Bankruptcy | Imamother

amother

Green

Wed, Apr 18 2018, 11:48 am

Anyone have any experience with declaring bankruptcy for cc dept? Were in over our heads. Not because weve gone on vacations or bought fancy cars house... My dh was not well and lots of medical bills went on the cc. Right now were paying 500 a month in interest. We have no way of paying it off. I have no one that can help us out financially at all. I feel like like its the wrong thing to do but I dont know if well ever get ourselves out of this if we dont do something drastic. I know if I declare bankruptcy our cc is shot for 7 yrs and we cant have a cc.
Question is, is there a way to take my name off of the cc act so that I can have my own cc with my name and declare bankruptcy on his? We still need a cc. Were still paying massive bills. But I figure with the 500 monthly that is going towards interest I can actually pay a cc if I didnt have interest.

ellacoe

Wed, Apr 18 2018, 12:00 pm

There are usually two options in this scenario, either bankruptcy or a credit consolidation company. Bankruptcy helps with credit card debt but does not wipe out debt from student loans or IRS debt (or alimony payments) I am not sure about the no credit cards for seven years. I was under the impression that you could actually get cc's after and that you are a more likely to be issued them because you have a clean slate. But I could be wrong.

There is also the option of having a debt consolidation company negotiate on your behalf with the cc companies and you pay off a much lesser amount on a payment plan and you pay the consolidation company a percentage of the amount that they saved you.

A debt consolidation company can tell you about getting your name off the cc. It also depends on wether you are on as a principal card holder or just an authorized signature.

It might also be helpful to sit down with a financial planner or just amongst yourselves and work out your budget. What you are spending, what can be cut etc. It is a very helpful exercise and can help with things in the future.

I have both consolidation companies and bankruptcy lawyers who I have worked with and referred to if you need that information.

creditcards

Thu, Apr 19 2018, 2:28 am

Try to transfer all the debt to either yours or your husbands name so only one name gets botched up. You can transfer with a balance transfer. All cards with a balance should be on the same name. If the other one of you is an authorized user on the card call up the company and tell them to take off the second persons name. Next call up each company and close the card. Stop paying it. And just ignore the calls. At some point they will offer you a settlement. They will offer to cancel a big part of the debt in exchange of you making a partial payment by a certain date....

amother

Bronze

Thu, Apr 19 2018, 10:41 am

creditcards wrote:

Please consult with competent counsel before doing this.

In general, you can't incur debt, then absolve yourself by taking yourself off the account and say "who, ME? not me!"

While you're at it, CYLOR about halacha regarding incurring debt then deciding not to pay it.

(this is addressed to creditcards' broad ranging suggestion, not to OP's situation, for which I have the greatest sympathy.)

creditcards

Thu, Apr 19 2018, 11:50 am

amother wrote:

What do you think all these debt companies do for you. This is how they get the companies to settle for a fraction of what you owe. I've never done it personally, but I know people who did it. The rav told them they are not allowed to incur debt with the intentions of not paying it, but once they are in debt and can't pay it they are allowed to get out of it by doing the bankruptcy... I just explained how to go about doing it without paying extra money for a company to do the same thing for you.

amother

Rose

Thu, Apr 19 2018, 10:15 pm

Please I beg you " Do NOT do bankruptcy!"

Do not believe a bankruptcy lawyer when he promises you everything will be ok and wiped off after 7 years.

I have learned this the hard way. We declared bankruptcy 14 years ago and it is still affecting our ability to obtain loans for mortgage and business. Even though it no longer shows on our credit reports, banks have many other methods of checking customer credit besides Experian transunion and Equifax.
You are marked forever as a dangerous risk.

You should be able to settle for $0.10 on the dollar. It may mean , you stop making all payments so the creditors see you are unable to pay. I cannot advise you the best method. Please talk to several debt consolidators and ask around. And it will be hell in the short term. But understand, this hell is temporary and a bankruptcy hurts forever.

Please do not do bankruptcy.

creditcards

Fri, Apr 20 2018, 4:04 am

amother wrote:

Settling also hurts forever. When people talk about going bankrupt they mean settling too. The only reason to settle is if you are really in debt over your head and are only busy paying interest. Banks know only if you had a card with their bank and you settled with that bank. Those banks will never give you loans or credit cards again even if it's off your report because they already had you as a bad customer. If you settle with multiple banks it puts you on the bad side with all those multiple banks.

amother

Natural

Fri, Apr 20 2018, 10:20 am

amother wrote:

Op, you really need to talk to a bankruptcy lawyer (1 hour consultations are generally free), to get the current and accurate information. I declared bankruptcy (both my husband and I) two years ago and we are currently doing ok.

This is where I currently stand:
- Both my husband and I currently have a credit card under our names. We both started off with secured cards (where you have to give a cash deposit as collateral) to start building up our credit and after a year we were both eligible for regular credit cards. Obviously, these aren't the cards with the best offers and rewards, but it serves its purpose. We actually limit its use as much as possible to not fall into the same trap and primarily use debit cards instead. But if you must have a credit card, bear in mind, it takes at least 3 months or more to be eligible for a secured card.

- We are hyper vigilant in making monthly payments in time and gradually our credit scores have crept up. In another couple of months or so, our credit ratings should be in the average range again.

- While we haven't applied for any new mortgages or business loans, we have successfully obtained new car leases without much issue, except for not being able to get the best possible rate.

- It's definitely made our financial lives much more bearable and it allowed us to reconstruct our finances into a manner that now works for us.

I've also been told that if you've successfully established your financial lives after a bankruptcy it's not that detrimental to your future. Having huge amount of debts and being late on payments for a long period of time may end up being more damaging. You really need a lawyer or a financial advisor to sort this all out for you.

amother

Lawngreen

Fri, Apr 20 2018, 10:46 am

I settled around 100k with credit cards 10 years ago. This was my experience:

On average they settled for around .25-.30 on the dollar. However, it's not as simple as saving 70%-75%. The reason is because lets say someone wants to settle 50k in debt. The ONLY way the cc company will consider settling is if you stop paying and show them that you have no intention of paying. This has to go on for some time. It might take a year for the cc to offer a settlement. By that time the debt has been subject to absurd interest rates, perhaps 25%. This means that you now owe 62,500. So when they offer you 30% settlement, it's not on the 50k you originally owed but on the 62.5 you now owe. Then you have to pay the settlement company. It's usually 10% of the forgiven debt. In this example, if you settle for 30% on a 62.5k debt, you will have to pay around 18k back to the cc company and around 4500 to the settlement company. Also, the money forgiven, in this example around 45k, is taxable. So you will possibly have to pay another 10k in taxes. In summation: you owed 50K, paid the cc company 18k, paid the settlement company 4500, and paid 10k in taxes. In the end you're paying around 32,000 of the 50k owed. My point is that settlement is not is good a deal as it seems.

creditcards

Fri, Apr 20 2018, 11:37 am

amother wrote:

If you do it yourself you don't have to pay anything to the settlement company. And if you have a letter with your tax return to prove that you still owe people money they let you get away with paying the taxes. Also once the debt is in collections the interest stops going up. Interest is only added until it goes to collections.