Filing for Bankruptcy

[Pharrox]

Hello everyone.

I'm mostly making this post to ask you about your opinions and hopefully get some experience from people who have been in a similar situation. The next several of paragraphs are mostly just an overview of what has happened to me in the last year or so, so if you want to just skip to the bottom (and the point of this topic) you aren't really missing anything.


About two years ago when I was looking for a college I was spit between two majors, software engineering and graphics design for game development. At the time, none of the schools in my area (at least that I could afford) were offering a good graphics design program, so I started out in software engineering. I was able to keep up with my payments and get through my first year of school debt free.

After the first year, a different college started offering a focused graphics design course, and whats more it was specifically targeted at game design. I transferred, but they required all of the money up front. My parents helped with setting up the student loans but I problem came when we were unable to find someone to cover a large portion (about $5,000). The school offered to take it on themselves and it would require payments be made after leaving school (like most student loans).

Two semesters in I realized that not only was this school very limited with their resources, the instructors seemed very uneducated on the subjects and were often even learning as they taught the class. I also realized that the mentality and skill set required for this field was in complete contrast to my set of skills. I decided to return to the first college and pick up where I left off in software engineering (something which I feel came rather natural to me).

At the end of last month I got a call from a collection agency saying I needed to pay back the $5,000 dollars that my second school had taken on. They gave me until the end of the month (6 days) to pay it off and if I could they would cut it to only $3,000. Since $3,000 is a lot better than $5,000 I did everything I could to meet the deadline including maxing out my credit card and putting about $1,000 in my overdraft credit line.

Despite my best efforts to find a job I have been unable to, and I'm starting to receive bills that I have absolutely no chance of being able to make. Even if I could find a job, almost all of the money would need to go the paying bills and I would likely be forced to drop out of school at least for the next couple years. Up until this point I have always had good credit and been able to make any and all payments on time, but now it's starting to look like that's not an option.


Okay, my little autobiography's over.
So mostly what I want to know is have any of you been in a seemingly impossible financial situation, and what did you do about it? Did you file for bankruptcy, and if so, what were the consequences? Do you look back on it as being a big mistake or was it more of a fresh start that helped you move on when you otherwise wouldn't have been able to? Did you go some other route to minimize or eliminate the debt and deal with the situation?

 

[Mic_128]

If you declare bankruptcy, don't expect to ever be able to get a loan, rent a house or anything of the like. Do anything else. If it means you drop out of school for a year, do it. A year in the long run isn't that long.

 

[Chill]

Doesn't bankruptcy only stay in your credit history for 6 years? If you don't get any helpful advice from this thread I would speak with a financial advisor in addition to learning everything you can about this. If Mic is correct and bankruptcy is going to ruin you I would follow his suggestion. Put school on hold until you pay off your debt.

 

[Evil Eye]

I see elderly people in my college, so it's not some MUST COMPLETE BEFORE 25 supersprint as it was for generations past. Even if bankruptcy only stays on you for so many years, any alternative is always better.

I am in an "impossible" debt situation right now. I owe to my credit card company, my school, and student loan services. The brutal irony of it is that falling through an unfortunate loophole in the services of one group was the catalyst that put me into my current situation, as I have been constantly working for the last two years attempting to chip away at one debt while one of the others mounts.

This summer I'm hoping to take the bull by the horns and completely eradicate my debt. Here's some advice of what I'm doing that makes the future look a bit better, with bankruptcy never having come onto my plate:


-Make inquiries. It's too easy to try to ignore these things, because you feel crushed by your situation. Don't. The notices you're receiving must come with phone numbers and websites attached. Look into all of them. Believe it or not, banks and loan granters are not evil corporations. They enjoy the mounting interest, but they know there's no percentage in it if they grind you down to the bone and you declare bankruptcy. As such, most debts have clauses that can be invoked. There was one program for my student loans I just missed the application date for that would grant me amnesty from payment for a certain period of time, and this was unfortunate for my case. I also have payment protection insurance for my credit card to make sure that my payments are always covered. Look into these things, and use them. You'll be glad.

-Make peace with the debtors. The worst thing you could do is try to pretend they don't exist. As I said above, they're not evil. When you make calls, explain your situation -- they'll be helpful, if not sympathetic as well. Diligent customer service has helped me come to a payment agreement with one of the loan providers that not only will square things until I finish my degree, but make me able to receive more loans in the future! I have to come to a similar agreement with my school itself, and I firmly believe that they will be helpful and understanding.

-Prioritize. You're in debt to multiple agencies, I assume. Buy a calendar and use it. Keep track of when payments are due, and how much is due. This gives your goals a tangible quality, instead of just being this ominous, abstract "oh god oh man oh god oh man" situation lurking in the recesses of your mind every day. You need to pay at least ____ by _____ for _____. You need to play at least ____ by _____ for _____. You'd be amazed what organization can do for your mentality.

-Man up. This is going to suck, so embrace the suck. Take two jobs. ****, take three if you can make it work. I'm presently applying for call center jobs and bouncer jobs, as I know the shifts are never going to conflict. Will it be terrible? Absolutely. It might be the worst summer of my life -- but I'm going to make a lot of money, and it might just disappear my debts in their entirety. Freedom is worth it. Take the year off if you have to, as well. You have all the time in the world.

-Tighten your belt. I took a year off and didn't make nearly as much headway as I'd have liked with my situation. Simply put, I was irresponsible. I started out making five times the minimum payment, and soon dropped to making minimums as I spent more and more money on booze, fast food, girls, video games, and every other stupid thing you blew your money on in high school. Don't do that. Again, embrace the suck. If almost all of your money has to go to your debts... then so be it. They call it "crunch time" for a reason. These pleasures of life aren't going anywhere, and they're so much better when you don't associate them with the guilt of where your money should be going. Assign yourself a very tight budget for yourself and never waver from it. Try to emulate a kid that lives just outside of town on a failing farm with his parents and only has a crappy allowance for his money. This part is probably the hardest to do, and it follows that it's the most important. All the money in the world won't help you if you don't hold onto it.


That's about all I've got. I believe, however, there are services for debt consolidation you can look into as well. Essentially, they take away the nightmare of having to pay several groups by paying your debts and having you owe the total amount to them. It has its own problems, of course, and I'm sure there's hefty interest to go with it. However, having one manageable payment to worry about may solve your problems.

 

[BBQTV]

skip dinner, it's the least important meal of the day

 

[1048576]

You could kind of set up your own Ponzi scheme. Use your still good credit to take out even bigger loans to pay back the outstanding loans. Then when those loans come in, repeat the process. I've seen people get all the way to 1.5 million by themselves before they finally collapsed and declared bankruptcy when it didn't matter so much anymore (they got older.) That's what I plan to do if/when I end up in a similar situation.

*disclaimer: don't take advice from 20-somethings on smashboards

 

[Pharrox]

If you declare bankruptcy, don't expect to ever be able to get a loan, rent a house or anything of the like. Do anything else. If it means you drop out of school for a year, do it. A year in the long run isn't that long.

Everything I've read says that it stays for somewhere between seven to ten years depending on what type you file. The problem with dropping out for anything more than the summer is that my health insurance is dependent on me being a full time student, also that would mean I would mean interest would start accruing on my other student loans and I would need to start paying them off as well.

Doesn't bankruptcy only stay in your credit history for 6 years? If you don't get any helpful advice from this thread I would speak with a financial advisor in addition to learning everything you can about this. If Mic is correct and bankruptcy is going to ruin you I would follow his suggestion. Put school on hold until you pay off your debt.

I have spoken to a couple financial advisers and I have a few meetings coming up. Unfortunately, since I haven't been able to find a job there aren't very many options.


[COLLAPSE=Originally posted by Evil Eye]I see elderly people in my college, so it's not some MUST COMPLETE BEFORE 25 supersprint as it was for generations past. Even if bankruptcy only stays on you for so many years, any alternative is always better.

I am in an "impossible" debt situation right now. I owe to my credit card company, my school, and student loan services. The brutal irony of it is that falling through an unfortunate loophole in the services of one group was the catalyst that put me into my current situation, as I have been constantly working for the last two years attempting to chip away at one debt while one of the others mounts.

This summer I'm hoping to take the bull by the horns and completely eradicate my debt. Here's some advice of what I'm doing that makes the future look a bit better, with bankruptcy never having come onto my plate:


-Make inquiries. It's too easy to try to ignore these things, because you feel crushed by your situation. Don't. The notices you're receiving must come with phone numbers and websites attached. Look into all of them. Believe it or not, banks and loan granters are not evil corporations. They enjoy the mounting interest, but they know there's no percentage in it if they grind you down to the bone and you declare bankruptcy. As such, most debts have clauses that can be invoked. There was one program for my student loans I just missed the application date for that would grant me amnesty from payment for a certain period of time, and this was unfortunate for my case. I also have payment protection insurance for my credit card to make sure that my payments are always covered. Look into these things, and use them. You'll be glad.

-Make peace with the debtors. The worst thing you could do is try to pretend they don't exist. As I said above, they're not evil. When you make calls, explain your situation -- they'll be helpful, if not sympathetic as well. Diligent customer service has helped me come to a payment agreement with one of the loan providers that not only will square things until I finish my degree, but make me able to receive more loans in the future! I have to come to a similar agreement with my school itself, and I firmly believe that they will be helpful and understanding.

-Prioritize. You're in debt to multiple agencies, I assume. Buy a calendar and use it. Keep track of when payments are due, and how much is due. This gives your goals a tangible quality, instead of just being this ominous, abstract "oh god oh man oh god oh man" situation lurking in the recesses of your mind every day. You need to pay at least ____ by _____ for _____. You need to play at least ____ by _____ for _____. You'd be amazed what organization can do for your mentality.

-Man up. This is going to suck, so embrace the suck. Take two jobs. ****, take three if you can make it work. I'm presently applying for call center jobs and bouncer jobs, as I know the shifts are never going to conflict. Will it be terrible? Absolutely. It might be the worst summer of my life -- but I'm going to make a lot of money, and it might just disappear my debts in their entirety. Freedom is worth it. Take the year off if you have to, as well. You have all the time in the world.

-Tighten your belt. I took a year off and didn't make nearly as much headway as I'd have liked with my situation. Simply put, I was irresponsible. I started out making five times the minimum payment, and soon dropped to making minimums as I spent more and more money on booze, fast food, girls, video games, and every other stupid thing you blew your money on in high school. Don't do that. Again, embrace the suck. If almost all of your money has to go to your debts... then so be it. They call it "crunch time" for a reason. These pleasures of life aren't going anywhere, and they're so much better when you don't associate them with the guilt of where your money should be going. Assign yourself a very tight budget for yourself and never waver from it. Try to emulate a kid that lives just outside of town on a failing farm with his parents and only has a crappy allowance for his money. This part is probably the hardest to do, and it follows that it's the most important. All the money in the world won't help you if you don't hold onto it.


That's about all I've got. I believe, however, there are services for debt consolidation you can look into as well. Essentially, they take away the nightmare of having to pay several groups by paying your debts and having you owe the total amount to them. It has its own problems, of course, and I'm sure there's hefty interest to go with it. However, having one manageable payment to worry about may solve your problems.[/COLLAPSE]
Thanks a lot for the lengthy post. Sorry to hear that your going through a similar situation. I've pretty much already come to accept the fact that this is going to be the worst summer of my life. I'm pretty much willing to do anything if it means bringing in a little extra money. The biggest problem is my inability to find a job. Even though I haven't been looking for that long is is still quite discouraging.

I'm going to look into the inquiries aspect tomorrow, because I know you're right that they'd rather negotiate than lose everything. Bankruptcy is a last resort that I'd like to avoid if at all possible.

skip dinner, it's the least important meal of the day

Hard to skip something you you don't do as it is. Who needs to eat?

You could kind of set up your own Ponzi scheme. Use your still good credit to take out even bigger loans to pay back the outstanding loans. Then when those loans come in, repeat the process. I've seen people get all the way to 1.5 million by themselves before they finally collapsed and declared bankruptcy when it didn't matter so much anymore (they got older.) That's what I plan to do if/when I end up in a similar situation.

*disclaimer: don't take advice from 20-somethings on smashboards

Don't think I haven't checked totse.

 

[Crimson King]

Fortunately, I have been good with my money, and I have a really good credit score/no debt, as well as a mortgage (I think I just aged...), but there are ways to cut costs, which is really important right now, while you try to earn funds.

- Foods: be careful with this one. Ramen diets will be cheap, but it will hurt you in the long run, and you don't want a medical bill to foot in addition to your situation. Basically, look at fruits and vegetables for your meals, with day old bread to round out your diet. It'll suck, but if you buy cheaply, you'll cut a lot of money off your expenses.

- Grants: A LOT of places are rich. So rich, in fact, that they have to give away money every year just so they don't get taxed heavily on their interest. Occasionally, you'll see grants for individuals to do research work and other stuff. Research them, and apply. I know there are several grants for writers just to dedicate X hours per week to write a novel, have it completed, and work towards publishing it. It's not a whole lot, but it helps ease the burden. You could easily take your situation, apply for this grant, and try to make it into a book.

- Make quick money: the internet, despite all it is, has some good stuff. I have a cache of websites that let you work from home. One good site is Baby2Bee (I think). Basically, you call people on a list, while you are at home, read them a script to give away free stuff (they are all new parents and it's free), and you make your sale. It's easy, and I think the pay was around $10 per hour. There are LOADS of jobs like this, and if you can push yourself, you can make a great deal of money. Keep in mind that since it is at home work, you will have to have discipline.

- Ask for help: This sucks, but if you can have a debt to your family instead of loan companies, you'll be in a better situation. Explain what's up, explain how fast you'll pay them back, and borrow, borrow, borrow.

 

[Fuelbi]

Everything I've read says that it stays for somewhere between seven to ten years depending on what type you file. The problem with dropping out for anything more than the summer is that my health insurance is dependent on me being a full time student, also that would mean I would mean interest would start accruing on my other student loans and I would need to start paying them off as well.



I have spoken to a couple financial advisers and I have a few meetings coming up. Unfortunately, since I haven't been able to find a job there aren't very many options.


[COLLAPSE=Originally posted by Evil Eye]I see elderly people in my college, so it's not some MUST COMPLETE BEFORE 25 supersprint as it was for generations past. Even if bankruptcy only stays on you for so many years, any alternative is always better.

I am in an "impossible" debt situation right now. I owe to my credit card company, my school, and student loan services. The brutal irony of it is that falling through an unfortunate loophole in the services of one group was the catalyst that put me into my current situation, as I have been constantly working for the last two years attempting to chip away at one debt while one of the others mounts.

This summer I'm hoping to take the bull by the horns and completely eradicate my debt. Here's some advice of what I'm doing that makes the future look a bit better, with bankruptcy never having come onto my plate:


-Make inquiries. It's too easy to try to ignore these things, because you feel crushed by your situation. Don't. The notices you're receiving must come with phone numbers and websites attached. Look into all of them. Believe it or not, banks and loan granters are not evil corporations. They enjoy the mounting interest, but they know there's no percentage in it if they grind you down to the bone and you declare bankruptcy. As such, most debts have clauses that can be invoked. There was one program for my student loans I just missed the application date for that would grant me amnesty from payment for a certain period of time, and this was unfortunate for my case. I also have payment protection insurance for my credit card to make sure that my payments are always covered. Look into these things, and use them. You'll be glad.

-Make peace with the debtors. The worst thing you could do is try to pretend they don't exist. As I said above, they're not evil. When you make calls, explain your situation -- they'll be helpful, if not sympathetic as well. Diligent customer service has helped me come to a payment agreement with one of the loan providers that not only will square things until I finish my degree, but make me able to receive more loans in the future! I have to come to a similar agreement with my school itself, and I firmly believe that they will be helpful and understanding.

-Prioritize. You're in debt to multiple agencies, I assume. Buy a calendar and use it. Keep track of when payments are due, and how much is due. This gives your goals a tangible quality, instead of just being this ominous, abstract "oh god oh man oh god oh man" situation lurking in the recesses of your mind every day. You need to pay at least ____ by _____ for _____. You need to play at least ____ by _____ for _____. You'd be amazed what organization can do for your mentality.

-Man up. This is going to suck, so embrace the suck. Take two jobs. ****, take three if you can make it work. I'm presently applying for call center jobs and bouncer jobs, as I know the shifts are never going to conflict. Will it be terrible? Absolutely. It might be the worst summer of my life -- but I'm going to make a lot of money, and it might just disappear my debts in their entirety. Freedom is worth it. Take the year off if you have to, as well. You have all the time in the world.

-Tighten your belt. I took a year off and didn't make nearly as much headway as I'd have liked with my situation. Simply put, I was irresponsible. I started out making five times the minimum payment, and soon dropped to making minimums as I spent more and more money on booze, fast food, girls, video games, and every other stupid thing you blew your money on in high school. Don't do that. Again, embrace the suck. If almost all of your money has to go to your debts... then so be it. They call it "crunch time" for a reason. These pleasures of life aren't going anywhere, and they're so much better when you don't associate them with the guilt of where your money should be going. Assign yourself a very tight budget for yourself and never waver from it. Try to emulate a kid that lives just outside of town on a failing farm with his parents and only has a crappy allowance for his money. This part is probably the hardest to do, and it follows that it's the most important. All the money in the world won't help you if you don't hold onto it.


That's about all I've got. I believe, however, there are services for debt consolidation you can look into as well. Essentially, they take away the nightmare of having to pay several groups by paying your debts and having you owe the total amount to them. It has its own problems, of course, and I'm sure there's hefty interest to go with it. However, having one manageable payment to worry about may solve your problems.[/COLLAPSE]
Thanks a lot for the lengthy post. Sorry to hear that your going through a similar situation. I've pretty much already come to accept the fact that this is going to be the worst summer of my life. I'm pretty much willing to do anything if it means bringing in a little extra money. The biggest problem is my inability to find a job. Even though I haven't been looking for that long is is still quite discouraging.

I'm going to look into the inquiries aspect tomorrow, because I know you're right that they'd rather negotiate than lose everything. Bankruptcy is a last resort that I'd like to avoid if at all possible.



Hard to skip something you you don't do as it is. Who needs to eat?



Don't think I haven't checked totse.

Can't you just go to one of those building where they actually help you LOOK for a job?

Or look at the want ads in teh newspaper.

I don't have any working experience in working except the job my dad made me have with him last summer, which was 100 dollars a week so I don't have any experience on what to do on tight situations, nor do I have saving experience due to the fact that all I did was blow the money on video games the first month and blew the rest on a phone in the last month

In all, don't take advice from a 14 year old who is old enough to get a job (by the florida statutes or whatever it is written in) but doesn't have one