Question regarding filing bankruptcy?
I know my best option is to talk to an attorney, but I’d like to get some pre-attorney advice on here before hand.
The big question is, should I file for bankruptcy? I am only in my early 20’s, and I made some mistakes when I was in my teens. Without getting in to the story, what I will say is that, all of my credit cards were charged off, and sent to third party collection agencies. I owe about ,000 all together.
I was told that a charge off looks horrible on your credit account, and the only way to recover from a charge off is to wait the seven years for it to wash off your report. How do seven charge offs look compared to a bankruptcy? I am still struggling to pay them off, and my monthly income is sufficient to live off of and pay things such as rent, food, utilities, and for my dependents. There is legitimately no money left over to even think about negotiating the money. I know I owe it, and I’m not denying that, but I’m trying to figure out my options from here.
What are the benefits from filing for bankruptcy VS waiting it out and paying them off later down the road?
Sorry you have to wade through all of the spammers to get an answer.
The accounts you incorporate in your bankruptcy will remain on your credit report for the full reporting period. If you file Chapter 7 (discharges all unsecured debts), the bankruptcy will remain on your credit report for 10 years from the date filed. Also, depending on your income, you may not be able to file Chapter 7, rather you would have to file a Chapter 13, which is essentially a repayment plan that is harder on your credit. The only upside is that interest and penalties cannot accrue and is only reportable for 7 years from the date you file.
As the other person said, $10,000 isn’t a huge amount of debt. If you can afford to start paying off these accounts, do it. You may even be able to settle with the collection agencies for less than you owe (although the difference will be considered a taxable event and you will receive a 1099 for that amount which you must declare as income on your taxes). Charge offs are bad. Bankruptcy is worse and can follow you for a longer period of time. It’s also not cheap to file ($1500 to $2000..money you could be using to pay off those old debts). Think about this for a long time. Then think about it some more.
May 4th, 2010 at 7:01 pmPersonally, I don’t think $10,000 is worth filing bankruptcy over. Have you tried to find a second job to help supplement your income and allow you to pay this debt off quicker? While a charge-off may remain on your credit report for seven years, the effect of it lessens as the years go by… so, if you’re correcting the problem and paying the debt (and not adding more), then the charge-off won’t be viewed so harshly in a few years.
May 4th, 2010 at 7:01 pm