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Bankruptcy: To File or Not to File…That is the Question

Question: New to group, but have been embracing frugality for several years now. But unfortunately, DH hasn’t been, and as a result we have been battling credit card debt. The mere mention of how much our total min. payments come to each month would likely make the hardiest of you faint dead away. Thankfully he has seen the error of his ways and hasn’t charged anymore in over a year and in fact cut up the cards and cancelled them. ( Of course the fact that I had a major fit and removed my belongings from our room into one of our daughter’s rooms prior to his decision to become a tightwad had nothing to do with his enlightenment he he ) Anyway, the ratio of our minimum payments compared to the outrageous interest charges amounts to 60 percent of our total monthly payments are going to interest. One card payment is 74 and the interest charge is 61.65……That’s 83% of this payment going to interest, each and every month! Anyone out there that can say, ” Been there done that,” I’d love to hear a few words of wisdom. Please no flames of how stupid we were to get into this mess! What is the difference between the different types of bankruptcies? Our budget is already stretched about as far as I can stretch it and at the rate we are going, I’ll be 99 before everything’s paid off and will have paid 10 times or more what the charges were. Our home, land and cars are paid for. We live simply, house in bad need of fixing up, but no money to do it with….both cars are older models…..79,000 and 128,000 miles respectively. We can’t lose them. Our credit rating is already bad because of the debts, so being without the ability to get credit for 7-10 years doesn’t worry me, but if we did decide to file any of the chapter bankruptcies, would we have to sell our house and cars? I saw one person mention you’d never be able to get a credit card again…..That’s the least of my worries! I don’t ever want to use one again. If we don’t have the money to pay for it…we don’t need it! Please save the nasty comments and chastisements. There’s nothing you could say that we haven’t said ourselves. We’re not deadbeats, and certainly not opposed to paying our debts, but these interest charges are making it impossible to ever become debt free! HELP!!!!

Answer: Have you thought of calling up your credit card companies and negotiating with them for a lower rate of interest? I got several offers recently for new credit cards at 3.9% interest for several months up to a year, and the companies were WANTING balances transferred from other credit cards. I bought a car recently with a cash advance from a VISA account, so at the moment I have a substantital amount of credit card debt. I applied to two of these companies, and between them was extended enough credit to just about wipe out the original debt. Yes, now I have three credit card bills to pay instead of one, but I’ll make only minimum payments on the 3.9% cards (and incur NO NEW CHARGES) until I finish off the higher interest card. Then I’ll work like a dog to pay off as much of the other two cards as possible before the interest rate goes up…and I’ll watch my mailbox for new offers of 3.9% interest. Take out your calculator and see for yourself the difference in interest charges between a $10,000 debt at 3.9% interest and one at 12%, especially over a year or two. Chase and Citibank are two companies offering 3.9% on balances transferred NOW. Call your 800-directory assistance for phone #’s. The credit card companies WANT your interest and your business. If you talk to them intelligently there’s no telling what they’ll do to keep your money coming in their direction. If you own your home free and clear, you can also probably easily get a home equity loan to pay off the credit card debts, not only at a way lower interest rate but also TAX DEDUCTIBLE. Start making phone calls. You have more options than you think. If you think of bakruptcy as an option, it’s almost like wishing for it, and my good credit rating is an asset I intend to keep.

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