Talk me out of filing for bankruptcy

[Just Dave]

Due to some mismanagement on my part, I'm now in debt pretty bad. Nothing too crazy, but not so little that I'll have it paid off in 2-3 years. I'm 30, have a 2 year old home and am not interested in upgrading, have newer vehicles so I won't need an auto loan in the near future, and have no more use for a credit card. Since my wife and I are both 30, she is sweating me like crazy to have a kid. I can't afford day care at $800/month and pay anything towards my credit. I am considering filing for bankruptcy to get out of debt so I can afford to have a kid. I know I shouldn't, but I just can't see any other way to have kids in the next couple of years.

[John]

refi your house, have it eat up the cc debt into a more manageble payment. I am doing the same thing right now and my mortgage payment is going down between 10-90 bucks a month, while swallowing up my car payment of 450 a month, giving me a total monthly savings of ~500/month. If you have a newer home, you easily have enough equity to do this. Bankruptcy should be your ultimate last resort.

You can look up your estimated home value at http://www.bankofamerica.com/loansandhomes/index.cfm?template=hc_home_worth
its pretty accurate

[Vito_Corleone]

My mom did it when i was younger (my dad ran up some crazy bills before the divorce :lol: ), she hated life for 7 years, she was making a ton of money too, but having no credit SUCKS. You seem pretty secure at the moment, but ya never know.

[_Charles_]

Due to some mismanagement on my part, I'm now in debt pretty bad. Nothing too crazy, but not so little that I'll have it paid off in 2-3 years. I'm 30, have a 2 year old home and am not interested in upgrading, have newer vehicles so I won't need an auto loan in the near future, and have no more use for a credit card. Since my wife and I are both 30, she is sweating me like crazy to have a kid. I can't afford day care at $800/month and pay anything towards my credit. I am considering filing for bankruptcy to get out of debt so I can afford to have a kid. I know I shouldn't, but I just can't see any other way to have kids in the next couple of years.

Wow. where to start. Filing bancruptcy will ruin you for 7-14 years. Don't do it, period. Daycare is not $800/mo....okay, I paid $640/mo...but not $800.

Look into your equity first. Like John mentioned, look at your debts. CC's have high intrest rates. Look into a Home equity loan to roll them all up into one single low interest payment. Also, with a Home equity loan, you can deduct the interest from your taxes.

You have so many choices as a home owner....don't ruin yourself with a bancruptcy. And so you know, I filed back in 1994. Wish I hadn't, and it's taken me forever to get past it.

call 1-800-ask-charles don't be skarred and cunfuzed. We be here to help.

Charles <---TampaForums Credit/Finance Advisor tm

[Dunecune442]

dont do bankruptcy. Its easy long term but man o man is it a bitch long term. You cant get a new car for the next 7-8 years, no credit. Basically, all purchases will be cash. Not very good.

Think down the road, one of your cars bites the dust. Can you afford the 15-20k cash to pay for a new car?

Just do what everyone has said earlier, it will take longer to clear your debt but youll still have credit.

[Charles]

What they said... open up a HELOC against the equity in ur home to pay everything else off, typically a 10k line will leave you with a $100/payment.... interest that is paid on that will be tax deductible too. Does the wife think it's worth going into bankruptcy to have kids now as opposed to later? Assuming she is the same age, you guys are 30ish not 40ish :dunno:

[Amortized]

you mentioned you could have it paid off in a couple years, and you mentioned you'll want kids in a couple years. Where's the bk debate? Pay off debt, have kid, be in better credit situation down the road when the child puts you in a real financial strain, have credit extended. Or file now, have kids, have child put you in financial strain, have ZERO credit extended. If it can be paid off in a few years, I wouldn't even consider a BK.

[John]

The base price for our house when we purchased it was $117k. Now its $210k. Not sure what the land is worth now and I guess it doesn't matter since we don't intend to move, but I'm sure we wouldn't be hurting if we sold.

Based on this you could EASILY refi and roll up whatever debt you have into it. Interest rates are still really good, you may have to take an increase in % (depending on what you originally financed for), but I'm willing to bet you'd end up on top. As everyone else has said, the interest is tax deductable, where as now it is not. Hell, you could even get a little extra cash out if you wanted to make a nursury, buy baby clothes, etc. You're in fine shape, BK should not even be your last option at this point.

[Dunecune442]

BK is a last resort, not a quick fix. Your going to have to put this in your head. There is no quick fix in life. Times are tough but not impossible. Refi your house, get your shit straight and read moldy's thread on budgeting. Good luck my man and keep us all informed how you fare. But please for your sake and more importantly your families sake, do NOT file bankruptcy. My parents did so in their first business venture (almost 11 years ago) and their credit finaly reached 800 this year, that took ages! I remember wearing the same clothes for up to two years (when I was growing) because we had to pay cash for just about everything (and both parents were in school for one thing or another).

Trust me, its not fun. You can recover but youll be 40-45 by then.

[Scott]

Keep in mind too that the Bankruptcy laws are changing soon (they had a feature on the news last night) so if you are going to do it do it soon.

[Amortized]

Keep in mind too that the Bankruptcy laws are changing soon (they had a feature on the news last night) so if you are going to do it do it soon.

jeez, he said talk him out of it. But to add to what he mentioned, the gov. is trying to make it harder to file for Bankruptcy. They will be allowing less Chapter 7 (debt wiped out) and requiring the debtor to under go Chapter 13 (repayment plan is negotiated). From what I hear, they are making it even harder to file for those making over $57k. The fees will also be increased as well. Minimum payments on credit cards will also be increasing from 2 to 4%. It will be interesting to see what type of effect these changes will have.

[Rdline1]

if i were you, id sell the house, take a huge profit, rent for a couple years and pay off all the credit cards as you clear everything. better to wait a year or so, maybe two, and have a comfortable financial situation before you have a kid. a year or two wont be that much longer kid-wise, my dad was 30 and my mom was 28 when they had me, 4 years later had my brother and 3 years after that they had my youngest brother. my dad was almost 37! you have plenty of time.

[moldyhands]

basically john nailed it. home equity loan and more manageable payments. but if you do this, you HAVE to not allow yourself to rack up anymore debt. also, at least in my mind, there's the moral factor that you rightfully owe people/companies this money, and you do have the means to pay it back. a lot of times, i see bankruptcy as akin to theft.

[_Charles_]

if i were you, id sell the house, take a huge profit, rent for a couple years and pay off all the credit cards as you clear everything. better to wait a year or so, maybe two, and have a comfortable financial situation before you have a kid. a year or two wont be that much longer kid-wise, my dad was 30 and my mom was 28 when they had me, 4 years later had my brother and 3 years after that they had my youngest brother. my dad was almost 37! you have plenty of time.

Sell his House? What the $^&# are you thinking? He should sell his toys before he sells his house! HIs house is currently increasing his net worth by about $10-$15k per year!

DO NOT SELL YOUR HOUSE. If need be, Home Equity Loan, but personally, I think you could accomplish what you want by budgeting and laying off of the toys for a bit ;)

Charles

[Just Dave]

I have no plans of selling my house.

Actually, I really didn't have plans of filing for bankruptcy. It seems like the easy way out, but I know its not. I wanted to get the dialog going in here. I'm going to tap the equity in my house and use that to pay off all of my debt. Instead of paying close to $600/month in minimum pmts, it should be about $300, leaving that much extra to pay down the principle.