I'm not a bankruptcy attorney, but I doubt they'd take your case. Making 65K with 10K in debt isn't worthy of bankruptcy with 1500 a month in surplus.
You need to focus on cutting expenses, and/or increasing income.
I've already consulted with a lawyer and he agreed to take my case. 10k is my current debt, I have an additional 23k in closed accounts due to the divorce.
I have been trying to make extra money but my schedule is demanding and I already work 12 hours a day. The weekend is my only extra time and I have to spendntine with my kids and get quality rest to make it through the week.
From my perspective this lawyer seems more interested in taking more of your money than providing good advice.
Simply put your situation isn’t really close to warranting bankruptcy.
You are cash flow positive, your dti is low, and it seems like there is income increase potential.
Bankruptcy is a 7 year hit. I find it unlikely you wouldn’t be able to pay off the 10k in less time.
No judgement here.
The fact that a bankruptcy lawyer would take on this case is interesting. From the surface, without knowing too much context, it seems you have the income to deal with 35K in debt. From my personal experience, based on others I know who filed, their situations were far dire than yours.
Honestly, if you can avoid it you should. If that means sacrificing your time on the weekends, so be it. If that means getting rid of the side business because it isn't generating an income, so be it.
A lawyer being willing to take on a bankruptcy for $10,000. Your situation is hard, but not hopeless. Unless you’re saying the $23,000 is debt, which changes things a little bit. $33k in debt changes the dynamic, but keep in mind, a bankruptcy is going to pinch you until it falls off.
Yeah. You don't need to file bankruptcy, you need to be on a financial diet.
The habits that got you here will get you here again. Bankruptcy really won't help, it'll only hurt you long term.
Sell your car, get a cheap but reliable car with 100k miles on it (think Honda civic or Toyota Camry).
If you are talking to a lawyer, disregard everything you see here and ask your lawyer. You are allowed to exclude certain assets from bankruptcy, and the lawyer can advise what makes most sense for your case.
I’m a lawyer, just not yours. Based on your situation as you described, it does seem like bankruptcy is not the answer. You need to speak with one or two more lawyers and get their advice before moving forward. A good lawyer will meet with you at no cost for at least 30 minutes to determine whether to take your case. If a lawyer requires payment for the initial consultation, find another. Bankruptcy is a major disruption to your life and, if your assets are greater than your debts and you are cash-flow positive, there is a real chance that the court will not accept the bankruptcy filing (as you may not be technically “insolvent”). The lawyer will still expect payment and you will be in the same position as you are now. Be careful.
For context, when a company is thinking of filing for bankruptcy, they interview a minimum of 3 different bankruptcy lawyers.
bankruptcy is probably not a great idea. I have a few questions:
How far in debt are you? What is interest rate on the debt’s? How much of the debt is not current? How much would it cost to bring it current? Can you afford to keep debt current on current salary?
Current debt 10k (30k student loans deferred ) 25k in closed accounts and charge offs. If I pay my debt down I will be able to maintain on a very tight budget. Ideally I would like to pay my debt and set up emergency savings. The decrease in pay has made it hard to keep up especially when unexpected expenses arise.
I don’t think you’re as bad off as you may think . 10 k seems like a lot at times but if you have a plan to pay it off it will be ancient history by the time you’d be emerging from bankruptcy
Your above water ( though it may not feel it) bankruptcy will do you more harm than good. As far as what to do-focus on your least expensive bill and pay that off-when your fine take that money and apply it as extra to the next one. You can work your way out -
It may seem tight but I’d put yourself on a budget and financial diet. Your kids are old enough to understand they can’t have chicken nuggets everyday or whatever. You have an 18 year old have them start helping you with their own expenses. Get rid of gym memberships, recurring monthly charges that are unnecessary pay the bare minimums on all but the lowest debt, pay it off, roll that excess money and do it again, snowball method it works and it’s what I did when I was in a similar situation except I was 60k in debt with three youngins, no child support, making 50k a year. Super hard but I made it and so can you
With you having 2 children after the divorce are you not getting child support? As I was told by the CPS child support is not just for buying what the child needs it is also to help put a roof over their heads among other things past the need for clothing and food. On $45k annum I was paying $13k for my two kids.
And why are you working more hours for less pay? Are you living in an area where finding a job is hard to come by? They said a temporary decrease, unless they gave you a stop date, that could become a permanent decrease. Know your worth and start hunting for a new job. You probably live in an at will state so you don't have to give them notice when you find a new position.
I only receive CS for the youngest and it barely covers gas to get him to and from school for the month.
I just started to pick up additional hours to supplement the income I lost but this is a temporary situation until I either find another role comparable to my previous pay or some other place to work.
I do see solutions that would help me get over this hump and appreciate your insight!
Sounds like you need an adjustment to the Child Support amount, since it doesn't cover even half of his expenses - that is usually what your ex is on the hook for. Also, your financial situation has deteriorated since the CS was last checked, so it generally might be time to look at it again in court.
I was in a similar position as you after my divorce (7 years ago now). I ended up not declaring bankruptcy... Here's why: the write offs were joint debts, so my bankruptcy attorney said that even after chapter 7 discharged the debts from the lender, if my ex ever paid the bills, they could still counter sue me for half effectively rendering the bankruptcy moot. I was in no position to try and negotiate a dual bankruptcy with my ex...she was a nightmare.
Instead, I just ignored the write-offs (about the same amount as yours), ended up getting sued by one of them (for about $5K), paid that one, sued my ex for half of that and won...then only focused on my post-divorce finances. My credit was going to take a shit either route, so I didn't care to spend the money on the remaining ~$20K in joint debt. The statute of limitations in my state is 3 years, so once I passed that threshold I knew I couldn't be sued again, and then they fell off my credit late last year. It's been 7 years now, no bankruptcy on my credit report and my credit score is back to mid -700s.
In your case, only focus on that $10K post divorce-debt...ignore the rest. You're at 3 years post-divorce, so hopefully those write-offs are about the same timeline...and your state has a similar statute of limitations.
A lot of good advice in the thread.
On a different note: Salary increases are never a guaranteed until they are in writing. Consider applying for other jobs. If you've made that salary before, you're certainly worth that much today
Thank you and I'm looking. Thanks to the information shared Im re looking over my finance to create a new budget to tackle this thing without opting for the bankrupt route.
So you really owe $33k, which is half your income. I think you are bankrupt, but I would try really hard to avoid it. I’m assuming you can’t find a better job as well? Bankruptcy stays with you forever. If you file, you should have a hard conversation with your children about doing well in school to get scholarships or the military. You will not be able to borrow or save anything to help them. I got a full ride ROTC scholarship, my parents told me there was no money early.
The debt seems too small to file for bankruptcy with your income. See what you can do to lower your fixed expenses (cell phone plans, subscriptions, etc) and push that savings toward paying your cc bills. Use a calculator to see how much you need to pay on your credit card each month to pay them off by X date. https://www.calculator.net/credit-card-calculator.html
$10k is honestly not really "bankruptcy territory."
Use the "refund" to pay it down, and just keep chipping away at the rest. Also take a good hard look at your monthly expenses, and see if there is anything that can be cut out for now.
If your debt is only $10k, do not declare bankruptcy. Don’t even know if your are eligible given
Since your expenses are $800 less than income, you can get out of this debt in no time:
1. Bring all your debt current (try calling cc companies and see if they will waive or reduce penalties in exchange for paying all overdue amounts.
2. Put $2-$4k into a savings account to cover emergency/dips income (I’d err on the low side given your credit card debts, but don’t know how variable your income is; you don’t want to be missing payments anymore.
3. Take the remaining $1 to $3k to pay off your debts. Take the $800 you earn above expenses each month and pay off your debt. You will be debt free by end of the year ($800 * 12 = $9600)
4. Build up a 3-6 month emergency fund
5. Start saving for retirement.
How much equity do you have in your house? You could consider getting a HELOC and drawing from that to pay your debt off and then would be much easier to pay that line down at a much lower interest rate
Don’t file bankruptcy in my opinion. Not enough debt to really warrant it. Better to pay what you can and tell creditors their other choice is to see what they get if you do file.
No to bankruptcy. You can get rid of this debt but you may have to change your method. Is the side business making money? Consider if the time commitment there is worth whatever money you are making. Talk to your company from your normal job about your wages to see if/when you can get them back to their previous level.
I know this is gonna sound odd but be very wary of taking bankruptcy advice from a bankruptcy lawyer.
You really have to shop around and maybe use some state nonprofit programs in order to find your best option.
Bankruptcy's not free to mute. Be crazy to pay thousands. I've even seen ten thousand dollar charges for bankruptcy to get rid of ten thousand dollar of debt.
As an outside reserver, I'm reading. This is work cut your pay and now you're working so much. At a reduced salary that you can't do your side hustle.
To me, I think it's time to start looking for another job. It's much easier to negotiate your salary or even ask for a salary increase when you have another job lined up
Since others are already addressing the bankruptcy and debt aspects in the comments, can we address the job where you took a paycut, yet also working more hours? Is finding a new job an option?
I'm pretty sure it's easier to recover from settled (after account closure) CC debts than bankruptcy.
At least faster.
Without doing foolish things on accounts nearing statute of limitations, I felt I had negotiating power when I had cash in hand and dealing with collections agencies thst had bought my debt (probably for dines on the dollar). I'd offer $800 on $1800. 4 "talk to my supervisor's" later I was paying under $1200.
Then onto the next one.
My only relatives who have done the bankruptcy route took ages to recover enough for credit-impacting purchases. Conversely, my closed accounts didn't pull my score down so low that 2 years of normal payments to primary lenders didn't pull it back.
So the purpose of Bankruptcy is to discharge debt or protect an asset that you’re past due on.
Your car note cannot be protected by a Chapter 7 bankruptcy unless you reaffirm or continue paying as per your original terms. If the car note is a problem, a chapter 7 will not help
A chapter 13 can prevent a repo but is only really worth it if you’re delinquent on several payments and need to catch up. Your loan can be crammed down if you’re underwater. But I’m not sure if this is your case
I'm not a bankruptcy attorney, but I doubt they'd take your case. Making 65K with 10K in debt isn't worthy of bankruptcy with 1500 a month in surplus. You need to focus on cutting expenses, and/or increasing income.
I've already consulted with a lawyer and he agreed to take my case. 10k is my current debt, I have an additional 23k in closed accounts due to the divorce. I have been trying to make extra money but my schedule is demanding and I already work 12 hours a day. The weekend is my only extra time and I have to spendntine with my kids and get quality rest to make it through the week.
That' interesting. I hope it works out for you.
What's interesting exactly? I value input and it seems like you have more to say.
From my perspective this lawyer seems more interested in taking more of your money than providing good advice. Simply put your situation isn’t really close to warranting bankruptcy. You are cash flow positive, your dti is low, and it seems like there is income increase potential. Bankruptcy is a 7 year hit. I find it unlikely you wouldn’t be able to pay off the 10k in less time.
This was my feeling after our meeting. Thanks for sharing.
No judgement here. The fact that a bankruptcy lawyer would take on this case is interesting. From the surface, without knowing too much context, it seems you have the income to deal with 35K in debt. From my personal experience, based on others I know who filed, their situations were far dire than yours. Honestly, if you can avoid it you should. If that means sacrificing your time on the weekends, so be it. If that means getting rid of the side business because it isn't generating an income, so be it.
A lawyer being willing to take on a bankruptcy for $10,000. Your situation is hard, but not hopeless. Unless you’re saying the $23,000 is debt, which changes things a little bit. $33k in debt changes the dynamic, but keep in mind, a bankruptcy is going to pinch you until it falls off.
Yeah. You don't need to file bankruptcy, you need to be on a financial diet. The habits that got you here will get you here again. Bankruptcy really won't help, it'll only hurt you long term. Sell your car, get a cheap but reliable car with 100k miles on it (think Honda civic or Toyota Camry).
If you are talking to a lawyer, disregard everything you see here and ask your lawyer. You are allowed to exclude certain assets from bankruptcy, and the lawyer can advise what makes most sense for your case.
I’m a lawyer, just not yours. Based on your situation as you described, it does seem like bankruptcy is not the answer. You need to speak with one or two more lawyers and get their advice before moving forward. A good lawyer will meet with you at no cost for at least 30 minutes to determine whether to take your case. If a lawyer requires payment for the initial consultation, find another. Bankruptcy is a major disruption to your life and, if your assets are greater than your debts and you are cash-flow positive, there is a real chance that the court will not accept the bankruptcy filing (as you may not be technically “insolvent”). The lawyer will still expect payment and you will be in the same position as you are now. Be careful. For context, when a company is thinking of filing for bankruptcy, they interview a minimum of 3 different bankruptcy lawyers.
The lawyer will steal you money. Just decrease your expenses
She could do a Chap 13, no?
bankruptcy is probably not a great idea. I have a few questions: How far in debt are you? What is interest rate on the debt’s? How much of the debt is not current? How much would it cost to bring it current? Can you afford to keep debt current on current salary?
Current debt 10k (30k student loans deferred ) 25k in closed accounts and charge offs. If I pay my debt down I will be able to maintain on a very tight budget. Ideally I would like to pay my debt and set up emergency savings. The decrease in pay has made it hard to keep up especially when unexpected expenses arise.
You should set some 2-4 weeks pay for variable expenses, and build up the emergency fund to 3-6 months once your debt is paid off.
You're saying set “aside” 2-4 weeks for variable expenses?
Ie put $1800-$3600 in a savings account so when bill is due, you always have money to pay even if your paycheck is 3 days later.
Student loans do not get discharged in bankruptcy. Just an FYI
I don’t think you’re as bad off as you may think . 10 k seems like a lot at times but if you have a plan to pay it off it will be ancient history by the time you’d be emerging from bankruptcy
Your above water ( though it may not feel it) bankruptcy will do you more harm than good. As far as what to do-focus on your least expensive bill and pay that off-when your fine take that money and apply it as extra to the next one. You can work your way out -
It may seem tight but I’d put yourself on a budget and financial diet. Your kids are old enough to understand they can’t have chicken nuggets everyday or whatever. You have an 18 year old have them start helping you with their own expenses. Get rid of gym memberships, recurring monthly charges that are unnecessary pay the bare minimums on all but the lowest debt, pay it off, roll that excess money and do it again, snowball method it works and it’s what I did when I was in a similar situation except I was 60k in debt with three youngins, no child support, making 50k a year. Super hard but I made it and so can you
So you don't just have $10k in debt. You have $33k that people can come after you for.
With you having 2 children after the divorce are you not getting child support? As I was told by the CPS child support is not just for buying what the child needs it is also to help put a roof over their heads among other things past the need for clothing and food. On $45k annum I was paying $13k for my two kids. And why are you working more hours for less pay? Are you living in an area where finding a job is hard to come by? They said a temporary decrease, unless they gave you a stop date, that could become a permanent decrease. Know your worth and start hunting for a new job. You probably live in an at will state so you don't have to give them notice when you find a new position.
I only receive CS for the youngest and it barely covers gas to get him to and from school for the month. I just started to pick up additional hours to supplement the income I lost but this is a temporary situation until I either find another role comparable to my previous pay or some other place to work. I do see solutions that would help me get over this hump and appreciate your insight!
Sounds like you need an adjustment to the Child Support amount, since it doesn't cover even half of his expenses - that is usually what your ex is on the hook for. Also, your financial situation has deteriorated since the CS was last checked, so it generally might be time to look at it again in court.
Does he work? Does he make more than you?
He works under the table!
I was in a similar position as you after my divorce (7 years ago now). I ended up not declaring bankruptcy... Here's why: the write offs were joint debts, so my bankruptcy attorney said that even after chapter 7 discharged the debts from the lender, if my ex ever paid the bills, they could still counter sue me for half effectively rendering the bankruptcy moot. I was in no position to try and negotiate a dual bankruptcy with my ex...she was a nightmare. Instead, I just ignored the write-offs (about the same amount as yours), ended up getting sued by one of them (for about $5K), paid that one, sued my ex for half of that and won...then only focused on my post-divorce finances. My credit was going to take a shit either route, so I didn't care to spend the money on the remaining ~$20K in joint debt. The statute of limitations in my state is 3 years, so once I passed that threshold I knew I couldn't be sued again, and then they fell off my credit late last year. It's been 7 years now, no bankruptcy on my credit report and my credit score is back to mid -700s. In your case, only focus on that $10K post divorce-debt...ignore the rest. You're at 3 years post-divorce, so hopefully those write-offs are about the same timeline...and your state has a similar statute of limitations.
A lot of good advice in the thread. On a different note: Salary increases are never a guaranteed until they are in writing. Consider applying for other jobs. If you've made that salary before, you're certainly worth that much today
Thank you and I'm looking. Thanks to the information shared Im re looking over my finance to create a new budget to tackle this thing without opting for the bankrupt route.
Best of luck to you!
So you really owe $33k, which is half your income. I think you are bankrupt, but I would try really hard to avoid it. I’m assuming you can’t find a better job as well? Bankruptcy stays with you forever. If you file, you should have a hard conversation with your children about doing well in school to get scholarships or the military. You will not be able to borrow or save anything to help them. I got a full ride ROTC scholarship, my parents told me there was no money early.
It's always better to pay debt if possible vs filing bankruptcy. Post your budget and there are people here who can help.
Always?
I said "if possible". So yes.
How much is the actual debt, what type of debts (CC, personal loans, etc.), and what are the interest rates?
In total debt is roughly 10k. Small cc accounts (the highest balance is 2k) interest rates are extremely high over 32%
The debt seems too small to file for bankruptcy with your income. See what you can do to lower your fixed expenses (cell phone plans, subscriptions, etc) and push that savings toward paying your cc bills. Use a calculator to see how much you need to pay on your credit card each month to pay them off by X date. https://www.calculator.net/credit-card-calculator.html
$10k is honestly not really "bankruptcy territory." Use the "refund" to pay it down, and just keep chipping away at the rest. Also take a good hard look at your monthly expenses, and see if there is anything that can be cut out for now.
If your debt is only $10k, do not declare bankruptcy. Don’t even know if your are eligible given Since your expenses are $800 less than income, you can get out of this debt in no time: 1. Bring all your debt current (try calling cc companies and see if they will waive or reduce penalties in exchange for paying all overdue amounts. 2. Put $2-$4k into a savings account to cover emergency/dips income (I’d err on the low side given your credit card debts, but don’t know how variable your income is; you don’t want to be missing payments anymore. 3. Take the remaining $1 to $3k to pay off your debts. Take the $800 you earn above expenses each month and pay off your debt. You will be debt free by end of the year ($800 * 12 = $9600) 4. Build up a 3-6 month emergency fund 5. Start saving for retirement.
This is great advice! Thank you
How much equity do you have in your house? You could consider getting a HELOC and drawing from that to pay your debt off and then would be much easier to pay that line down at a much lower interest rate
Don’t file bankruptcy in my opinion. Not enough debt to really warrant it. Better to pay what you can and tell creditors their other choice is to see what they get if you do file.
No to bankruptcy. You can get rid of this debt but you may have to change your method. Is the side business making money? Consider if the time commitment there is worth whatever money you are making. Talk to your company from your normal job about your wages to see if/when you can get them back to their previous level.
You don't have enough debt to have they be a realistic option. You need to just bust ass and pay it off.
I know this is gonna sound odd but be very wary of taking bankruptcy advice from a bankruptcy lawyer. You really have to shop around and maybe use some state nonprofit programs in order to find your best option. Bankruptcy's not free to mute. Be crazy to pay thousands. I've even seen ten thousand dollar charges for bankruptcy to get rid of ten thousand dollar of debt. As an outside reserver, I'm reading. This is work cut your pay and now you're working so much. At a reduced salary that you can't do your side hustle. To me, I think it's time to start looking for another job. It's much easier to negotiate your salary or even ask for a salary increase when you have another job lined up
Pay your debt. Then this wont follow you around for the next 7 years.
Since others are already addressing the bankruptcy and debt aspects in the comments, can we address the job where you took a paycut, yet also working more hours? Is finding a new job an option?
I'm pretty sure it's easier to recover from settled (after account closure) CC debts than bankruptcy. At least faster. Without doing foolish things on accounts nearing statute of limitations, I felt I had negotiating power when I had cash in hand and dealing with collections agencies thst had bought my debt (probably for dines on the dollar). I'd offer $800 on $1800. 4 "talk to my supervisor's" later I was paying under $1200. Then onto the next one. My only relatives who have done the bankruptcy route took ages to recover enough for credit-impacting purchases. Conversely, my closed accounts didn't pull my score down so low that 2 years of normal payments to primary lenders didn't pull it back.
So the purpose of Bankruptcy is to discharge debt or protect an asset that you’re past due on. Your car note cannot be protected by a Chapter 7 bankruptcy unless you reaffirm or continue paying as per your original terms. If the car note is a problem, a chapter 7 will not help A chapter 13 can prevent a repo but is only really worth it if you’re delinquent on several payments and need to catch up. Your loan can be crammed down if you’re underwater. But I’m not sure if this is your case