Should I Claim Bankruptcy Or Not?
does it look better to rebuild credit with you still oweing money to people, 1 car loan ($9200) 1 house loan ($62,000) 1 credit card ($8000). or would it be better to clain bankruptcy and then build my credit? if the answer is to claim bankruptcy how long would it take to get a home loan? please someone take the time to answer this for me. Thank you so much
Gyva...
Pay back the money. You borrowed it, pay it back. Sell the car and use the bus or buy a cheaper one (my car runs great and cost me $3400). Do the same with the house or refinance it and take advantage of the low rates (30 years at 5% is only $332 per month). Give up cable. Eat out less. Cut up your credit card. Pay more than the minimum on your credit card. The list goes on. I'm guessing your payments look (or should look) like this:
Car: ($4000) Monthly payment: $100
House: $332/Month
Credit Card: $160 per month
Total: $592 per month
WHY WOULD YOU FILE BANKRUPSY???
McDonalds was hiring last I checked and you could easily make that payment working there.
If you're homeless and starving to death file for bankrupcy. You're debts are not (although they may seem to be) overwhelming. Call it your contribution to society. All we need is one more leech.
You may consider getting more on your home loan and wrapping your credit card payment and car loan into it. You might also take advantage of 0% balance transfers for a while.
I know this isn't the advice that you ask for, but it's the most reasonable and right thing to do. You're far from being burried by your debt. [ Edited by hibby76 on Date 07/09/2003 ]
Take it from someone who has been there. Absolutely do NOT file bankruptcy unless you are in a hopeless situation.
I wish someone had told us that when we did because it has caused nothing but problems, and ours was over 4 years ago.
lol, ummmm they took the car back I don't have it anymore payments were $252, the house has since forclosed over a year ago, my credit card has since been turned over to collections for the amount of $8000 and I haven't made a payment for like 2 years. ummmmm I was dumb I lost my job and walked away I had no equity built into the house yet I had only had it 2 months. this was 2 years ago. I dunno what to do? what looks better? no way am I paying for a house or car I don't have. unless it is the only way to get a house again?
Gyva
I re-read your post....now I'll answer your question.
Credit is built by successfully paying off debts. If you've never borrowed money, you have no credit (not bad credit, just non-existant credit lines).
They try to make bankrupsy hurt so that people don't do it. It will absolutly be terrible on your credit for many years to come. Forecloseures are, in many ways, worse than bankrupsy. Sounds like you are considering both. Bad plan.
Take advantage of your extended credit lines and start to rebuild it. There are companies, books, and websites out there that help you rebuild. Use them. In 6 months to a year you can have great credit if you're proactive. (do nothing and it will probably stay the same).
Make all of your payments ON TIME! Vow to yourself to never be late again. Set up as many of your bills as you can on automatic payment systems. Do the same with your mortgage. Get overdraft protection for your bank account just in case. Good luck.
So do I start making payments on my car I don't have, and start making payments to my credit card again? will I regain somewhat of a credit line line again even before there paid off? man I'm up crap creek lol... I was a dumb kid that had perfecto credit and walked away because I lost my job Grrrrrr. I hate myself... but I want to rebuild and if it takes paying off a $8000 credit card I'll do it.... I don't really know what happened to the car. the motor broke and they refused to fix it even though I had a warrenty, but they found a loop hole and got out of it leaving me with a ussless car so I said fine you won't fix it I'm nor paying for it lol... dumb choice but thats what I did. Anyways.... I should call the credit card people and make a payment plan with them? And as for the car I should probably call them right and establish a payment system with them.... Correct? is this better than bankruptcy?
Or shoud I say is this going to give me a better chance in getting a house again?
Gyva
I'm a little confused with your figures.
You say that the car was repossessed (when?). How much did you owe at that time? Did the loan company sue you for the difference between the loan amount and the next sale price?
You said that the house was foreclosed on a year ago. Was the loan amount then $62K? If so, did the bank sue you for the difference between the loan balance and the sale price?
You owe a CC company $8K + costs on your credit card. It has been turned over to collections. On this one, call up the company and work out a payment plan. I'd offer to pay it off (in payments) as long as the negative is completely removed from you credit file (they remove the late, assigned to collection, etc.). This is legal and they can do it (it's their report). If they agree, GET IT IN WRITING.
Roger
I don't know if I got sued? they have not found me since I walked away. that goes for the car and the house. Now in the credit card I just called them and they said its out of their hands now, and I have to call the collections service. now can I still get the bad credit removed from both paces master card and the collection service? how does that work? I'm going to call them right now if I can get them to erase the bad credit from their report.
Gyva
That is, if I repay them lol... then I'd only have a car loan and the house. hummmm man I don't think I'm getting another house anytime soon , but if theres a way let me know. OK put it this way, if you were me what would you do to fix this mess enough to get another house?
Gyva...
ANYBODY?
Gyva...
A Time machine would be good about now
A word of advice from someone who has made similar mistakes:
Suck it up, drop the pity crap, face reality, and take action.
You got yourself into this mess, get yourself out.
First- Make a budget. Stick to it.
Second-Make a cash flow statement. Show every dollar you bring in, and every dollar going out.
Third- Talk to all creditors. Let them know that you do not want to file bankruptcy. Bankruptcy is a LOSE/LOSE proposition for both parties. You lose any credibility with any lender, and the creditor sees the smallest fraction of it's money. (Most goes to the trustee). Ask them what they want, and what they are willing to accept.
Fourth- If they will give you the ability to pay the money back without having to get food stamps, GREAT! If not, show them the cash flow statement. If you are honest and seem willing to pay the money back no matter how long it takes, the creditors will work with you. All they want is their money.
Fifth- Take action. STICK TO THE BUDGET, KEEP YOUR WORD TO THE CREDITORS, AND REMEMBER YOU WILL ALWAYS HAVE HELP IF YOU NEED IT.
Jesse
Quote:
On 2003-07-09 21:41, Gyva wrote:
OK put it this way, if you were me what would you do to fix this mess enough to get another house?Gyva...
As some others have advised you, do not file bankruptcy under any circumstances. Not even if they have a judgment against you.
Paying on things you no longer have is fruitless and counter productive. Don't do that.
What you need to do is look down at my signature line and then go put that single word into any search engine and start learning how to deal with your problems in ways that are effective and will work.
[addsig]
Bankruptcy stays with you at least 10 years. Longer than most marriages! You can't even buy a tire at Sears. Think about it!!! Herb
A note to everyone reading here...
Wouldn't it have been nice to have "home and car buying," "how to use credit," and other "real world" classes in high school instead of so much &*%# geometry that we never use now? That might have prevented many of the bankruptcy cases that we are seeing now. Just a thought.
Moving On....
It sounds like you don't even know how much the judgements are against you at all. Find out. It probably isnt' $62K. Instead of contacting a bankruptcy lawyer, contact consumer credit counseling! They might be able to knock down your cc balance lower or stop the interest rate, and give you payments that you can afford.
Since you were not going to pay for a car because "they" wouldn't fix it... it sounds like an auto lease or a dealer financed car. A lease works way different from a loan. A loan is all principal and interest. A lease is depreciation of the car plus bank charges. (I used to work for 2 auto lease companies).
Don't claim bankruptcy - especially when you don't even know what you've been sued for yet! Don't keep making mistakes, take control.
Get us some real numbers & your entire situation and ask us again. We're creative here, but we need the facts.
I'd say "good luck" but you need more than that!
OHhouse
I forgot to mention...
Right now, it looks like the only way that you are going to get a house is to pay cold hard cash.
The cheapest thing on the MLS in my area right now is $7,900 asking price on an REO. That means that $3-5k will buy it. It might not be exactly livable and in a crappy area, with a school system that is in "academic emergency," but it would be all yours!
Look for these kind of deals in your area and start savin' up!
Of course, if you did buy it and those companies sued you for your new house, they probably could get it.
If you fix up and "flip" the properties, you might eventually have all of the money to pay your credit card off, then the car, then the house.
OHhouse
I am the happiest person in thes forum right now, I just called on all my debts and have just found out the house is still mine, they were going to auction it on Sept. 2nd but since I got ahold of them before that they are going to work with me! I owe $12,400 in back payments and I don't know if I have to pay that out right or if they will roll that back into the loan and go from there? If I have to pay that out right do you think anybody would loan me the money lol funny huh? kep in mind I reall don't have any equity in the house I only made 2 payments on it before all this crap happened. They are sending me a work packet I have to fill out and they are making write a letter about why I let my house forclose (any opinions on what I should write) to tell you the truth I thought once they posted that little paper on the front door announcing it was to be auctioned I thought it was to late. they have tried to auction it 2 times now but with no luck, sept was to be the third time. but I want it back thats all I want!!!! Any comments or suggestions would be great! I love this website and all you guys have been very helpful in making me understand.
Gyva
Well, that's a surprise!
FYI... In Ohio, even after the auction has happened, the owner can still save the house until the judge actually approves and signs the sale. Then, it's too late. This varies between states.
If you would have lived in your property as agreed, after 2 years, your home would have appreciated in value and you would have some equity. However, since you walked away, the house is probably in poor condition. If you are in an area with cold weather, your pipes could have frozen and busted. Windows could be broken and your roof might leak. Critters might have eaten holes in your roof, etc...
If you are able to work out a deal with the bank, move back in, and fix the place up... you will see your appreciation and equity come back (somewhat).
Your equity could help pay off your car or credit card.
Read over all of their paperwork. If you don't understand something, don't give up again. Ask plenty of questions and fight for it, if that is what you want. I suggest legal help. A lawyer might help you with the letter. A good excuse might be that you did not seek out legal counsil in the first place (ex... you thought that once the auction sign went up, it was too late.)
You did the bank a big favor by calling them and working something out. If it would have gone to auction and only gotten 2\3 of the appraised value, they would be out a lot more than your back payments! In your letter, hint that you are considering Bankruptcy if you can't work something out. They HATE the "B" word and will do almost anything to avoid it!
Keep in mind that whatever terms they offer you, it will most likely be negotiable.
Good luck to you and keep us posted. Your experience with the bank will help us investors know how banks work in this situation.
Congrats on possibly keeping your house.
OHhouse
Thank you very much, I'll keep the legal help in mind if it looks like the bank won't work with me, but so far they seem more than helpful, I look at it this way they've tried to auction it twice already and nobody wanted it, or didn't know. cause my fron yard is so over grown you can't see the papers they posted. but I know it gets posted in the paper anyway so ???? but ya since 2 auction attempts failed I think since nobody but me has shown an intrest I'll get it back.... I'll keep you guys posted!!!! lol, or comeback for help if another problem arrises. Thank you all for your kind and helpful words
Gyva...
Congrats on everything. I don't think you ever said.. but where are you from ?
Sorry about that I live in Boise Idaho right now my home is 30 miles away in a little town called Mt. Home. Right now I still have no word on whether or not I'll get my home back but everyone at the loan company says I have a really good chance! well hell, they've tried to auction it twice now and no one wants it. I bought it as a fixer upper and I believe I got it at a steal for $62,000. It was built in the 30's and the whole thing is built (Not with particle board) But with 2x8 20' long ruff cut lumber, solid as a rock, of course with siding over that lol. but ya I'm happy everything is looking positive as I said before I'll keep you posted or if I have more questions I'll post them here.
Gyva
I would not recommend filing bankruptcy. It stays on your credit report for 7 to 10 years. (7 for a chapter 13, 10 for a chptr 7). However, if you do, all is not lost. You can get a home loan at subprime rates after the bankruptcy has been discharged for 2 to 3 years. You can buy a car the day after the bankruptcy has been discharged if you dont mind paying credit card rates on a car loan. The key is rebuilding your credit. Make sure you keep one credit card open through the bankruptcy if possible. Use it and pay it off every month so you get a "paid as agreed" rating. If you cant keep one open, as soon as possible after the BK is discharged, open a secured card and USE IT. just having it does no good.
I am refinancing a guy right now that had a BK discharged 3 years ago and has built up a 650+ FICO score since then. I wouldnt have believed it unless I saw it myself.
Avoid foreclosure at all costs. An investor will put up with a BK with no foreclosure but will not give you money if you have failed to make your housepayments. I have several lenders that will over look bad credit lines as long as the previous mortgage history is good.
[addsig]
I must say that I disagree with the previous posts.(only in the sense to dismiss BK as an option) Some cases BK will help. I agree that you did borrow the $ and therefor owe. BK is there and for a reason. I would consult a BK attorney and have them explain the pros and cons. and how it will effect YOU PERSONALLY. We all make mistakes and maybe it IS in YOUR best interest to consider filing. I have seen people who "wiped the slate clean" through BK have better luck in re-establishing their credit then those who tried to do the right thing and pay off their debts. Go Figure! The fact is that a Bk can only stay on your credit for 10 years (sometimes 7) and if it takes you 5 years to re-establish or pay your debts off it takes seven years after that to "wipe the slate clean"
I would definately at least consult with a BK lawyer and discuss your personal situation
Well for an update all is going well. I came to this site looking for advice on how to buy a home again and through everyones advice to not claim bankruptcy I called my morgage company. I was so close to claiming, I had already sat in fron of the lawyer and he gave me the papers to fill out and hand back. scared I came to this site. And then after advice I called my morgage company and they said all I needed was to prove my income to show I was employed and write a hardship letter and I did. I called them yesterday to see how things were going and I got my house back!!!!!! they told me my loan was with negotiators and I would know the details in 5 days. so I asked what that ment and she said "well if your loan gets this far in the system then you got your house back" I was sooo happy... Thanks everyone. thanks for changing my mind. I can't thank you enough!!!!!!!!!!!!
Mike...
in order to declare bankruptcy that is ch. 7 bankruptcy your total income must be less than what your payments would be to your creditors...so if you make 1500 a month and your payments after housing, food, clothing, car, credit cards, and other miscellaneous debt is 2000 a month than you are eligible for ch. 7 bankruptcy were your debts will be discharged.
now if you do go through ch. 7 and sometime later on in your life you get that high paying job you can always go back and pay those creditors (even though under the law you wouldnt have to, but it would be the right thing to do)
Take it from someone with recent experience - bankrupcy is a mistake. This will sound bad, but you're better off to change your name and try a restart. Even if you don't go that far, defaulting, judgements and lawsuits are better options than bankrupcy because they WILL clear off the reports over time. Don't let anyone tell you a bankrupcy does - it doesn't. The lawyers tell you bankrupcy is a "fresh start" - b.s. it is a dead stop. My folks had one follow them hard for over 14 years; after that they stopped using credit so who knows where it would have ended. I expect mine will be there forever to haunt me too. Not only that, the lawyer botched it all up. Now, the person who started this post is just plain irresponsible and childish and it probably doesn't matter what he/she does, his/her future ain't too bright. But if you've had a nasty setback, like I did, bankrupcy isn't the answer. Avoid it like AIDS. Oh, and by the way, paying a debt off after it is discharged is ONLY a balm for your conscience, it won't improve your credit one iota.
I suggest you speak to a reputable bankruptcy attorney (not like the one that a previous poster mentioned). There are numerous consumer loan and mortgage loan programs available to persons who have been discharged from bankruptcy. You may be eligible for one of these programs upon completion of a Chapter 13 bankruptcy plan. Bankruptcy is and was intended to be for the purpose of allowing a person to get a fresh start. I know there is a bankruptcy attorney on this TCI (not my practice). He/she may be able to shed some light. Get professional advice on this one.
I know of a highly reputable program that gets you debt free within 2 years. They negotiate down your debt with each vendor and also show you how to grow your money once you're debt free. Best of all the service is free. It is different from some debt councelling companies (who are actually funded by credit card companies) that reduce your interest rate but the debt stays the same, it just gets prolonged.
Let me know if you would like to know more.