View Full Version : Bankruptcy Or Credit Counseling...

02-18-2005, 03:49 AM
A sistah is broke right about now. My CC's are LATE and I don't see myself being able to pay them anytime soon. However, hypothetically, I might have a great job next week and be able to pay all my CC's, the rent, and my student loans (but I doubt it). I'm seriously considering taking some sort of action. I really don't want my credit to take such a serious nosedive, but maybe it won't be so bad.

Have any of ya'll filed bankruptcy or bought into Credit Counseling?

02-18-2005, 04:17 AM

1. Contact the student loan people and try to get a forbearance on your studuent loans. You will still accrue interest but you will have some time before you have to repay them OR you can have it set to pay a reduced amount. You set the amount for a certain amount of time. My sister just did this.

2. Contact the Consumer Credit Counseling Services. They are a free organization ( to my knowledge). You should be able to find them online. STAY AWAY from the folks who say they can clear your credit. Only TIME can do that.

3. Contact your creditors and try to negotiate a lower rate and work out a payment plan with them. They would rather receive SOME money than none at all.

4. Look at your budget and see what you can cut out in order to save money. Look at things such as:

-Drinking water instead of wasting money of beverages like coffee, tea, soft drinks.
- Bring your own coffee to work
-Switch to basic phone service instead of wasting money on features that you can do without such as caller id
-Get an answering machine instead of paying monthly fees for voicemail.
-Get rid of cable/satelite tv...buy an antenna.
-Sell your car (if you have one) and take public transportation if it is reliable in your area.
-Buy generic products instead of name brand products.
-Getting a cheaper ISP...if you use dialup, JoiInternet is good. I pay $84/year for use.
-Change your own oil on your vehicle. It's not difficult and can save you some money...I save about $10 this way.
-Get on a budget plan for your utilities if you aren't already. This can save you as much $50-$200/year.
-Sell clothes that you no longer wear to a consignment shop.
-Get your side hustle on (legally) and make some extra funds. Everyone has a talent. Find yours and exploit it!
-Do your own hair if you don't already.
-Cook your own food instead of eating out. Take your lunch to work.

I'll try to think of some more things that you can do to create extra money.

EXHAUST ALL options BEFORE you even think about filing for bankruptcy.

If you don't mind me asking, how much do you owe on your credit cards?

02-18-2005, 04:22 AM
Bankruptcy - think long and hard before you take this step because this is something that is going to affect your life for a long time. A bankruptcy is going to be on your credit report for 10+ years, and this will make your life uncomfortable in many ways. It will be held against you when you look for financing to buy a house or a car. It will probably come up when you try to rent a home in your name and a lot of employers do credit checks as part of the screening process. You won't be happy if the one thing standing between you and a great job is the new bankruptcy on your credit report.

Credit counseling - what these organizations do is help you contact your creditors and set up promises to pay. Not all are reputable and some do charge hidden fees. The way I see it, if you can call a credit counseling company you can just as easily call your creditors yourself, tell them what your situation is and make promises to pay and negotiate for lower monthly payments. A few creditors will even allow you to defer for a month. Let them know that you may have a job next week and hopefully you'll be able to get back on track. If you don't get the job let them know as well. Just keep them up to date on your status. This way you don't get black marks for being deliquent.

Sorry to hear that you're having trouble but it sounds like you're doing what you can to hang in there. I'm sure that things will turn around for you sooner than later. That's the way it usually works.

Hope this helps.

02-18-2005, 04:41 AM
Bankruptcy is a big decision. If you want try credit counseling. Try Consumer Credit Counseling. They are here in Memphis. Do not do credit counseling online or use a phone number that you saw on TV.

They can help, but ask them how it will be reflected on your credit report. In many cases it will show up that you are in credit counseling and I don't know if that's a good or bad thing..... Just ask.

If you really decide to file for bankruptcy, DO NOT FILE CHAPTER 13.
That is a total ripoff and the only one that gets paid is the lawyer. It does not look any better than chapter 7 on your credit report. It is still a bankruptcy AND they want you to pay them back!! File Chapter 7 and don't pay anything, except for things that you want to reaffirm, like a house or car or something that you want that might be a secured debt....

AND I really wouldn't file if I had less than $20,000 in debt. I know that my seem like a lot, except for if you have medical bills, but would you really want to ruin you credit for five or ten grand?
Try credit counseling first (locally) before you take the big step.

02-18-2005, 04:43 AM
Originally posted by Lokii@Feb 17 2005, 11:22 PM
The way I see it, if you can call a credit counseling company you can just as easily call your creditors yourself, tell them what your situation is and make promises to pay and negotiate for lower monthly payments.

If you do this, MAKE SURE THAT YOU PAY THEM!!! Don't EVER promise to send them payments and then you don't. KEEP up your end of the agreement.

ETA: Bankruptcy will NOT cancel out your student loans. Even if you file for bankruptcy, you will STILL HAVE TO PAY BACK YOUR STUDENT LOANS!! If you are in school, get a deferment. If you are no longer as student, call and ask about a forbearance.

02-18-2005, 01:29 PM
Oh, thanks for the replies ya'll! I have heard that bankruptcy is the pits, but then I've heard that some people use it as a restructuring tool. I figure I won't know until I go that route.

So far I have forebearances on the federal student loans and unemployment deferments on the private ones. I'm not too worried about the student loans, they are pretty easy to negotiate. My big problem are those CC folks. I am so tired of being called four times a day for late bills. I've contacted what I've been told is an excellent credit counseling service and I'm set up to start paying them this month, but I don't have the cash to pay them! :unsure: This is why I'm considering bankruptcy. Oh trust me, I'm living bare bones, at my mother's house, no social life, no shopping, just no anything. I'm really tired of borrowing money to pay credit card bills instead of using it to buy food. I think I have almost borrowed almost $5grand from the 'rents to pay credit card bills this year. Blah, sorry for the rant.

I am really looking to hear from people that have done credit counseling because i've heard that this also has an adverse effect on credit scores. I figure if I'm going down, I might as well hit the bricks.

02-18-2005, 01:50 PM
Maybe this consumer credit counseling information will help you decide what to do:

http://www.nappturality.com/forum/index.ph...topic=43176&hl= (http://www.nappturality.com/forum/index.php?showtopic=43176&hl=)

02-18-2005, 01:52 PM
Are you working anywhere right now?...even part time...

How many cards do you have? What are the interest rates on them? What are the balances? Are they late or over the limit?...


02-18-2005, 02:20 PM
Credit Counseling svcs only do what you can do yourself for FREE! And bankruptcy is worse, unless you don't plan on buying a house or car in the next 10 years. :( One thing Suze says is that if your cc debt is more than your salary then it's best to go ahead and file bankruptcy and I don't know what your earning, you'd have to lay out ALL the facts before I could tell you what would be best to do.....

02-18-2005, 04:35 PM
:2cents: i have worked with several people (non african americans) who have filed for bankruptcy (a couple more than once) and had no interruptions in purchasing. As a matter of fact I was told a while back by a woman whom I use to work with who had filed previously that I should file because I was so far behind. Well of course my PRIDE did not allow me to do that. She made it seem as if there was no problem. People are so AFRAID of the word. She reminded me that #1 the items that were already on my report will be there for x amount of years #2 my credit was already messed up #3 and even if it took me years to clear up certain items, company sell their accounts all the time so something that was charged off, etc. can reappear through another company for payment. and once they contact the time starts all over again. (this has happened to me already prior to filing)

My story: I went to apply for a fannie mae mortgage and the financial advisor ran my COMPLETE report. after reviewing he told me what I alread knew. HE SUGGESTED for me to file for bankruptcy, get a couple of credit cards to build my credit back up and come back to see him in two years-he then would give me a mortgage. Mind you I had just spoken to a brother who just purchase a truck and was waiting for final papers on his mortgage-he filed 3 years prior.

Capital One - Love you. they were included on my bankruptcy and they were first to grant me a credit card.

I wont advocate for banruptcy just want to say ITS NOT THE END OF THE WORLD- trust me. I could give my views on the credit counselors, who have been reported as fraudulent in some areas, but I will leave that alone.

I wish you the best in what ever you do.

If all else fails, pay everyone $5.00 a week and this will believe it or not keep you above water. My sister did it once.

02-18-2005, 04:54 PM
Good advise from TDhayes.
Be careful with the Credit counseling agencies. Some of them are shady. Like some of the others said, you can do all of that yourself. Some will say this is wrong but I actually disputed some of my debts and had them removed, or lowered. If the creditor does not respond to your dispute, they must remove it from your credit report. I also called my creditors and asked for lower interest rates and many of them agreed. When they tried to strongarm me paying higher interest, I threatened Bankruptcy-it worked.

About Bankruptcy:
I SHOULD BE A LAST RESORT. However I have known people to file Bankruptcy and they are just fine. I don't think it's as bad as everyone makes it out be. My friend "M" filed Chapter 7 when she was 27 and purchased a small town home 2 years later. It's now been 6 years and she has is in the process of selling her town home and moving into a larger house.

My cousin filed in the late 90's, she purchased space to open her hair salon in 2001. She bought her home summer '04.
By no means am I advising Bankruptcy, but people file BK and recover from it everyday. You will pay higher interest rates and all but if you are smart about reestablishing your credit, I think you will be fine

02-19-2005, 07:38 PM
Wow! Thank you so much for all of your advice!

@AFashionSlave - thanks for the link to that thread, I don't know how I missed it, I called myself reading this board. :doh

You all have given me a lot of information and believe me its very helpful. I think Tran68 mentioned Suze Orman, I actually started to consider bankruptcy more because I watch her show. I have heard her say on many occasions that if you aren't in a position to pay off CC debt and stay above water then filing bankruptcy might be the best option. I think I might be in this boat. I've been out of work for almost 10 months now and my savings was depleted somewhere around month four. I've got about $80,000 in student loan debt, and $16,000 in credit card debt, a car note, insurance, etc. I cut out everything extra in my budget. I haven't gone to a movie, dinner, bought a CD, gone to a club - nada! Unless somebody else is paying of course :D All of my credit cards are maxed out and overlimit, and they've been that way for a while now. I cut most of them up because they are useless.

I've been in positive thinking mode for too long now and I assumed (incorrectly mind you) that I would be able to handle my debt because I worked throughout college and law school and have never had a problem finding a job. For whatever reason, I'm unable to find substantive employment now, but I don't want to get into that.

I guess I really just want to be prepared to grow financially instead of being stuck treading water with the same debt issues. The one positive about credit counseling is that I will be out of CC debt in less than five years. I do feel responsible for the debt, it bought me many a book for class, plane tickets home, and basically provided me with the ability to pay for dental care and medical bills. But all of that dependency has to stop, I was young and slightly naiive when I got those cards, the time has come for me to settle this issue.

Anyways, I have heard so many mixed messages about the positives of bankruptcy, because it is always given such a bad rep, but like Nappilocs and blkrose I've heard of many people filing bankruptcy and moving right along opening businesses and buying homes and cars. I figure that I won't be ready to make any moves like that for at least five years though so I think I might try out the Credit Counseling route for a few months and see if I can handle it. The payments under the program are less than what I am paying individually to each creditor, the interest rates are lower than I could negotiate for, and the monthly fee is only about $20. If that doesn't work out, bankruptcy it is! We'll see how it goes ;)

Thanks again!

02-20-2005, 03:08 AM
Unpaid credit cards hurt you worst than a bankruptcy. Trust me on that one.

Check out www.creditboards.com

02-21-2005, 06:08 PM
Definitely check into the credit counseling. However, IF you do decide to file for bankruptcy, be CRYSTAL clear on what it will and won't take care of AND on what you can expect from creditors as you are trying to rebuild your credit.

02-23-2005, 01:23 PM
I know your stress. I've made horrible financial decisions so I feel your pain.

Credit counseling services: If you go that route, don't go to any of the ones that advertise on TV. Call United Way and get in touch with your local Consumer Credit Counseling Service.

Bankruptcy: It's not the end of the world but it's close. I know of people who abused it by going on spending sprees then filing. I know several students who got cash advances on their credit cards, paid off their school loans (which don't count under bankr.), and then filed. That was their plan. One woman said it will be off my report by the time I'm ready to buy a house. OTOH, I know another person who was simply overwhelmed, became depressed and unable to function because of the debt (I'm not sure which came first, depression led to debt or vice versa). Anyway, she was open about her feelings in our Bible study group. She went through with it and you could see a difference in her countenance at church. The only problem was that she then became a crusader for good money management and finances that was nauseating for those of us who didn't have such skills. But I digress....

Pray and do what is best for you. But what you do and however you get from under the debt, learn from it and don't let it happen again.

02-25-2005, 05:57 PM
My sistas, I just had to ring in on this one. Bankruptcy is not the end of the world. As a single parent, with no help from anyone, I put 2 daughters thru college and grad school, largely on loans and credit cards. I was doing okay, I had a pretty well-paying 2nd job and everybody was getting paid every month. Then, my main job was eliminated and the only option I had was to move to another city 3 hours away to take another job (with the same company). Anyway, I had to pay for the move myself ( and moving is REALLY expensive), but the icing on the cake was that I couldn't find a part-time job in my new location. I was really depending on the second income to make those ends meet. I had pretty good credit up until that time, but I started falling behind. I was simply not bringing home enough money. I got really depressed, because there was no way out. I was already on credit counseling and I could no longer make the monthly payments. I had about $20,000 worth of debt, including a PLUS loan. I filed a Chapter 7 reluctantly. The truth is, I haven't suffered very much, and it immediately took the pressure off. Capital One gave me a Mastercard almost immediately, which I only keep for emergencies. I never charge more than I can pay at the end of the month. I re-affirmed my car note with the credit union and have since paid that off. I have since paid off the PLUS loan (which isn't forgiven under bankruptcy). My bankruptcy is now over 2 years old. I have been assured that I can still qualify for a mortgage. The interest rate will be a little higher, but after 2 years of paying on time, I can refinance at a lower rate. The important thing is to re-establish your credit after a bankruptcy. It is not the end of the world, especially if you're still fairly young. Bankruptcy is not the scarlet letter that it used to be. Use it as a tool and a learning experience. Understand that it is a new beginning, not a way to get over. I'm not advising anyone to do it except as a last resort, but there is life after bankruptcy.

02-25-2005, 08:21 PM
I filed for bankruptcy four years ago, my senior year in college. It wasn't something I'd ever planned on doing, but my credit card debt was way out of control. I went to a credit counseling service and they couldn't do anything for me at that point, so my dad and I sat down and decided bankruptcy was the way to go.

I will admit, it was tough at first, having potential landlords tell me I had such horrible credit that they were afraid to rent to me. But, my perfect rental history has always allowed me to move into a place (and I've moved to a new apartment each year since then in desirable areas and buildings). I even moved across the country after the bankruptcy!

Also, I secured a brand-new job in my career only two years after filing. And, I'm still here and have been promoted two times since.

I also bought a new car two years after filing. And though my father had to co-sign for me, the payments are still on my credit report and improving my credit score and reputation everyday.

I've been approved for three credit cards since then (I know how to control my spending now :blush: ) and even had the limit raised significantly on one of them. I know that's a ploy from the credit card companies to get me to spend more, but it also means that I've been paying my bill on time and in full, which makes me proud. ;)

So, while I would never advise someone to file for bankruptcy, I will just tell you that it's not the end of the world and it won't ruin your life unless you let it. By the time it will have (hopefully) cleared from my account, I'll only be about 29. And I wouldn't be able to buy a house out here in overpriced Los Angeles by then, anyway! :rolleyes:

HTH! :)

03-04-2005, 07:41 PM

I lurk this board but almost never post here but I just wanted to say that credit counseling helped me pay off almost uh...about I'd say about $15,000 in credit debt. It worked very well for me. Just - as someone else mentioned - it's important to find a reputable one. I used an online non-profit service http://www.dca.org/

Best of luck to you. I made it out OK and so will you. This was a few years ago when I paid everything off and now I'm getting ready to go house shopping next year.

- Tania :afro: