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Is bankruptcy a good option for me?

We have had our house foreclosed on, have a $14,000 car loan which is not due to be paid off til next January, $5000 in credit card debt, about $3500 personal loan. The foreclosure is a major thing, since we had onl ybeen in the house 6 months and put no money down on it. We were really inexperienced, got a house out of our price range with a ARM. Bad, bad decision and it has negatively impacted us greatly. We realize our mistakes and want to make up for them, but we don't know where to start. Debt consolidation says they won't touch most of our debt. So we are curious about bankruptcy? Advice?

 
Anonymous

Asked by Anonymous at 5:35 PM on Jan. 25, 2010 in Money & Work

This question is closed.
Answers (9)
  • I'm not sure how bankruptcy works with a foreclosed house. We filed for bankruptcy before they made changes to it. We had our house for almost a year, but were still making payments. We owed more on our car than it was worth and had A LOT of credit card debt and some student loans. We did chapter 7 and kept everything but the credit card debt. It did not wipe out the debt owed on the car loan or on the student loans. We went through a bankruptcy lawyer and it has been a great blessing to us. Those first few years after bankruptcy were hard though. We still had our house payments, car loan payments, and student loan payments. If we needed to buy anything, we had to have the cash on hand for it. But, we were finally able to get on top of it all and paid off the car and student loans now.

    I suggest you visit a lawyer and see what your bankruptcy options are. Most will not charge for the first visit with them. Good luck!
    Anonymous

    Answer by Anonymous at 6:13 PM on Jan. 25, 2010

  • I'm in the same boat! I'd really love to hear whoever answers this Q!!!!
    Anonymous

    Answer by Anonymous at 5:39 PM on Jan. 25, 2010

  • and if it matters the house was about $175,000 left on it when the bank foreclosed.
    Anonymous

    Answer by Anonymous at 5:39 PM on Jan. 25, 2010

  • You need to ask a bankruptcy attorney. The laws changed a few years ago and I think a lot depends on what your income is. If you don't qualify for Chapter 7, you may qualify for Chapter 11 which is a refinance plan. However, an attorney will be able to tell you the consequences a bankruptcy is going to have on your credit. With a foreclosure, you guys are going to have a rough road ahead of you. Good luck
    Anonymous

    Answer by Anonymous at 7:44 PM on Jan. 25, 2010

  • If you sold both the cars how much would they bring?
    Are you upside down in your home?
    Bankruptcy laws vary from state to state, but generally (emphasis on generally) the court will want you to sell what you can or at least continue making payments on the item(s).

    The amount that you owe on the car is probably part of what is killing you financially. If you can dump them I bet that would easily wipe out half or your debt.

    Also bankruptcy can end up costing an arm and a leg anyway. I *think* up to $10,000. So probably not a good option for how much you owe. Get another part time job, rent cheaply for a couple years. Get out of debt, and then save up some cash for a down payment on a home.

    Check out DaveRamsey.com for more information or visit the Dave Ramsey group on Cafemom. You're not too far in the hole-- assuming of course that you weren't upside down on your home.
    Anonymous

    Answer by Anonymous at 8:00 PM on Jan. 25, 2010

  • My car is worth according to the Kelley blue book $11,000. DH's car is worth about nothing. His car is 20 years old and has 201,000 miles on it. So maybe $250 or so if that. We're in military housing so we don't technically pay rent. We do "pay" our housing allowance straight back to the housing company but the military does that, we never even see the $. We budget, live paycheck to paycheck, but I do know the legal office on base does some bankruptcy filing for free if its simple. I don't know what is considered simple. I sometimes sell things from home, sometimes babysit to bring in more money. but I can't go get a job. The child care would be more than I would make. My friend just got a job after months of looking and it pays $8.50/hr and she's got more experience than me. Also DH is gone for training for 2 days-3 weeks sometimes longer every couple months, so i can't really work around his schedule for him to be home.
    Anonymous

    Answer by Anonymous at 8:13 PM on Jan. 25, 2010

  • I'm just frustrated, want to get everything straightened out. I had asked DH about selling my car since the car payment is so high, but he said we would be about $3000+ upside down on it, and since we only owe one more year on it, it would not make it worth it. his car is about to break down and we will be down to just my car. his transmission is going out, needs new brakes, ac and radio don't work right, motor for the windshield wipers quit working, it's in bad condition. So I'll be driving him to work, the kids to school, then picking him up in the evenings. so I can't really just sell my car. if it was that simple I would do it if his car was more dependable.
    Anonymous

    Answer by Anonymous at 8:16 PM on Jan. 25, 2010

  • It would make sense to sell the car if it kept you from bankruptcy.
    What are your payments on the car then? More than $1000 a month? You could have $3000 paid off so fast. And then what? You'd have an extra $1000 a month that you could put into your budget so that it's not so tight.
    Anonymous

    Answer by Anonymous at 12:13 AM on Jan. 26, 2010

  • Its $626 a month, and we're just paying on the principal now. It didn't seem to make sense to leave a family with 3 kids with no car, no way to get around to and from schools because like I said my husbands car is not going to make it much longer in fact it stalls on the road quite often and we have to kill the car and restart it to even get it to work. we couldnt go 3 or 4 months with no car then long enough to save up to buy a used one. here a decent used one costs $1000+. Thats for a car that just runs. and definitely no sense in paying on the one we have now for 5 years just to sell it with one year left and then have no way to finance another cheaper car. we would have to pay cash for a POS used car with no warranty or anything. mines still under warranty til 100,000 miles so will still be under warranty until a couple years after its paid off. Gotta think of the safety of my kids in the car im driving.
    Anonymous

    Answer by Anonymous at 10:12 AM on Jan. 26, 2010

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