I need information on Bankcrupcy
 

I never thought I would be doing this, but my attorney wants $600 per hour and $200 for phone call, so I am hoping someone can answer my query.

I have a granddaughter who is old enough to know better; however, she messed up big time. She has allowed herself and a boy friend to run up $20K in credit card debt on her cards. He has taken off and she cannot pay it off. She is talking bankruptcy.

Does anyone know what bankruptcy does to your life. Can you ever get a credit card again. Does it go on your employment info. Does it dog you forever.

I would prefer to do this through a pm rather than putting her private information on a chat line. Any information would be gratefully appreciated.

A $20K credit card debt is nowhere near enough to be worth filing for bankruptcy. She should make a deal with the credit card companies in which her debt can be reduced and she can make lower payments over time. Good luck.

PM sent. Sorry to hear about this.

Best to contact cc companies and see what she can work out. Probably stop or cancel all interest and pay principal is the best she can do. Second choice would be a credit repair company but I would worry about being taken advantage off by one so make sure you research the co if you go this route.
$600 an hours would tell me I need a new attorney.

Thank you to all who answered my question. I had been researching one of the companies who works with the credit card companies to work out a payment plan, but she is frantic and has been told she needs to do a bankruptcy. Unfortunately, there is a lot more to this story; i.e. professional white collar criminal preying on stupid young girls who think they know it all! He gets to walk away and find another victim and she is left to pick up the pieces.

A Chapter 7 bankruptcy may stay on credit reports for 10 years from the filing date, while a Chapter 13 bankruptcy generally remains for seven years from the filing date.

If she does but I doubt. She could borrow from her 401k and pay herself back over 5 years interest is paid back at prime rate + 1%.into her account.Credit card interest is around 28% on my last disclosure and my rating is “840”

Noooooooo! Please rethink the idea of bankruptcy. $20,000 looks like a fortune to her now, and she is no doubt under stress and probably embarrassed. . .

But this stuff happens all the time and usually to the nicest, kindest of women. She can handle it -- and then chalk it up to the cost of an education. She'll be OK, and she will never again fall for that type.

Right now, she is in the moment and thinking bankruptcy could be a quick fix that would give her an immediate clean slate. I don't know how long filing bankruptcy would follow her, but I think it could be longer and more costly than trying to clean up the mess herself -- as unwieldy as that idea probably sounds to her while she is in the throes of the emotional component of this.

Buying into "credit repair" can open another can of worms. I recently read an article titled "The High Cost of Bad Credit" in the New York Times Magazine, dated June 7, 2023. (I pick up a Sunday NYT from time to time because I like to read a hardcopy paper once in a while. I read this article a few weeks ago. You can find it online with a Google of the title and paper, but it is behind a paywall. You should be able to read the whole thing though if you grab it on the first try.)

There are a lot of people in the "business" of credit repair who are scamming others who are in vulnerable situations. There are some who really do try to help, but they mostly charge, too, and finding one of those would not be easy........

I read the whole article (a long one) about what they do and it seemed to boil down to writing letters to the credit card companies. The letters they provided were basically boiler plate and she could do that herself. She should be able to find some info on how to give it a try. Seems like asking for a significant interest reduction might be the way to go. Worth trying, anyway.

My next thought is a long shot because I don't know if there are still such things as zero percent interest credit cards where she could transfer at least some of the debt. (Years ago, I advised someone to do this. They had been living high on the hog and were in excess of $50,000 in debt. They were able to transfer balances because they had been making their payments and had good credit scores. That is another weird thing about credit scores. If you don't borrow money, your score might not be as high as those who do and just make the payments.) If these cards still exist, she might be able to transfer. The zero percent was always for a very limited time, but it could help to make a dent in the dollars owed. She should see if this is a possibility. If she has been making payments, she might be able to do this -- if there is still such a thing as zero percent.

Something else that crossed my mind is that she should keep a very close eye on her credit because he no doubt has enough information to keep on using it.

This will not be easy, but she will feel better as she works her way through it.

(Now I will address the big elephant in the room: I know that interest-free or low-interest loans can sometimes be available from close relatives, but those can get messy, especially if there are other offspring. With such family loans, the lenders need to have signed paperwork (fwiw) and must never loan money they do not have or cannot afford to lose and certainly must never co-sign a loan. If a private loan is even on the radar (please do not comment) I think I would start with just a part and see how it goes, not loan the whole amount.

Well, I don't know if anything I have typed here can help. But please tell her not to be hard on herself. She is not the Lone Ranger in this one. Happens all the time. She will be fine and far more aware and can go around warning others.

(I wish there were a way that these good women could sue the puny b@llz off those losers who take advantage of them. . .Now that could be worth the cost of a lawyer. . . Damn, I shoulda gone to law school when I retired, relatively young. By now I could have been Pro-Bono Boomer with an airbrushed ad on the side of city busses.)

Boomer

PS: LuvNH, no need to respond to this with comments in another post. This is a very private matter for you and for her, and I respect that. Hug her and guide her. When she works through this, maybe with a combination of things suggested by others, and gets it all truly behind her, she will be tougher for it -- and she will recognize that type of guy immediately -- and will accept the fact that $20,000 was not too bad for the cost of an education these days.

There are lots of "introductory specials" for new credit cards. Chase, Discover, and others all offer them. It's not likely that she'll get one with a $20k credit limit though, if she doesn't have the kind of job where she can pay that $20k off within the first year (and not add new debt to the mix). What she might try to do - is get two brand new cards with the 0-percent intro rate, with a 1-year minimum window for that special. Transfer $500 less than the max on each card, whatever that max is. So if the credit limit on card #1 is $8000, then transfer $7500 to that card. If the limit is $3000 on card #2 then transfer $2500 to that card.

Then call the current card's bank, tell them you want to put a hold on the card so NO new purchases can be made on it, and ask them if they'd work out a no-interest deal to pay off the balance.

Then pay THAT card off ASAP, whatever the balance is after you transfer to the other new 0-interest cards. Meanwhile, pay the minimum on each other other two new cards.

Use only one of the new cards for new purchases - groceries, gas, and that's it. Don't even think about buying new underwear until the original credit card is paid off in full AND completely closed.

Once that original card is paid off, double, triple, or even quadruple the minimum payments on each of the new cards for a couple of months. If the minimum is $50, then pay $200 on each if you can. This should allow you to start saving a little - so that in a couple of months, you can start paying down MORE every month. And every few months - pay more, and more, per month - to hopefully get the full amount of the original debt paid off in full.

If your Granddaughter were to listen to most of the advice you've been given so far, she'll end up in more trouble than she's in now.

Bankruptcy is not the end of the world. In some case, a credit score will go up when someone files BK. Re-building credit after a BK, is no where near as hard as it use to be. There are a zillion companies out there, who will give her a "secured credit card" and then transition that card into a straight credit card, within 6-12 months. That way, she can re-build her credit.

There are other ways out of her situation, but I'll get pummeled if I laid them out, publicly. Most lawyers with any familiarity with credit card debt, will be able to explain the reality of their debt collection practices and explain what motivates CC companies to make deals. Trust me, they don't make deals on current debt. They only negotiate, once they become convinced it's cheaper to settle, than trying to collect.

You don't need a super star lawyer to file a simple, small BK like $20,000. She should be able to find someone that will handle her case for $2000-$2500. In every city and town, there are lawyers who specialize in credit card and other debts. You can get their names, if you show up to "Motion Session" and look at the docket. 1 or 2 lawyers will probably be handling 20-25 clients, all of whom are owed money. That's the kind of lawyer it's worth speaking to, as long as they don't have a conflict. Usually, if you ask in the Clerk's office of the local courthouse, you'll likely be pointed in the right direction.

She could a get second job to pay off her credit cards. That way you know she will never do the same thing again.

Bankruptcy will haunt her for a very long time. Renting an apartment, gaining employment and in many other ways. To go bankrupt over $20,000 is just not worth what it will cost her in many ways long term.

I had a work mate friend years ago who found himself in credit card trouble.
He did not use a lawyer, but he did have a good accountant, who dealt the credit card companies on his behalf.
If I remember correctly, I think they settled for 1/2 of what he owed.
What I found funny was no sooner did he pay them off when they started sending him new credit cards.
He was totally irresponsible when it came to money, I would not be surprised if got into trouble again.

You could have phrased it a little better, but Ill reply to you. My Granddaughter is working two jobs. She starts at 8 am and gets home at 8:30pm, I believe that is about 13 hrs. She is paying for her stupidity, while he is already shacked up with a 19 yr old.

She has a supportive family around her. All I wanted to know was what a bankruptcy does to a life, and to the people who answered that for me, THANK YOU.

Check this link on the cons of filing bankruptcy and the alternatives that are available. Until she gets this behind her, the best advice I could offer would be to pay cash for those incidentals she would normally have used a credit card. Then I'd tell her to lock her credit so the POS she was living with can't apply for a new card in her name. My final suggestion would be to develop the mindset "If I can't afford it, then I won't buy it."

Pros And Cons Of Filing Bankruptcy — Forbes Advisor – Forbes Advisor

You didn't mention what the young lady does for a living. IF her job (present or future) involves the need for a security clearance from the federal government, a bankruptcy could hinder her chances of employment and/or promotions.

Find the non profit community legal services in your area and get in to see them. NFCC.org is also an option for advice on bankruptcy or creating repayment plans with her creditors. Best of luck.

Find an attorney that specializes in bankruptcy. They often give free consults and then you can ask the questions to the attorney. Also find a flat rate bankruptcy attorney, meaning one fee depending on the type of bankruptcy and they do not charge by the hour.
I would not recommend a credit repair company.

Bankruptcy
 

I would probably just pay off her debt. Why wait until you die to help your loved ones. Bless them while you can see the gratitude in their eyes. Of course, I would have a serious talk with her about not doing it again.
That’s just me. 😎

Try Credit Counseling, Debt Management | InCharge Debt Solutions. Nonprofit and works with credit issuers and its clients. They will assess situation and if bankruptcy only option, it will advise. They can negotiate on your granddaughter’s behalf to lower interest and consolidate into one monthly payment based on income. Please stay away from the shady debt relief places. InCharge is much better solution than bankruptcy. Certified counselors who can also help answer questions on bankruptcy as last resort. Good luck.

Trinity Debt Management
 

She could call Trinity Debt Management at 18007939049. It’s a Christian based nonprofit credit counseling agency. They work with creditors on the clients behalf and negotiate interest rate reductions and elimination of late fees. According to their website, … participants in the program can become debt free and just 3 to 5 years.

Get different credit cards to use going forward.
She has 3 choices.
Pay it off.
Stop paying the 20k. Wait a bit and contact CC co and offer a settlement in lieu of bankruptcy. Offer 5k for total payoff. Get IN WRITING a paid in full agreement, along with requirement to report favorable to her credit report. Then move on. Do not allow any access to bank acct. Send bank check (or CC might suck out all bank acct funds available). Credit score may still be hit hard.
Third choice is bankruptcy. Stop paying on all CC since it will go away anyhow and not need to be paid. Future CC access will be easier than now because she cannot discharge any debt for 7 years.

Reality is that none of these choices are very good. Hope this helps. Hard life lessons learned in the worse way.

Homepage - Community Legal Services central Florida legal aid

If she lives elsewhere, find legal aid in her area.

She should freeze her personal credit so no new credit will be issued by anyone.

Was she one of the people saying I need to make a living wage at my job as she is buying something else on credit with out thinking of the payments she was racking up? Or was she the one driving around in the car with a 600 a month payment? Did she not have any adults around her telling her credit cards are for poor people ? Maybe she is one that screws up and waits for mommy and daddy or grandma to bail them out and all she gets out of this is " wow that was close"

RedsMom you are an angel and you have given me just the information I need. Her parents are devout Christians and they would entertain this before many other avenues.

I should not even bother with you, but NO, NO and NO. She was very young, he is 16yrs older and very handsome and he stalked her and she thought he really loved her.

I am going to assume you are one of those men who automatically blame the female, and she is finding the system agrees with you. The men get away and the female pays.

And vice versa... I have seen women bankrupt their husbands and boyfriends by overspending and in other ways.

Are you the one who didn't read the OP's post to learn that her boyfriend racked up all the debt and then skipped town and left her high and dry with the bill due?

I read the OP and that is NOT what was stated. Here it is verbatim.

"She has allowed herself and a boy friend to run up $20K in credit card debt on her cards. He has taken off and she cannot pay it off."

----1--u need a new lawyer....

2---don't opt for bankrcy

3- take control yourself, line up all the debt and start making phone calls...you can negotiate all of the debt to 50-75% of amount owed just by explaining the situation and that you will be paying off in lump sum !!

....then make you granddaughter pay you, whatever she can afford...be reasonable, peeps make mistakes in life, :crap2:

Thank you for your kind words. My Dad used to say "There, but for the grace of God, go all of us".

Fairly objective article on bankruptcy.

Can I File for Bankruptcy With $35k in Credit Card Debt? - Experian

Please stop posting facts.

When I lend to family I assume I might not get paid back and if that happens I would forget about the debt. So far I have gotten paid back although it took longer than I though it would.

And how many people replied here that ever had to file? Probably only me. Bankruptcy is no big deal. If you determine you must then do it. Rebuilding credit is easy and you just do it step by step and don't fall back into bad habits that got you there. 7 or 10 years on your record is easily delt with and before you know it all is ok again.

You obviously didn't read the thread because you were too excited to post a holier than thou, rude comment.
Are you one of those people who can't feel compassion because it makes you feel better about yourself to put others down? Or are you the one who just trolls a message board hoping to hurt someone's feelings? Maybe you are the one who is just a mean, cold hearted person that nobody wants to be around so you take out your frustrations on a message board.
See how that works?

You can tell your Granddaughter that you don't walk away from the $20,000 debt. The living expenses will be gone over with a fine toothcomb. Then the income of everyone in the house that your granddaughter is living in is added up. Now you go to see a mediator who proposes a monthly number that you must pay back each month for 36 or 60 months. If you miss a payment anytime during the 60 months there is no do-over, you then owe the entire 20 G'S.

Run towards the creditors who have you on the hook or rather the ones you owe a legitimate debt to and tell them your story and tell them you are trying to come up with a solution. Whatever you do don't hide and avoid those you owe, trust me you'll be sorry. Contact them by phone tomorrow.

I worked with many people over the years who were facing financial ruin, the phone calls each day from collection agents were terrible. The answer is own up to it and forget about BANKRUPTCY over $20,000. It's foolish to do it. Please don't do it. I helped many make the decisions that they were incapable of making. They felt shame. Forget about that, it's strictly business.

Credit.org is a reputable debt counseling service that can help restructure her debt. It’s better known as Consumer Credit Counseling CCCS. I am a retired NE banker.

Thank you, may I pm you for some more information which I do not want to put on an open chat line such as this?

Sure