanding the problem. My thoughts below don't really apply if you are recovering from a medical/mental health condition. 

If your problem is buying too many things, eating out too much, traveling, etc when you can't afford it - bankruptcy will not solve that. It will put a band aid on the issue but if you are able to ditch this debt without paying for it, and without taking responsibility for it, I find it unlikely that you won't be back in this same situation 10-15 years down the road. Plus if you are in the habit of overspending, once you can't use credit you will fall behind on your other bills, mortgage payment, etc since you'll spend your earnings on other things too. You need to get a handle on a budget, and stick to it.

Also think about it - someone is going to absorb the cost of the 85k that is being "forgiven" if you declare bankruptcy. It's probably not going to be the CEOs of the banks you borrowed from. It's going to be the consumers, in form of raised rates for other people who did not overspend. Maybe your 85k is meaningless in the bigger picture, but if lots of people did the same thing you're really hurting a lot of people. Maybe you don't care, but I think you should really think about the ethics of getting all this stuff for free when most other people have to work hard to pay for it. If you decide that's ok with you, so be it, but don't pretend that there are no greater consequences for people doing what you want to do.