Need advice on how to deal with my debt and possible BK?
I currently have $123,590.93 in total debt. $72,356.07 is student loans and I can’t do anything about that but pay it. $49,561.86 is in lines of credit and credit cards. My MINIMUM monthly payments are about $1400. As of today, I have not missed any payments, but my credit score is pretty bad because I have a Debt to Credit ratio above 85%. As of November, I am no longer going to be able to afford to make my payments. After paying rent, utilities, car insurance and for food, there just isn’t going to be enough left over to cover the minimum payments.
I’d really hate to do it, but I’m seriously considering filing for Chapter 7 to get a fresh start. Yes, I know it will kill my credit rating, but it doesn’t much matter anyway. Identity thieves wouldn’t even want my SSN. I also know that it will stay on my record for 10 years. I’ve gone over all the pros and cons and it looks like I’m going with the bankruptcy. However, has anyone had any success with any of these debt settlement companies? I know they negotiate with my creditors to reduce my balance, close the account and work out a payment plan, but how much will the amount be reduced? Can I realistically expect a 50% reduction in my monthly payment if they reduce my debt by 50%? Is it realistic to expect that this is a viable option as apposed to bankruptcy? If I could somehow get the payments down to $700 or less per month, that would be awesome!
I already called a Credit Counseling Service and they actually recommended I file for bankruptcy, which was odd. So, consolidating into one payment with a reduced interest rate just won’t work. I need to either reduce my debt and payments, or wipe it all out with bankruptcy. I’ve already tried to cut out every possible unnecessary spending and cook all of my meals to keep costs down even more. I’m just tired of living paycheck to paycheck and getting nowhere with my debt. Also, getting a second job is kinda out of the question. I live in Baltimore (to keep costs down) and work in Washington DC. So, with the commute (by train to again, keep costs down) I leave my home at 7am and get home around 7pm. As much as I would love to work during my few hours before going to bed every day, I’m not going to. There’s no point in killing myself with work if I’m just going to make minimum payments and get nowhere with my debt.
Any advice would be greatly appreciated. I’m tired of just treading water and will either sink with the bankruptcy or swim with the debt settlement. Either way, I have to do something about reducing or eliminating my monthly payments and get rid of my debt.
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