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Long story short. I have a TON of credit card debt and I
would like to know what I should do given I don't have a
lot of money
I have like 10 cards that are all maxed out. I don't have
a job.Will they send me to jail. Will I get laughed at if I
try to finance anything in the next 2 years.
Unless you have a fairly good job and expect to pay back your debts, I would say file bankruptcy. Most credit cards will pile on interest, attorney fees, etc. just to add on weight so you can negotiate it back down to its original debt. For example, if you owe $2000, and they file suit against you, they usually ask for $6000 (treble damages in court) plus attorney's fees, interest, late fees, etc. So your debt will balloon to $6000-7000. Then they'll send you a letter saying that if you agree to settle, they'll knock it down to the low, low price of $2000 if you pay it in one payment. That's how the game works. If you don't pay it, they write it off as a loss, but you'll still have it on your credit report.
Even if you do try to pay it off, how long will it take you to pay off 10 cards? A few years? A decade or more? And that's assuming you do have a steady, good paying job, after all bills, mortgage, etc. are paid.
Most bankruptcy attorneys charge anywhere from $900-1500 for a Chapter 7 filing for personal bankruptcy and the rule of thumb is that you are able to keep your house and up to $15,000 ($25,000 for a married couple) of assets (i.e., car, furniture, etc.). It takes about 2-3 months tops, and you can start anew again. So the choice is really yours. 2-3 months and start fresh, or try to pay everything off in 8-10 years. There's a reason why bankruptcy is created. You're not the first person to run into financial trouble and you won't be the last. Many people have been there and laws were created to help people (and businesses). Just make sure you consult an attorney and truly weigh your options. Debt consolidation companies will just bleed you for a service you could do yourself so I truly do not recommend it. Talk to some attorneys and you will get a more clear picture.
Great advice daddiesgirl - I agree. Talk to a few BK attorneys as most offer a free consult. You will probably hear a trend in their opinion, advice, options, costs. And, you are so NOT ALONE - these days especially - so don't (try not to) feel that way. I suggest you stand back, and try to take a clear look at it, get some info, decide, and move forward.
You can get an attorney to evaluate your opitions (free first visit) It appears Chapter 7 might work for you. The attorney
will do the ratio debt vs income. You will have to provide a few years of W2-forms and itemize all credit both secured
(house,car,boat appliances) and unsecured credit cards the later is wiped out IF the final administrator (court appointed)
trustee. Warning! they don't like abusive card use and prefer extreme hardships related to health,accidents, change in
employment (salary) and divorce etc. You will have to fill out forms untile your cry like a teen girl. Good Luck!
Avvo is a site where attorneys will directly answer questions. There is a wealth of information here so it's the best place to start if you have very specific questions and most of everything has already been covered by people well before you. Good luck!
Unless you have a fairly good job and expect to pay back your debts, I would say file bankruptcy. Most credit cards will pile on interest, attorney fees, etc. just to add on weight so you can negotiate it back down to its original debt. For example, if you owe $2000, and they file suit against you, they usually ask for $6000 (treble damages in court) plus attorney's fees, interest, late fees, etc. So your debt will balloon to $6000-7000. Then they'll send you a letter saying that if you agree to settle, they'll knock it down to the low, low price of $2000 if you pay it in one payment. That's how the game works. If you don't pay it, they write it off as a loss, but you'll still have it on your credit report.
Even if you do try to pay it off, how long will it take you to pay off 10 cards? A few years? A decade or more? And that's assuming you do have a steady, good paying job, after all bills, mortgage, etc. are paid.
Most bankruptcy attorneys charge anywhere from $900-1500 for a Chapter 7 filing for personal bankruptcy and the rule of thumb is that you are able to keep your house and up to $15,000 ($25,000 for a married couple) of assets (i.e., car, furniture, etc.). It takes about 2-3 months tops, and you can start anew again. So the choice is really yours. 2-3 months and start fresh, or try to pay everything off in 8-10 years. There's a reason why bankruptcy is created. You're not the first person to run into financial trouble and you won't be the last. Many people have been there and laws were created to help people (and businesses). Just make sure you consult an attorney and truly weigh your options. Debt consolidation companies will just bleed you for a service you could do yourself so I truly do not recommend it. Talk to some attorneys and you will get a more clear picture.
While yes Chap 7 does seem ideal there are a few mistakes in your post:
1. Treble damages are not applicable in a credit card case. Treble damages are for extra punishment when someone does something wrong, not because they can't pay their credit cards.
2. The CC companies may not even sue you for the debt. If the debt is $1500 there is no way they are going to waste their time suing someone who is unemployed for such a small amount.
3. Usually a repayment plan is for a short period of time (not 8-10 years) and for a reduced amount. But beware any forgiven amount will be sent to you in a 1099. That can be a surprise when you now owe the IRS 1/3 of the amount discharged.
4. Once they sell the debt, the interest/penalties stop.
5. CC debt is unsecured, much harder for them to collect.
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