Repair Credit Score

Question: Why should I NOT declare bankruptcy?

I'm $100,000s in debt, mostly due to a job loss due to a medical condition and the associated medical bills. I got a huge tax refund and used it all to pay off my debt, increasing my Credit Score from 530 to 610. I've tried really hard to get a job, but I have got no offers. So I can't pay my bills again and my score dropped back down to 570. Equifax's credit simulator says that if I declare bankruptcy my score will drop to about 450.

Why should I not just wipe out the debt and start over? What do I gain by trying to do the right thing and pay my debt off? They keep wanting more, more, more, even though I don't have it. If I don't declare bankruptcy, when I do get a job they will just garnish my wages.

So, why should I NOT declare bankruptcy and just start over with a clean slate? My credit is already horrible, this will get it over with in 8 years. (my Credit Score before I got sick was 787).

Answer: Let me give you the same advice I give to anyone asking this question.

Pretend you live in Oz....where all creditors are good and sweet and willing to work with you. They all agree to waive any future interest and late fees....and reduce your debt by 30%. So you now owe $70,000.

Then you sit down and make a very strict budget....no more entertainment or dining out....no more Starbucks. You cancel your cable tv ad cell phones, scrimp like crazy on utilities, and learn to use coupons at the store.

After doing all this, can you come up with $1200 a month over the next 5 years?

Without a job....probably not.

OK, now wake up from you dream. These creditors are not going to waive anything, and you might get a few to cut 30% off your debt. And it's extremely unlikely they will agree to wait 5 years for you to pay them back.

I the next few months you are going to be bombarded by harassing collectors, lawsuits, and threats of property seizures and bank account garnishments.

Or you file for bankruptcy.

You don't have a job, so I'm going to bet you qualify for Chapter 7. Hopefully, after all of the unsecured debts are erased you will have some funds left over to pay your mortgage and/or car payments. If not, you will probably lose them...but you are already on the verge of losing them anyway.

Yes, your credit will be in the toilet for a few years. But if you educate yourself on how to restore your credit, and visit sites like http://www.lifeafterbakruptcy.com you will be in decent shape in a few years.

Bankruptcy is not easy, but it's certainly better then dealing with creditors threats for the next several years.

Jubeat - Evans Full Combo by YS-Y