What's the worse that can happen if I file for bankruptcy. I think you should know that I am a student and that I have several loans out. I just want to file for bankruptcy as far as the credit cards go. Bikim
Dear Bikim:
If you file for bankruptcy, a notation that you filed will be entered on your credit bureau file. This derogatory notation can remain on your credit bureau file for 10 years. While this bankruptcy notation is on your credit bureau file, you could be prevented from getting credit, a job, insurance, an apartment or opening a checking and/or savings account.
Dear Susan & Co.,
I am recovering from a past bankruptcy that was released 7/93. Since then I feel I have been punished by having to pay almost 25% for my first post bankruptcy car loan. I traded that car in and got a lower rate which is now almost 17%. It makes it hard to ever get good credit terms... what can I do? Mary
Dear Mary:
Bankruptcy is often called a 10 year mistake and you are evidence of that. A notation that you filed for bankruptcy will remain on your credit bureau file for up to 10 years from the date you filed. This notation will prevent you from getting credit or if you do get credit, you will not get credit at favorable terms.
Until 10 years have passed, you will continue to have the stigma of bankruptcy follow you. Sorry.
Dear Susan & Co.,
If I do this program would it be considered bankruptcy? Penny
Dear Penny:
No, a debt management program is not considered bankruptcy. It is considered an alternative to bankruptcy. If you file for bankruptcy, this blemish can stay on your credit bureau file for up to 10 years. Bankruptcy can prevent you from getting credit, insurance or a better job in the future. The program helps prevent this from happening.
Dear Susan & Co.,
Five years ago I declared bankruptcy! You are right about it being the biggest mistake a person can make. Unfortunately, no one explained that to me at the time! Since that time I have purchased nothing on credit.
I need a new vehicle and I am tired of paying rent on a home. I could really use some limited credit purchases.
Is there a way to obtain some limited credit for these types of items? Could you direct me to a source? LKR
Dear LKR:
Yes, there are creditors out there that will consider you for a home mortgage loan and financing to purchase a vehicle. You will just have to start making some phone calls.
In regards to a mortgage loan to buy a house, even though you filed for bankruptcy, there are mortgage companies that will consider you for a loan, if it has been over two years since you filed. To find mortgage companies that might consider you for a loan, look in the yellow pages of your phone book under "Mortgages". Start calling some of the mortgage companies listed. Explain the details of your bankruptcy and ask if they will consider you for a loan. If they won't, can they recommend another mortgage company that will consider your request.
In trying to get a vehicle financed, call an authorized car dealer in your area and ask to speak to the person in charge of financing vehicles at the dealership. Explain to this person that you filed for bankruptcy 5 years ago and do they have a financing source that will consider you for financing a vehicle, even though you have a bankruptcy notation on your credit file. You might have to call a few dealers before you get a positive response. Good luck.
Dear Susan & Co.,
I am considering bankruptcy or your service. I have seen you use the phrase "ten year mistake".
My question is this; I have been told that you are a not for profit organization that gets most of it's financing from the credit card companies. If this is true, is your opinion on bankruptcy unbiased or self serving, and why do you not disclose this information? Sincerely yours, WHJ
Dear WHJ:
We feel our opinion about bankruptcy is totally unbiased. Yes, it is true our primary financial support comes from the credit card industry but that doesn't mean we will not recommend bankruptcy when bankruptcy is the logical solution to a consumer's debt situation.
The primary reason we suggest a consumer look for another solution is because of the negative comments we have heard from consumers who have filed for bankruptcy and then wished they hadn't. For ten years they have trouble getting credit, insurance and possibly a better job. We just want the consumer to be knowledgeable about all aspects of bankruptcy, both the good and the bad, and offer alternatives. Then the consumer can make an intelligent decision, based on all the facts.
Why don't you just tell people to file for bankruptcy, then they can spend their wages on their families instead of on banks? Harry
Dear Harry:
Not everybody wants to file for bankruptcy. People are looking for an alternative to bankruptcy. We offer an alternative.
Bankruptcy is often looked at as a ten year mistake. When you file for bankruptcy, a notation to this effect can remain on your credit bureau file for up to ten years. This can prevent you from getting credit in the future. You can also be denied a checking account, insurance, apartment lease and a better job. These are all negatives a bankruptcy can cause that most people try to avoid.
About 9 1/2 years ago I filed for Chapter 7 Bankruptcy . My question is how can I get this off my credit history once I hit the 10 year period . Can I hire your services to do this? Please let me know. Thank you. Jose Jr. in NYC
Dear Jose Jr:
After 10 years, the credit reporting agencies (CRAs) should automatically remove this bankruptcy notation from your file. To be sure it has been done, after the 10 years has gone by, you would be wise to get a copy of your credit bureau file. If you see the bankruptcy notation is still on your file, which I doubt you will, you will need to contact the CRAs yourself and demand they remove this notation.
The names, phone numbers and e-mail addresses of the three primary credit reporting agencies are:
Experian at 1-800-643-3334
Equifax at 1-800-685-1111
Trans Union at 1-800-916-8800
When you contact them, you will be informed as to what procedure you need to follow to get a copy of your report.
Is it necessary to have a lawyer to file for bankruptcy? Please advice. Al
Dear Al:
No, you do not need an attorney to file for bankruptcy although it is strongly recommended you seek the services of a bankruptcy attorney. You can file all the necessary paperwork yourself. But don't look to the bankruptcy courts for advice or assistance in helping you file. In most cases, they will not help.
For help and assistance, you can go to a book store or office supply store and purchase books and material that will guide you on the bankruptcy process.
Can you please explain to me how your program is superior to filing chapter 7 or chapter 11 bankruptcy? It appears that 7 discharges debts, and 11 allows the payment of debts without interest. Your program appears to require payments of debt, with interest, and cannot guarantee an improvement in credit record.
Thank you for your assistance. Star
Dear Star:
Chapter 7 bankruptcy is often looked at as a 10 year mistake. That is because if you file for Chapter 7, a notation to this effect can remain on your credit bureau file for up to 10 years. This can prevent you from getting credit, certain insurance and possibly a better job for the next 10 years.
Instead of Chapter 11, a consumer would probably file for Chapter 13 bankruptcy. Both basically serve the same purpose but Chapter 11 is primarily for businesses to reorganize their debts and Chapter 13 is primarily for consumers to reorganize their debts. If you file for Chapter 13, this notation can remain on your credit bureau file for 7 years.
Yes, our program does require the repayment of your debt. This is what most consumers want to do instead of filing for bankruptcy. The debt management program (DMP) is looked at as an alternative to bankruptcy. When you start a DMP, some creditors will stop or reduce their finance charges and/or other fees. Others will not. This is an individual creditor policy and these policies may change over the course of a DMP. MMI actively works toward gaining more creditor cooperation in this area.
True, our DMP does not guarantee an improvement of your credit rating but a Chapter 7 or Chapter 13 is a guarantee of a poor credit rating. Our DMP seeks to help a person maintain their credit rating. Very seldom does a creditor submit a derogatory report for 7 years for clients participating in a DMP. A temporary blemish might be noted but after a client successfully completes a program, all negative comments are generally removed.
Dear Susan & Co.,
We signed up for a debt management program, thinking it was a good way to get out of debt. Now one loan company tells me its a form of bankruptcy. Is this true? Then why didn't they tell us about this. Can we get out of this program? Need your advice. Ronald
Dear Ronald:
This loan company is just looking out for their own interests and is not being honest and candid with you. Why haven't other creditors told you the same thing?
No, a debt management program (DMP)is not a form of bankruptcy. A DMP is an alternative to bankruptcy. If you file for bankruptcy, this notation can remain on your credit bureau file for up to 10 years. Your counseling agency makes no notation on your credit bureau file that you are on a DMP.
If you still want to discontinue your DMP, call your counseling agency and tell them you will resume handling your accounts yourself and to drop you from the program. They will honor your request. My suggestion is you not listen to this loan company and stay with your program. Good luck.
Dear Susan & Co.,
I recently became unemployed after the birth of my third child. Our debts are now greater than our income. I know there are debt management companies that can help with unsecured debts, but do any help with secured debts? The companies we have contacted can only reduce our payments on the unsecured debts by about $50.00 per month which will not help our situation. Are we doomed to file bankruptcy?
If we do have to file bankruptcy, what are the different types? Julie
Dear Julie:
Unfortunately, most secured creditors will not lower your monthly payments. It's either full payments or they will consider repossessing their collateral.
The individual generally files one of two types of bankruptcy; Chapter 7 or Chapter 13. Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. The purpose is to obtain a discharge of your existing debts. Under Chapter 7, a trustee takes possession of all your property. You may claim certain property as exempt under governing law. The trustee then liquidates non-exempt property and uses the proceeds to pay your creditors according to priorities of the Bankruptcy Code.
Chapter 13 is designed for individuals with regular income who are temporarily unable to pay their debts but would like to pay them in installments over a period of time. You are only eligible for Chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code. Under Chapter 13, you must file a plan with the courts to repay your creditors all or part of the money that you owe, using your future earnings. Usually the period allowed by the courts to repay your debts will be not more than five years. Your plan must be approved by the court before it can take effect.
There are certain debts that are not dischargeable under the law. You may still be responsible for such debts as certain taxes and student loans, alimony and support payments plus other debts that a Bankruptcy attorney can discuss with you.
Another bankruptcy that you might have heard of is called Chapter 11 bankruptcy. This bankruptcy is designed primarily for the reorganization of a business. Very seldom will an individual file for Chapter 11 bankruptcy.
For further provisions of the Bankruptcy Code, you will need to seek the services of an attorney. Good luck.
Dear Susan & Co.,
Can a student loan in the state of Texas be dismissed by filing a chapter 7 or chapter 13? Troy
Dear Troy:
As a general rule, a government guaranteed student loan cannot be discharged by filing Chapter 7 or Chapter 13 in Texas or any other state. Generally speaking, any debt owed to any government entity is not dischargeable through bankruptcy. This includes debts such as student loans, IRS taxes, property taxes, fines, etc.
I'm in the middle of a divorce and I can't seem to get out of the pile of debt that was accumulated in our marriage. It seems I was "awarded" the bulk of the credit card debt, which is around $40k. I pay about $1k in child support. I currently make $85k plus bonuses. But, I can't seem to make it to the next paycheck without checks bouncing. I'm 34 yrs. old and I'm considering filing Chapter 13. Do you have any suggestions? Signed, At Wit's End
Dear At Wit's End:
Before you consider Chapter 13 bankruptcy, I strongly suggest you contact your nearest CCCS office and schedule an appointment to speak to a professional counselor. During your counseling session, your counselor will review your overall financial situation, discuss possible solutions and make recommendations for you to consider. If your debts are truly unmanageable, your counselor will explore the possibility of a Debt Management Program (DMP) which allows you to make reduced payments to creditors. The DMP serves the dual role of helping you repay your debts and helping creditors collect money owed them. You agree to deposit funds with CCCS each month which CCCS will then distribute to your creditors until you become debt free. The DMP serves the same purpose as a Chapter 13 bankruptcy except you don't have the blemish of a bankruptcy noted on your credit bureau file.
To locate the closest CCCS office, call 1-800-388-2227. If it is inconvenient for you to visit a CCCS office, call our affiliate Money Management International (MMI) at 1-800-762-2271. MMI offers the same service as CCCS except MMI counseling is done over the phone, by mail, fax and the Internet. Counselors are available 24 hours a day, 7 days a week. Good luck.
Dear Susan & Co.,
I'm about $50,000 in debt. Cannot afford a very large payment. Been using one Credit Card to make payments on another and things got out of hand. Am I just wasting my time? Should I just go ahead and file bankruptcy and get it over with. I am afraid the hole I've dug for myself is even too big even if I got assistance from CCCS. Jones
Dear Jones:
Before you make the ten year mistake by filing for bankruptcy, you MUST talk to a CCCS counselor. During a counseling session, a trained professional counselor will analyze your income, expenses and overall financial situation; discuss possible solutions; and make recommendations for you to consider. If debts are truly unmanageable, your counselor will explore the possibility of a Debt Management Program (DMP) which allows you to make reduced monthly payments to your creditors. The DMP serves the dual role of helping you repay your debts and helping creditors collect money owed them. All services with CCCS are free to the consumer.
Dear Susan & Co.,
My husband and I are currently filing bankruptcy. We are only filing unsecured debt...credit cards......Chapter 7...is it going to be difficult for us to buy a home or rent? Some things that I have read say yes and others say no. We are keeping our car loan which is up to date as well as another secured loan as well....I would appreciate any and all info you could give me. Sincerely, Lisa
Dear Lisa:
Yes, after you file for bankruptcy it will be difficult for you to buy a home and possibly rent. You can look at bankruptcy as a blemish on your credit bureau file for the next ten years. That means you will have difficulty obtaining credit as long as this notation remains on your file. You still might be able to get credit but you will probably have to pay a higher interest and/or put down a larger down payment if you are going to finance a major purchase.
Before you file for bankruptcy, may I suggest you call our affiliate Money Management International at 1-800-762-2271 and speak to a counselor. Counselors are on duty 24 hours a day, 7 days a week. Explain your dilemma to the counselor and see if the counselor can suggest an alternative to bankruptcy. Good luck.
Dear Susan & Co.,
My husband owes over $37,000 in debt. Most of which is medical bills from before we met. Last year he had to have emergency open-heart surgery. He was off work for about 7-8 months due to the surgery and lack of work. He received 2 1/2 months of unemployment but did not receive any income for the remaining 5 months. When he went back to work it was a slow period for his company. To make a long story short, he fell behind in his payment to his creditors (approximately 2-5 months). I tried to help but I also have bills that I had to pay. Although we contacted the creditors and tried to work with them, most of them kept adding late payments, additional finance charges, and over-limit fees (2 credit cards). This put him even further behind. Recently his truck was repo'd. Not because they weren't getting monthly payments but because they were late. Now the bank sent a demand letter to him for the balance of his loan after they sold the truck.
His actual take home income last year was approx. $6,000. His normal annual income is about $17,000 - $22,000. His current income fluctuates to extremes at time.
We did go together to see a bankruptcy attorney who very, very strongly recommended that he file bankruptcy. I have been at other appointments for other individuals (family and a friend) but with those the lawyer never pushed filing this hard. They always gave other options. I have contacted CCCS and they are sending the paperwork for us to complete. Regardless of what you say at this point, we will be keeping the appointment with CCCS.
My question is:
Is this lawyer trying to scare us? Or could he be serious in the fact that this is the only plausible solution?
From the above is it possible for you to make a summary assessment? Thank you. Barbara
Dear Barbara:
With your husband having over $37,000 in debt and a normal annual income of $17-22,000, it will be extremely difficult for him to get out of debt without your financial assistance. You have done the right thing by contacting CCCS in an effort to resolve this problem.
When you go to your CCCS appointment, a trained professional counselor will analyze your income, expenses and overall financial situation; discuss possible solutions; and make recommendations for you to consider. If debts are truly unmanageable, your counselor will explore the possibility of a CCCS Debt Management Program (DMP) which allows you to make reduced payments to creditors. The DMP serves the dual role of helping you repay your debts and helping creditors collect money owed to them. Give the DMP serious consideration. If your husband still find it too difficult to pay his debts, contact the bankruptcy attorney again. You can then honestly say you have explored all options in resolving your debt situation. Good luck.
Dear Susan & Co.,
I am currently in deep credit card debt of $35,000. It just came to a halt, all of the sudden and I am going around in circles trying to pay the bills and I will be unable to pay the bills in the next couple of months.
I want to tear up the credit cards and not use them anymore. I am trying to get into a repayment plan with low enough payments that I can pay to return the money.
What other options are available? Can I declare a bankruptcy saying I cannot pay the bills? How do I do that? Thanks, Christie
Dear Christie:
You need to call your closest CCCS office and set an appointment to speak to a financial counselor. If you don't know where there is a CCCS office, call 1-800-388-2227 for information on the nearest location. During your counseling session, a trained professional counselor will analyze your income, expenses and overall financial situation; discuss possible solutions; and make recommendations for you to consider. If your debts are truly unmanageable, your counselor will explore the possibility of a CCCS Debt Management Program (DMP) which allows you to make reduced monthly payments to creditors. The DMP serves the dual role of helping you repay your debts and helping creditors collect the money owed them.
You could also file for bankruptcy but I would strongly suggest you speak to a financial counselor first. Bankruptcy should be your last resort to solving your financial crisis. Bankruptcy is often called a ten year mistake since a notation that you filed for bankruptcy will be noted on your credit file for up to ten years. This derogatory notation could prevent you from getting credit in the future and also a better job. Many employers now use a person's credit file in judging whether they should hire a person.
If you still want to file for bankruptcy, you will need to contact an attorney familiar with bankruptcy. The attorney will guide you through the process.
Dear Susan & Co.,
I'm in trouble. I have my own business which has done well up until a few months ago - it still has potential, but it's not coming through for me now just because I'm in trouble. I'm in over my head and my student loan deferments have all been used up, to make matters worse. In my cleaning business I receive checks directly to me from my clients. If worse comes to worse and somebody wants to garnish wages, can they do that to me in my current employment situation? I don't see any way, but what "they" can do never ceases to amaze me. I'll be calling a counselor to make suggestions, but I'm starting to look at bankruptcy as an option... unfortunately. No bankruptcy in the world covers student loans, does it? Thanks, Angela
Dear Angela:
Each state has different laws pertaining to garnishment of wages. You will have to check with an attorney or the Attorney General Consumer Affairs Office to see what the garnishment laws are in the state where you live.
As a general rule, student loans are not dischargeable in bankruptcy but there are some exceptions. Since this is a legal question and I am not an attorney, you will have to check with a bankruptcy attorney to find out when student loans are dischargeable. From what you have briefly told me, I don't think your student loans will be dischargeable but only an attorney can tell you for sure.
Before you consider bankruptcy any further, please call your closest CCCS office to set an appointment to speak to a financial counselor. Perhaps the counselor can give you more specific advise and other alternatives than bankruptcy. Remember bankruptcy will remain on your credit bureau file for up to ten years, which could affect your getting credit or another job in the future.
Dear Susan & Co.,
We are one payment away from ending our 49 month plan with Chapter 13 bankruptcy. However, I was just informed that we were to have this paid off 4 months ago. While the motion to dismiss our case has not been issued and they have told us that if we make our final payment by the end of this month they we will be okay. We have been paying $500 a month for 49 months and are 1 payment away from having it paid off. What would a dismissal mean at this point of the bankruptcy? I would think that most of our creditors would have been paid by this point. Much Thanks, A.F.
Dear A.F.:
It sounds like you have paid off all of your creditors through Chapter 13 and if so, the creditors who were included in the plan can not ask you to pay any more towards the debt even though you might not have paid 100% of the debt. That is the purpose of Chapter 13, to restructure your debts. For further information or clarification, you will need to check with your attorney or the bankruptcy trustee.
Dear Susan & Co.,
Our debt is more than our assets. Is it time to declare bankruptcy when this occurs? Thanks, Bet
Dear Bet:
Absolutely not. Unfortunately there are millions of consumers who are in the same situation as you are but they have no plans on filing for bankruptcy. Instead what you need to do is work on a payment plan to get yourself out of debt in a reasonable length of time so that you become solvent instead of bankrupt.
If you need help in doing this, call 1-800-762-2271 and speak to one of our counselors. The counselor can go over your budget, income and debts and try to structure a repayment plan for you. The solution to your dilemma is probably easier than you think.
Dear Susan & Co.,
My family suffered a house fire a year ago and has incurred great debt. We are currently current on all financial obligations but find our monthly debt exceeds our monthly income. My husband and I have both taken second jobs as a result. In simple terms could you explain the difference between a Chapter 7 and Chapter 13 bankruptcy? I am considering it for myself and my debts only (unsecured credit). However, how will it affect our house, furniture, cars (the only assets we now have)? Will it effect by husband at all? What about debt that is in both of our names? Thank you for taking your time to help! Sincerely, Feeling Hopeless
Dear Hopeless:
In bankruptcy, Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. A trustee takes possession of all your property but you may claim certain property as exempt from seizure under governing law. The trustee then liquidates your non-exempt property to pay your creditors according to priorities of the Bankruptcy Code. The purpose of filing Chapter 7 is to obtain discharge of your existing debts, however some debts are not dischargeable under the law. You will need to check with a bankruptcy attorney to determine what property is exempt under both federal and state laws and what debts are not dischargeable in bankruptcy.
A Chapter 13 is designed for individuals with regular income who are temporarily unable to pay their debts but would like to pay them in installments over a period of time. You file a plan with the court to repay your creditors all or part of the money you owe them, using your future earnings. Your repayment plan must be approved by the court before it can take effect. Under Chapter 13, unlike Chapter 7, you may keep all your property, both exempt and non-exempt, as long as you continue to make payments under the plan. After completion of payments under your plan, your debts are discharged except alimony and support payments and long term secured obligations.
Whether this bankruptcy will affect your husband is hard to say specifically but the chances are it will, especially if you plan or need to apply for credit jointly in the future. On debts that are in both of you names, once you file for bankruptcy, the creditor can only ask your husband to pay. A bankruptcy attorney can give you more specific answers.
Dear Susan & Co.,
My sister's husband recently lost his restaurant due to business bankruptcy. Unfortunately, he had pledged their house as collateral to a business vendor and now they are declaring personal bankruptcy. My sister's husband doesn't want to pay the higher mortgage amount required by the lender to reinstate the mortgage. They are significantly behind on mortgage payments. They are about to go to foreclosure. He believes that their credit is so bad now, it doesn't matter if they foreclose on their house. I wonder if that's true. My sister is thinking that banks etc. would look more favorably on them for maintaining their mortgage payments despite their personal bankruptcy. She is concerned about their future ability to buy a house. Will it help them significantly to continue to pay the higher reinstated mortgage amount, or will the bankruptcy harm them so much it doesn't matter. Also, she lives in Albany, NY. Do you have an office there she can go to? If so, phone number and address please. Thanks. Cheryl
In Albany, NY there is a Consumer Credit Counseling Service (CCCS) office offering budgeting, money management and credit advice. CCCS is a non-profit community service organization providing counseling service at no fee to the consumer. Have your sister call CCCS to set an appointment to speak to a financial counselor. CCCS appointment number in Albany, NY is 1-800-479-6026.
Dear Susan & Co.,
My domestic partner declared bankruptcy under Chapter 7 approximately 4 years ago. How will this affect our ability to obtain a mortgage for a home in the next few months? My credit is good, but my income alone won’t qualify for a mortgage. Prospective Homebuyer
Dear Prospective:
Creditors are most interested in the last 24 months of a person’s pay history. Since your partner’s bankruptcy occurred 4 years ago, it shouldn’t affect your ability to obtain a mortgage although the interest rate may be higher. He/she should be prepared to explain the circumstances of the bankruptcy.
Don’t forget that the lender must take into consideration any liens, judgments, debt ratios, previous foreclosures and employment history. Also, be prepared for a downpayment which will vary according to the lending program you use. If there are Community Homebuyer Programs in your area, plan to attend one to obtain valuable homebuying information.
Best wishes.
Dear Susan & Co.,
I had a bankruptcy three years ago, Chapter 7. I now would like to purchase a home. I have three years at a good job and no outstanding debts. Will I be able to qualify for a first mortgage?
Thanks in advance for your time. Tim
Dear Tim:
Since creditors are most interested in the last 24 months of your pay history, your three-year-old bankruptcy may not present a problem in obtaining a mortgage loan. You may incur a higher interest rate, and you will have to explain the circumstances of the bankruptcy.
You’ll have to prove sufficient income and have a downpayment. Beyond that, every lender has guidelines and various lending programs available. Attend a Community Homebuyer Program to obtain valuable homebuying information. I wish you the best.
Dear Susan & Co.,
My question is: If my fiancee files bankruptcy before we are married, will my credit be affected negatively after we are married? Ken
Dear Ken:
If currently you have no credit accounts in common with your fiancee, your credit report should not be affected by your fiancee’s bankruptcy.
However, after marriage when you apply for joint credit purchases such as a car or a mortgage, the lender will review both your credit reports. Your fiancee’s bankruptcy will be noted, and your purchasing power may be lessened due to her credit history.
Dear Susan & Co.,
I filed Chapter 13 Bankruptcy in 1989. I have since paid the required payments in my settlement which ended in September, 1994. I have tried to apply for a credit card and been turned down. I pay the balance on my wife’s credit card (I have a card with my name on it) and am the sole user of the card. My question is how long does it take for financial institutions to realize that I have learned my lesson? What can I do? Jimmy
Dear Jimmy:
Put yourself in the lender’s shoes. Let’s say your second cousin Earl has the reputation for borrowing money and not repaying in full. He now has come to you saying he has changed and asking you for a loan. Before you lend him money, what questions do you want answered?
Why do you need the money? How much do you want? What kind of collateral do you have? Do you have a job? How long have you been working there? Where can I find you?
Chances are your questions will be the same ones lenders will ask you.
So when applying for a loan, be able to answer those questions. Instead of applying for an open credit line, apply for a small installment loan with a bank or credit union.
Dear Susan & Co.,
I have a significant debt in addition to my student loans (these must be repaid). It seems as if it will take forever to pay it all off. How do you know when you should give up and declare bankruptcy? Deep in Debt
Dear Deep:
You give up and declare bankruptcy only after you have taken stock of your current situation and looked at all your options.
Take three sheets of paper:
Now, on a fourth sheet of paper list possible solutions. Plan to investigate every solution you list. Here are some starters.
Dear Susan & Co.,
I have a balance of $3,100.00 on my credit card and my income is $21,000 a year. My rent is $545 per month, and I can only afford my minimum credit card payment which is $67.00. Should I file for bankruptcy? Anne
Dear Anne:
To file or not to file bankruptcy is moving into the legal realm and I’m no lawyer. I can tell you that I hear your discouragement over a credit balance that never seems to go down. If that’s the problem, there are some steps to take.
Start with a budget. I know. Suddenly you feel an urge to paint the house. Resist it. Go to the library, find a budget form in a book, xerox it and fill it in with your expenses. What’s the picture? Do you need more income? How much more and how will you get it? Your solutions will include decreasing expenses and increasing income. Like these.
How about a roommate or moving back home with your parents on a room and board basis for awhile? Or how about a part-time job with all the proceeds going to pay off that credit card? How about a combination of both?
By seeking ways to honor your debt obligation, you’ll get to keep your good credit, discover how resourceful you are, and maybe find a better-paying job.
Thanks for writing. Let me know how you’re doing.