Babies and Bankrupcy poll

[LabChick]

RichT:

First if you file a chapter 13 bankruptcy which requires you to repay a portion of your debt, that can take many years to finish depending on the amount of debt. A chapter 7 is usually much quicker, often less than a year from filing to discharge. Yes, the laws vary from state to state, but once discharged federal law allows for the BK to stay on your credit report for 10 years after the discharge. As far as this going on your spouses credit, it depends again on what state you are filing in. In most states, if you file by yourself and are only requesting to have debt that only you are responible for discharged then your spouses report is not touched. Please understand, I am not advocating bankruptcy, just stating some facts. You will have just as many problems getting new credit whether you filed bankruptcy or went through credit counseling. In some cases, it is even harder to re-establish credit after credit counseling than with a BK. Believe it or not, I’ve seen it in the industry I work in. Unfortunately there are too many fly by night companies out there who are willing to take your hard earned money to file a BK for you, and then they fail to do it correctly and you end up suffering in the long run.

What happens if the person needs credit while involved in credit counseling? That’s easy! They wont get it. Period. End of story. After a chapter 7 has been discharged moet people are amazed to find how easy it is to re-build their credit. In fact, there are revolving credit card companies just dying to give big fat credit limits to those who just got out of trouble. Sad, but true.

Sorry, I should have been more specific. My roommate in med school’s husband left her halfway through school and she ended up filing Chapter 7 during her residency in the state of Maryland because she couldn’t make the payments on her loans even after they were consolidated. Now, ten years later, she makes a six-figure salary and had to pay cash for her most recent car because the bank wouldn’t give her a loan due to the bankruptcy in her past (she has a letter stating this is the reason she was denied the loan).

As far as spouses go, my sister married a man in Florida who had filed for BK a few years before he met her. After they were married, she failed a credit check, ordered a credit report, and discovered his husband’s bankruptcy was on her credit too.

 

[RichT]

Almeria:

Really? Ouch!

I’d still suggest it as a last resort to bankruptcy, though. It’s not that I think bankruptcy is a sin, but I do believe that we have a moral obligation to resolve our debts if possible.

I agree with you regarding the moral obligation, I just think it is sad that people aren’t told that credit counseling is scored the same way a bankruptcy is. Think about it, you are basically saying I can’t pay what I owe. Credit counseling is similar to a chapter13 bk where your debts are negotiated to a settlement, and then a payment plan is set up for you to pay off what you now owe. Credit counseling is reported to your credit report and a comment is added to the trade lins showing you have settled on a smaller amount than what was owed. How do you think that looks to potential creditors. The reason new creditors don’t take too much issue with a chapter 7 bk is they see you as a person who is starting over. Most people statistically show they have learned their lesson and often have excellent credit after a bankruptcy.

 

[RichT]

LabChick:

Sorry, I should have been more specific. My roommate in med school’s husband left her halfway through school and she ended up filing Chapter 7 during her residency in the state of Maryland because she couldn’t make the payments on her loans even after they were consolidated. Now, ten years later, she makes a six-figure salary and had to pay cash for her most recent car because the bank wouldn’t give her a loan due to the bankruptcy in her past (she has a letter stating this is the reason she was denied the loan).

As far as spouses go, my sister married a man in Florida who had filed for BK a few years before he met her. After they were married, she failed a credit check, ordered a credit report, and discovered his husband’s bankruptcy was on her credit too.

If your sister ordered a joint credit report, then his history is on there to. His history should still be listed seperately. If he filed a BK prior to their marriage, there is no way her credit can be damaged by that.

In regards to you friend with the loans, I am guessing you mean student loans. Student loans are one of the debts that can not be discharged from a bankruptcy. If she had a history of not paying those payments or not paying them on itme, then that could have affected her credit. If she was turned down only because of the bankruptcy, I would question whether or not she applied at another bank or just took their word fot it and paid cash. Some banks will not loan to a person who had a BK. They are usually banks like credit unions or small banks. Another thing to keep in mind is that there are steps a person should take to make sure their credit is getting better after a BK. Your friend for example, whoudl have had the BK removed from her credit after 7 years. The law allowing for 10 years didn’t go into effect until about 2 years ago. Often what happens, is that an old lender keeps reporting some bad information to the credit bureaus and it fowls up the report so bad that the bk never drops off. These things happen all to often but can be avoided with due diligence.

 

[masondoggy]

LabChick:

Sorry, I should have been more specific. My roommate in med school’s husband left her halfway through school and she ended up filing Chapter 7 during her residency in the state of Maryland because she couldn’t make the payments on her loans even after they were consolidated. Now, ten years later, she makes a six-figure salary and had to pay cash for her most recent car because the bank wouldn’t give her a loan due to the bankruptcy in her past (she has a letter stating this is the reason she was denied the loan).

As far as spouses go, my sister married a man in Florida who had filed for BK a few years before he met her. After they were married, she failed a credit check, ordered a credit report, and discovered his husband’s bankruptcy was on her credit too.

Your friend could have disputed her credit report and gotten the bankruptcy off. Unless she was involved in the debts involved in the bankruptcy, it cannot be on her credit report. By law, spouses credit cannot be on the other spouses unless it is joint credit accounts. Unfortunately, the credit bureaus don’t always follow the law (in fact most of the time they don’t) and it ends up on spouses credit reports. It is illegal for them to do it, it can be disputed and if not resolved, you can sue the credit bureaus and the creditors for violations of the FCRA.

Just because something is on your credit report does not mean it should legally be there.

To the OP, I sent you a pm.

 

[Ourladyguadalup]

Something else to consider is this: if your credit card companies “settle” and allow you to pay only a portion of what you owe to wipe out the debt w/them, you will have to claim the difference as INCOME on your tax return.

My advice: suck it up, buckle down and pay it off. You’re lucky to have weekends as a family. My DH has always worked weekends. Especially since your kids don’t have to go to day care. Trust me a year or 2 goes by quickly. Do without the extras and you can pay it down faster.

 

[masondoggy]

Ourladyguadalup:

Something else to consider is this: if your credit card companies “settle” and allow you to pay only a portion of what you owe to wipe out the debt w/them, you will have to claim the difference as INCOME on your tax return.

My advice: suck it up, buckle down and pay it off. You’re lucky to have weekends as a family. My DH has always worked weekends. Especially since your kids don’t have to go to day care. Trust me a year or 2 goes by quickly. Do without the extras and you can pay it down faster.

This is true about settling a debt. You will have to claim the difference as income, but your still going to be paying much less than otherwise. It’s still a reasonable option if your struggling to pay your debts. One thing to point out about debt settlements is that the way you do it is so important because it can really come back to bite ya in the behind! Everything should be in writing! Don’t trust anybody at their word, especially collection agencies! The wording is also very important. You have to get it in writing that the debt is settled IN FULL, because if you don’t they will turn the difference over to a collection agency and they’ll hound you for the difference and it’ll land on your credit report. This is perfectly legal and they trick people and do it all the time. It must say settled IN FULL, and it MUST be in writing. Also, if the debt is reporting negatively, you should negotiate for payment in exchange for deletion of the negative remarks. They do this all the time and it benefits everyone involved. Whether it’s paid or not, it’s still hurting your credit report. Paid collections/charge-offs etc., are just as damaging as unpaid. This also must be in writing before payment. You’d also be surprised how little of a settlement they’ll accept sometimes. I’ve heard of people settling on older charge-offs/ collections for around 10% of the original debt. So start low and negotiate your way up.

 

[Lilyofthevalley]

According to Mary Hunt of “The Cheap Skate Gazette”, paying PART of the debt, in other words so many cents on the dollar, is a step above bankruptsy. It’s not much of a step either.
You may want to call Profina which consolodate your debts and deal with your debtors. Before you call Profina, check them out with the better business burea.

 

[1ke]

Almeria:

I Go with a non-profit/not-for-profit organization, and you should not have to pay the organization–if they ask for money to do this, they are not a good company.

This is not true at all. While fees should not be large, being a non-profit does not mean being a charity. Funding for credit counseling organizations comes in part from creditor, but they do not pay them enough to cover expenses to continue providing the service, and these organizations are not charities that receive donations nor are they subsidized by the government. They must meet their expenses by charging a nominal fee to the consumer who is using the service and receiving the benefit. Most organizations will evaluate the income and debt and may waive the fee if the consumer really cannot afford it at all.

I’d suggest looking into credit counseling organizations that are affiliated with the National Foundation for Credit Counseling at www.nfcc.org.

 

[MamaGeek]

Think of all those military families with one spouse gone for months at a time. You get to see your husband every weekend! Suck it up, and pay off your debt. Take responsibility for your own financial decisions.