jpmom3

is bankruptcy right for me?

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Without going into a lot of details that nobody really wants to hear:-) I had a realtor pull my credit report today and tell me that the best thing for me to do is to file bankruptcy. I thought that should be the last resort, so I have been dutifully trying to verify and delete accounts that cannot be proven and am trying to work out payments to others that can for the past month and a half or so. I do, however, have several judgments--one has been satisfied (although it doesn't show on my credit report), one is currently being paid through a wage attachment, and one is pending--just sitting there while I make petty little payments to try and appease the people I owe. Will bankruptcy wipe these judgments out? Will I be better off, or worse once I do this?

My credit score is pretty sad (FICO reporting 499), but I am in college and am getting student loans to help pay for the costs of schooling. I won't be finished with school until November 2011, so I will have to reapply for more loans next year. I don't want to ruin my chances of finishing school because I filed bankruptcy.

One other thing that is pretty large actually. I lost my younger sister last year to breast cancer, I now have reason to suspect that I may have this also. (Testing scheduled for next week) I have three kids who are still young (I am a single mom), who will need to have something to take care of them should (God forbid) this be serious. This is the biggest single reason I am thinking that bankruptcy may be the best answer, as I do not want anyone in my family to have to concern themselves with my past misdeeds when everything else is going on.

Advice would be greatly appreciated! Thanks so much in advance!!

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...One other thing that is pretty large actually. I lost my younger sister last year to breast cancer, I now have reason to suspect that I may have this also. (Testing scheduled for next week) I have three kids who are still young (I am a single mom), who will need to have something to take care of them should (God forbid) this be serious. This is the biggest single reason I am thinking that bankruptcy may be the best answer, as I do not want anyone in my family to have to concern themselves with my past misdeeds when everything else is going on.

Advice would be greatly appreciated! Thanks so much in advance!!

I can tell you, if you have breast cancer DO NOT file BK until you have completed the treatments entirely. I hope your tests come back negative for cancer, but if you have it there are excellent treatment programs available.

In my experience the cancer treatments are very expensive (I had BC 5 yrs ago) and take a long time to complete (in my case nearly a year). Even if you have insurance you will have additional expenses to cover as most health insurance policies don't cover the entire expense.

Another reason to put off filing BK is the fact that you are a current student. Are you working full time or part time? You have not provided enough information to have us help you with any pointers for you to make an informed decision - no income info or debt info. It is better for you to be situated with a job before you file so that once you are discharged you have an actual income so you can begin the recovery process. Remember, BK only handles past debt. It does not help with income issues.

Just based on your limited post, I would say that you need to wait until you are finished with your school and have a full time job. If you do have the added complication of serious illness (BC), then wait until all of your treatments are completed and all of your medical bills are in before you consider filing BK. Good luck.

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Thank you Denita. I am glad that you have made it through your treatments, and are presumably cancer free.

I am working full time. My income was just enough to pay my bills before, but I have a credit card company that began garnishing my wages a couple months ago, so now I can't really say that. I do not have any extra money, I am having to juggle which bills to pay which week at this point. I did have some concerns about the student loans I am still going to need to apply for in the coming year, so I was a little unsure about the way bankruptcy would affect that.

Honestly, all of my debt is over four years old at this point. I honestly did not think that bankruptcy was a good option for me, but after meeting with the realtor and hearing his take on it, I thought "What do I know?!" I thought maybe he was right. The only thing that worries me is that these judgments will never be paid off, and I am trying to stay extra vigilant about making sure none of these other companies try to take me to court. I am fighting everything I possibly can, and trying to work out arrangements with everyone else. I think maybe I will just stick with that. Thanks again for you advice!!

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You've certainly got a lot on your plate! I wish you luck with it and hope your tests are negative. Very scary.

I'm another single mom and student who's been treading water and is now starting to drown. I have a similar question about student loans also - what does BK do to your eligibility for them? I would imagine private student loans are out of the question, but I don't think qualifying for a Fed loan is affected. Can anyone clear the air on that? I would like to continue my education one day and get a doctorate. Will a BK ruin that option?

Also, what about any student loan money left over after the school has been paid? I have a full-time job and income, but the school money is largely what I've been living on this past semester.

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clabbergirl; don't I know about living off the additional money coming back from my classes! It always seems to be disbursed just when I think I am finally not going to be able to hold on any longer, and then like magic it is there and I get my bills all caught up until the next time! This wage garnishment is literally killing me at this point! I was barely scraping by before, I get paid every two weeks and at least $250 is coming out of my checks--leaving me with a whopping $510 for a two week pay period. My rent alone is $1200, that does not even count the money needed to feed my kids, pay electric, water, etc; and drive to work. This really sucks!! (Sorry, just had to whine for a minute-I feel much better thanks:-))

I was also concerned about still being eligible for loans after filing bankruptcy, I have a call in to my financial advisor, but she hasn't responded to my questions yet.

Good luck to you too!!!

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I don't know the answer to your question about qualifing for student loans after you file BK, but your description of your situation is an income issue. It is exacerbated by the judgement garnishment, but it is fundamentally an income issue and the BK won't fix that for you. It will only relieve the debt (and the garnishment).

Check your state's statutes to see if the garnishment is in compliance with federal guidelines. I found a website that details what it should be (but always check on your own in case the info is not current or correct :)) See below:

What amount can be garnished?

Federal law limits the amount of earnings that may be garnished to 25 percent of the debtor’s disposable income. (Disposable earnings are the amount of earnings left after legally required deductions e.g., federal, state taxes, Social Security, unemployment insurance and medical insurance.)

However, for individuals earning minimum or near minimum wage, the debtor must be left with an amount equal to 30 times the federal minimum hourly wage.

Example

Debtor earns $5.15 per hour, (minimum wage).

Weekly gross earnings = $206.00 (40 hrs. x $5.15).

Subtract deductions; disposable earnings = $186.00.

30 x $5.15 (minimum wage) = $154.50.

$186.00 - $154.50 = $31.50.

Amount that can be garnished: $31.50 each week.

Disposable earnings are the amount of earnings left after legally required deductions (e.g. federal, state taxes, Social Security, unemployment insurance and medical insurance.)

The information above is from: http://www.courts.state.md.us/district/forms/civil/dvcv065br.html#amount

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Depending upon different factors for different folks, bankruptcy is often the best option. Sadly, many people wait far too long to go that route. The social "stigma" still permeates throughout our society, when it should be nothing more and nothing less than a business decision. I personally know of no one who's gone the Bk route, who regretted it. If there is any regret, it is that they didn't do it sooner than they did.

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