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Maybe it is time to file???


dcguy511
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First of all, I am so thankful for this forum. I discovered it a few days ago. Reading all of the posts and replies really talked me off of the edge. Thank you all.

A number of years ago, I got into financial trouble. I was young and not very mature about financial matters. I finally got myself on track and have been really good. There are just a few negative items on my credit reports that should drop off in about 18 months.

One year ago my ex moved out. My living expenses instantly doubled. Unfortunately I started using my credit cards for living expenses. I cut out a lot of stuff. Then I was diagnosed with a major disease in Oct. Add some medical expenses to the mix. With everything going on, I was late with a credit card payment by about a week. I have two accounts with the bank, they raised the interest rate to 29% on both accounts. I tried to negotiate with them, but they said it was "in their interest to make this business decision." Now my payments barely cover the interest charges. Anyway, I was getting by, barely, until March when my insurance went from 600 every 6 months to 2000 because I hit a traffic island during a rainstorm last fall.

Last week I called MBNA to request to use some of my credit line for car repairs. I have a 10,000 credit line with about 2500 available. I was denied because there was a late credit card payment showing on my credit report and I have high balances on the above mentioned accounts. A few days later I noticed that my availble credit was dropped to zero. I also received a letter from my bank that my checking overdraft account was dropped from 2000 to 200 because of a "high balances ratio" on my credit reports. Well, of course there is a high balances ratio, everyone is dropping my credit limits.

Life has been really hard for the last year, but I was making it work. I cut out luxuries. Now, I cannot pay my insurance, living expenses and my credit card bills. I missed two card payments on the 1st. I have about 25,000 in unsecured debt. I have tried to move to lower interest cards, but was denied. I worked so hard on repairing my credit for many years and now it is shot. I literally had a panic attack last friday sitting at my desk. I am really distraught over my credit report. It was almost pristine until all of this.

If anyone wants to offer advice, I'm listening. I thought I would try calling CCCS. Their website is really cheesey and in their FAQ section it is obvious that they are sponsored by the CC industry. I know that there are other debt management services too. I understand the difference between chap 7 and chap 13, but what are the advantages of 13? Is it just the three year difference in reporting? When I got into financial trouble nearly 10 years ago, I basically hid from the creditors- not answering the phone or opening the mail. I do not want to go through that again. I have found myself thinking about really extreme solutions that are harmful to myself. My best friend thinks I should file BK. I'm just so uncertain.

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First of all let me say that I am sorry for all that you are going through. It feels like when it rains it pours!

My DH and I went through this last year. It seems like a vicious circle. It took about 6 months to convince me that this was the best choice for us. We have a house and as soon as I researched our laws and felt confident that we would be able to keep our house and car, I went for it.

MBNA will sue you that much I know. It may not be for 6-8 months, but they will do it. You could just wait and pay only your necessary expenses and not pay any CC's. That is what we did for almost 6 months. Your credit gets hit hard. Or you could file now while the late payments are not showing as bad on your reports and not get his as hard. Either way if you do file it is not the end of the world. FOr us we have no regrets and wished that we had done it earlier. We don't want any more CC's and only want to be able to save. We are only 34 and in 10 years we will be at a much different point in our lives. At least our children will benefit from this experience because they have gone through it with us. They have had to sacrifice extracurricular activities, eating out and even birthday parties. But now they appreciate the little things even more. We are much better off now and finally have a budget that is manageable.

Good luck- only you will know if this is right for you.

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Travelgrl, thanks for your sentiments. I am also 34. I have a couple of questions if you do not mind. Is it better to file with or without having a lot of late notations, charge-offs, etc., on my credit report? Will they (the court) think that I am not far enough behind for bankruptcy if I do it now? I was financially irresponsible when I was in college, I'm not sure if I could deal with the creditor calls and letters again.

Second, what do you mean that MBNA will sue? Will they sue to stop the bankruptcy or are you just saying that if I fall behind they will sue me?

Third, I just applied for a Chase card. I wanted to transfer one of my 29% cards to the Chase card. Well, I was approved for an alternative offer with a credit line of 500. So, I failed at transfering the balance. (this was one of my last survival efforts) If I file soon, does this new card fall into some sort of 60 day catagory. Chase did transfer 300 to it, but I could pay that at my next payday.

I do not have a house or condo, so my assets are zilch. I have a 401k, but the market sort of emptied that out on its own. I apologize for all of the questions. The whole thing just makes me nervous. One thing that I am starting to get angry about is the banks and their raising my interest rate, lowering my credit lines. I really feel like they are sharks. Once they smelled blood in the water, it was like feeding time at the aquarium. Oh well.

Thanks again for the reply. Take care.

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If you file now then your credit score would not be hit as hard then if you wait and get lates and charge offs. But either way when/if you file your score will tank and then gradually go up.

The BK court will look at your income versus your expenses. That will determine if you qualify. I would consult a couple of atty's in your area that specialize in BK who know the laws and know the trustees. First consult is free so take advantage of that. Trust your instincts as well.

MBNA will eventually sue if you are charged off with them. It will take at least 6-8 months before this happens. In our case it was about 8 months, but we filed and they could not do anything about it.

REgarding the Chase card that is a question for an atty.

Can you get by without filing BK? Sure. Do you want to live for many years fighting with CA's as they pass off your debt from one to another OR do you want to have the debt legally discharged and have a clean slate and be done in 6 months?

Good luck!

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Things will be much easier if you go ahead and file now. I was just discharged from Ch 7, and I wish I hadn't waited so long to do it! My credit score only took a 10 point hit, but I waited until things were really bad and my score was in the low 500s - if you file before your score gets too low you will have a much easier time re-establishing yourself after the bankruptcy.

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Hey dcguy511

Just wanted you to know your not alone. We have just recently decided to take the plunge and file BK, and feel a great relief already just knowing the phone calls will be stopping. I have been dodging CC companies for months, disputing with collectors. It became so much work to keep up with the letters and while holding them at bay for awhile, ended up getting sued by two major companies. MBNA also have started with arbitration awards against us. We then decided, enough is enough!

Yea, tried getting lower rates, applied for equity loans, working with creditors,, but there comes a time when you know you just can't do it.

It would take us 20 or so years to try to stay afloat and debt consolidation help,, won't work, really.

It is depressing for us, up until last year we had one of the best credit ratings around and were so proud of it. Bad business decisions put us down due to the struggling economy, and what seemed to start the downfall was a few late payments and high debt to income ratio, one by one these companies raised our interest rates. Geesh, how can most people pay down a 12k loan with 29% interest (just on one card alone)

I used to so horrible and ashamed about all this, but now feel that these sharks helped put us to where we are now and so far don't regret our decision. I do regret we didn't do this sooner before taking out IRA money to try to keep our business afloat! Now that truly sucks!

Good luck in your decision and if you have any questions, feel free to send me a PM, glad to help!

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{{dcguy}}: First, take a deep breath and congratulate yourself for finding a place where there are plenty of others who have been in your exact position and are now standing ready and willing to help you in any way they can. Just like you, I experienced the first (and last) panic attacks of my life when I thought my financial situation was hopeless. NOTHING is hopeless. As the old cliche says "This too shall pass" -- and believe me, it will. You are NOT a bad person because of your financial situation. Remind yourself of this as many times as you need to until you believe it. Please believe that nothing as menial as tanked credit scores is worth harming yourself over. It is something that, with time and determination can, be remedied!

Like you, I once had pristine, A++ credit (that's what they used to call it in the olden days pre-FICO -- am I giving away my age? *lol*) and was proud of it. I am not a spendthrift but for various and sundry reasons my finances got away from me and, before I knew it, were out of control. Just as with what happened with you my interest rates soared and my credit limits dropped. I was only able to pay the minimum each month, and sometimes not even that, and before I knew it the balance on each account had ballooned to an amount that in no way resembled the original balance. I did all the things that the experts said to do...call my creditors, be honest with them, try to work out alternate arrangements, etc. While the customer reps at the cc agencies were always cheery, they'd say things like "It is against the law for us to reduce your interest rate." Oh, I see, so it's within the law for you to raise my interest to usurious rates, but against the law for you to lower it?? Puh-leeze.

For various reasons that I won't go into here, bankruptcy was never an option for me. I was "fortunate" (if you call having to turn an unsecured debt into a secured debt) in that I had enough equity in my home to settle with all of my sharks...er, I mean cc companies. However, BK might be the best solution for you. What you need to do is sit down with a reputable BK lawyer and go over everything with him or her in detail. They are not going to judge you...BK is their business. Whether or not you ultimately decide to file for BK you might want to consider one of those "credit" courses where they help you to learn to manage your finances and to steer clear of credit pitfalls. I'm sure you've heard the statistics that something like 50% of people who file for BK file for it again at some point in their lives. You sound like you've got a good head on your shoulders, though, and that after this experience you won't ever go back to credit h*ll again. It sounds like you are somewhat ahead of the game because you don't yet have extreme lates, chargeoffs, or collections. I buried my head in the sand far too long before crying "uncle," and so I now am doing the eternal "dispute dance" with the CRAs.

Come back here often because there are a lot of people here who know what you're going through and really do care.

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