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In Dept, have job, but desperate for options


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My story, but first - the facts:
My husband NOR I have lost our jobs.
We are NOT behind on any CC payments - YET.
We DO have 4 kids, one a recent baby and lots of debt.
We make enough to pay minimum on all cards but nothing left to buy kids clothes, pay for their school lunch money, and we are always limiting ourselves with groceries.

Now the story...We have CC debt from being dumb...we sold our house and moved and used a lot of what we made on the old house to pay off cc's. We seemed to get back in the same boat soon after because I started a photography business and used my cc's to purchase equipment. We had 3 kids only but 8 years later we surprisingly got pregnant and had a baby. Here is where it has been rough. We were barely making it as is and now with child care it's been nearly impossible to live.

We own a house with a mortgage payment $1200
We have one car payment $600
And CC payments totaling $52k monthly payment approx $1,300
Medical dept as well of about $5k (i have collection notices on those)
Together we make about $5000 a month + a little extra maybe every 3 months or so from overtime ($100/mo) and photography ($100/mo approx)

Okay after stating the facts, do I even have a chance at getting rid of some of our dept so we can have a life again? Do I HAVE to have a hardship in order to try and settle on my cards. At this point, I can care less what my credit score is. I just want to have enough money to live without having to work 24/7 to make payments. I want to be able to spend time with my kids in the evenings instead of working on photography or working another job.

What are my options? Can I try to settle on the cards? I have withdrawn my 401k to pay off one card to free up some money. But I would rather use the money to pay off a couple or more if I can settle. It's only about 7k after 10% penalty fee plus I still have to pay taxes so about $5k?

Please help.


Home Depot $1k High rate ??
Discover $9.5k (cut card) High rate ??
Sears Citi $6.5k (cut card) High rate ??
Costco Amex $13k (closed) 14% rate approx
Citi $5.8k (closed) 2-6% rate
AT&T Citi $10k (cut card or closed) 2-6% rate
Chase $6.8k (Closed) 6% rate

FYI - Some of these accounts are closed and have been for several years now. I don't remember the rates off the top of my head but most are high.

Edited by TiredandAfraid
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i'd suggest you go talk with a couple of Bankruptcy lawyers to see what your options are. You probably won't qualify for a BK7, although with 4 kids you might.

If you have to file Bk13...that's effectively a debt settlement plan, but with the courts making your creditors play nice.

Trying to settle on your own is possible..but..no guarantees.

And, by allmeans, avoid the "debt fixer" companies. They're all scams.

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I've read up on BK and have found that I don't think I qualify. If they are going to take away my paid off cars that are worth close to nothing and are much needed to get to work, then I do not want that.

I understand that companies that try to help are rip offs and I can do it on my own.

I understand that if I settle I will have to pay taxes due to getting a 1099(?) form showing what i saved as income, right?

So do I pay off what I can with my $5k retirement money and keep paying minimum on the rest?

Or can I try to settle with credit card companies by threatening BK?

Can I even go the route of stop paying on my cards to try and settle 15% 5 months later without really having a hardship like illness or losing my job?

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That's why I say talk to a couple different BK lawyers. TX is a pretty consumer friendly state. Lots of your assets may be exempt...particularly old, worthless cars...and, the money in your 401k.

"Settling" for less than you owe is not as easy as it sounds. Your creditors won't care if you threaten BK, and some might sue after you miss the first payment...the first thing they'll do is check your credit reports, and if they see you've paid off somebody else with your 401k (BTW...a really, really dumb idea...I know, I did it...and I'm still paying the taxes 7 years later).

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I agree--it's time to speak with some BK attorneys and review options. Unless you can drastically increase your income, you're simply in a mathematically unsustainable position and, as bad as it is now, it will only get worse--a lot worse. Sorry to be blunt, I'm rooting for you, but I've been there. The one regret I had was waiting too long in doing the BK.

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To offer another viewpoint, I would not consider BK unless it's an absolute last resort.

Instead consider something along these lines ...

You say you have paid off cars you're using for transportation to work, but you're also paying a $600/month car payment? Sell that car. Get rid of the payment and put the money you get for it towards credit card settlement.

I have no idea how much the 600/month car is worth, but let's say it's 9,000. Good start. Now put the 600/month you were paying into savings for 6 months. That's another 3600. So after 6 months you'll have 12,600 from just this one step.

Add your 5,000 from cashing in retirement, and you're up to 17,600.

Work harder on the overtime and photography business to get them each to 150/month. Save that for 6 months, add to the pot. That's another 1800, for a total of 19,400.

Now to convince creditors to settle you'll have to stop paying them first. So take the 1,300/month you've been paying and save that every month for 6 months.

Now you're up to $26,600 after 6 months, which is 51% of what you owe.

I'm 100% confident you can settle $52K for 51%, and probably do way better than that. 35% to 40% is common.

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See a couple of bk lawyers. Whatever you're reading, you're not understanding. Tx. has tremendous bk exemptions.

Texas Bankruptcy Exemptions | thebankruptcysite.org

Note the one car per driver and $30K personal prperty exemptions.

Plus, that 401K is an exempt asset. With a family of 5, you're likely underthe median income plus, when you fill out schedule J {expenses} you likley have no disposable income.

Most bk lawyers give a free or lowcost initial consultation. Speak with a few and see what they say.

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I'd advise OP to remain unimpressed with the knee-jerk reaction of people offering BK in almost any situation. A BK attorney is good for _filing_ BK, less so for consulting on whether BK is the best approach -- they don't make their money by telling people BK is not for them, if you know what I mean. I think AndyJackson's above post is well-reasoned, especially the last 3 paragraphs.

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A BK attorney is good for _filing_ BK, less so for consulting on whether BK is the best approach
Exactly why I advise talking with several lawyers. Some will try to push you towards BK...others will help you understand exactly where you stand. You need a professional analysis of your situation...you don't have to follow their recommendations, but you do need to know what your state laws provide.

Note: As far as the "save your money, wait 6 months, and then settle" technique goes, you need to realize its a crap shoot. Some creditors will work with you...others will sue when you miss the first payment. At least if you have a lawyer, and file a BK 13, the BK trustee works out the settlement for you and makes your creditors play nice. Yes, you will be cash strapped for several years, but your tax consequences will be much smaller and maybe even $0.

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You really need to explore all the options you have been given.

Although I generally agree with what Andy has said you must think about the unstable future we all face. If you take Andy's route, what happens in a year from now, and you experience a catastrophic loss of income, one or both lose your jobs. You now have 50k less to survive on, and with 4 kids, that is scary.

I don't know too much about BK, especially in TX but you should see several attys as willingtocope says, take what they say with a grain of salt and do your own research into BK.

Settling is also a route to explore if BK isn't what you want, although Id leave the retirement alone.

I had to go the settle route since NJ BK exemptions suck and I didnt over borrow on my house when the banks were begging everyone to, so my defaulted credit card bill would have turned into liens on the equity in my home.

Just my 2 cents.

Whatever you decide to do, good luck.

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  • 9 months later...

I am not sure who will want to read through all of this...but if you do read and give me your .2 cents....bless you!!!   


I posted this in May 2012, for some reason I lost the link to this forum and never saw all of the responses until recently.  I feel terrible that I had so many nice people helping and I didn't see it.  I hope everyone accepts my apology and still wants to help me.  I promise I have bookmarked this website!


Almost a year later now and I'm in the same boat except worse because my husband has been ill (still working) but we have incurred new medical costs and I am continually for over a year now making ends meet month to month.  I have an appointment set with a lawyer on Monday 10am.  They asked me for my name, address, phone and describe my situation.  I was told that consultation is free but to take some form of payment in case I decide to use the lawyer.  


My first question:  Is using a lawyer not the same as using a Consolidation company where they shouldn't be charging an upfront fee?  Isn't that illegal?  Not to mention, I don't have a penny to give him, how would I pay him?  Should I even go?


I've heard it's not a good idea to list out my debt on a forum because cc companies can come and find it....this scares me, but what else can I do? I need help!


Ok, here is my situation right now:  I don't have any money left over in the month for kids lunch money, much less clothes, car maintenance, etc.  We never eat out.  I have 4 children (one in childcare for another 4 years), they are growing and have school expenses as well.  My 08' Honda minivan right now needs about $600 in maintenance costs because they have just been adding up.  Our front window of our house has cracked due to foundation problems on the house and it's been a year now and we don't have the money to replace it.  The homeowners association has called us that we need to get it repaired.  We got an estimate, it's over $800 to replace.  It's on hold as well.  Not to mention I owe the homeowners association $300 for their annual fee form 2012.  


There are always expenses we have come up such as these and therefore I am lying to myself when I tell myself we will put any extra money into the cc's.  There is no way.  Each time we have a little extra cash we are desperate to use it for something we need.  I keep telling my husband that if I can just get the chase card paid off that will leave us extra to start the snow ball to the rest of the cards and he tells me I have been telling him this for years!!  He's lost his patience.  I also opened my eyes and saw that I was just kidding myself into thinking we can do this.  We just can't anymore.  Once upon a time we were doing snowball effect and it was going just fine for several months until our surprise baby came along in 2011 and now we have daycare costs.  Our a/c at the house broke down in 2011, we had to replace it, my parents helped a tremendous amount with that cost.  Somehow God has helped us get this far and not miss any cc payments.  We have not been able to make the medical bills though.  Or the other stuff I've listed.  


I cashed my retirement money last year summer and used it to repair our old 1996 car that my mom gave to us because the old truck would no longer run to take my husband to work.  No payments on the truck or the car, but we have made payments of $100 to $300 a month for repairs since we got it.  Again we are taking it to the shop this weekend to have some more repairs done on it because it is heating up, etc.  My husband is cashing in his vacation money that he has left $500 to do those repairs.  I also used some of the money although you may oppose to this, but I made my daughter who turned 15 a Quinceañera which is customary in the hispanic community.  My parents helped with the bulk of costs, I just put in the rest.  Poor thing got over $1k in gift money and I had to use it for bills etc right the next month.  I now owe my daughter that money.  :(


I've been waiting for income tax money to pay my daughter back as well as pay my taxes that I will owe on the early retirement cashing, but now my income tax is on hold and it looks like I will be audited.  To make things worse.....


My debt:


My husband medical:  $6,500   (in collections)

My son's medical:  $700   (from 2009, not yet in collections, they offered to settle at $3XX, SOL in Sept 2013)

My other son's ortho expenses:  $1,500 owed


Car Payment:  $565/mo  $22,300 owed   7.6%


CC debt:

CITI - Home Depot:  $105/mo   $2,313 owed   26%

DISCOVER:  $190/mo   $9,200 owed    12.99% (recently asked to reduce and they offered 12.99% from 20.99% for one year)

CITI - Sears:  $175/mo  $6,761 owed   18.24%

BOA - Astros:  $15/mo    $432 owed   16%     CLOSED

AMEX-Costco:  $280/mo    $11,404 owed    15.24%     CLOSED

CITI - AT&T:    $200/mo     $7,078 owed      7%    CLOSED

CITI:           $110/mo        $4,661 owed      4%    CLOSED

CHASE:       $280/mo      $4,388 owed      2%    CLOSED


Income:  $5,266/mo minus necessary expenses: $1,323 minus cc payments $1,355 =  - 0


I've considered and even tried to do some of the following:  


1 - Selling my house and moving in with my parents to get cards paid off.  Why this wouldn't work, I have 4 kids, moving in won't be a joy for them with 4 kids.  I would have to move my kids schools to schools with bad rep.  I would not have daycare for my youngest son after school like he does not (the lady does not charge me).  I would not easily sell my house since at the moment it needs a new roof, all water pipes need replacing (i've had a few recent leaks and was told I needed to replace) and I have foundation problems.  Last but not least, what if after I pay things off my credit is not that great that I can't easily buy another house for my family or some other emergency happens and I'm stuck.


2 - Getting a second job.  I've put my resume out on monster.com and applied for a few jobs.  I was unable to find a job in the evenings that would pay me enough to be able to make any progress, not to mention, I would be away from my kids all week which means I can't help them with homework and they really need that right now.  My husband is a great help with cooking/washing, and babysitting, but his english is not perfect (yes he is legal!) and can't help much with homework and most likely wouldn't be able to get the best second job because he doesn't have a GED.  I've tried putting ads out for photography jobs but I took them down because I would have to report the little income I make and that means my personal income tax is reduced by $1500 automatically when reporting a side job on my income tax.  One year I reported making $3k and after being deducted $1.5k from my personal taxes decided it wasn't worth working the side job.  So, after 2 months, I have not found a second job.


3 - Selling the van ($565/mo) and asking my sitter if she will babysit the baby for free and I will pay her back with interest after 2 years when I've finished paying off my dept.  I called Carmax and I still owe $22k on the van.  I can trade it in for about $14k (according to bluebook) or just surrender the vehicle which means I still need to finish paying the remaining balance which will be around $10k.  Then I would still need to spend on repairing the truck that has transmission problems and finish fixing the car so both me and my husband have a vehicle.  Of course when we ride anywhere together 2 of my kids would be piled up with no seatbelt which isn't safe.  Plus asking my sitter to do that for me would be highly not doalbe even if she wanted to help.  She is using the money I pay her to help support her mother who is ill.  


4 - We tried last night to reopen the AT&T CITI account that had $25k credit so we can possibly get a low rate transfer and move over some of the other balances to be a little better off.


5 - I tried to get a home equity loan with wells fargo, was not accepted.  I tried to apply for loans at prosper and lending websites with no go and just ended up getting a bunch of junk mail at home from other lenders.  I called my credit union to try to get a home equity loan and without even checking my credit they were able to tell me that I couldn't get one.  I've thought of calling yet another credit union I have a $2 savings account with to ask for some kind of a loan.  Even a refinance for my car would be great.


6 - I have our old '94 ford ranger up for sale which I can possibly get $1,500 for.  But what do I use the money for.  Do I pay my homeowners assoc and fix the broken window?  what if the window just cracks again because of the foundation issues?  Do I use it to do the maintenance on my car that is much needed, I was told my rear brakes only have about 3% left + other stuff.  


Many people who responded the first time mentioned bankruptcy   I guess I could consider that.  Which chapter would I file?  Do I still need the lawyer?  Would my employer and everyone I know find out about it?  I guess that's not too important at this point who will find out.  I had already decided to stop paying on all cards and saving the $1300/mo and trying to settle, but then I read too many horror stories about CITI being the worst creditor and I got scared.  I have 4 CITI cards!  I've started the process of opening a new checking account with another bank.  But I'm back to square one.  What do we do?  I hear a lot of people who aren't scared of being sued and fighting in court.  What am I fighting?  That I don't own the debt?  But it is mine.  I know it's my debt.  What am I fighting if I get to that point?  I'm scared to death of Judgements.  Which is why I decided to talk to a lawyer.  I know it will be extra costs, but won't it save me from judgements?  What if I'm sued in 3-6 months by more than one card for not being able to settle so quickly?  I'm soooo scared!

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Oh, I should mention, I don't think I have any assets of any decent value, you tell me....here's what I have.


Mortgage loan was $160k when we bought in 2005.  Owe $106k


Minivan is  -$10k negative approx


'94 Ranger $1.5k approx


'96 Camry $1.5k approx


I own my two SLR camera's which are worth about $200 each.  3 lenses which are worth about $1800.


That's it.

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He's a Dept Defense Attorney.  


Why would it be a bad idea to stop paying on only some of my credit cards.  I could use the money to pay the others off and then after I'm done with those I can pay the remaining past due balances.  Guess it just doesn't work this way huh?  It's either all or none?


I've spoken with most of my creditors and told them I am at a point I can't make payments anymore due to hardship.  (But do I have a hardship?)  We both have our jobs....


They have all sounded very calm and not concerned at all.  Even Discover told me to just call them 24 hrs ahead of my due date to let them know and they would not make an automatic withdraw.  She said, it's possible you will incur fees, but all we ask is that you keep communication with us.  

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"debt defense attorney" sounds like a debt fixer...not what you want,  If he says anythink other than file BK, say thank you and walk out.


You need a lawyer thst specializes in BK.  You can't dig yourself out of the whole you're in.


Texas is a fairly consumer friendly state, and with the state exemptions, you may be able to keep your house.  You need expert BK advice.

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Really, my case is that bad, huh?  Ok, I will cancel my appt with that attorney and I have looked up several around my area that are bankruptcy lawyers.  I hope I pick a good one.  I see one that has only been in practice for 4 years but has a 30% of bankruptcy cases than the ones that are over 30 years in practice and have only 16%.  Any suggestions?

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