credit cards and bankruptsy questions.

[artmaker]

hello, live in Michigan.

My good husband, (who should NEVER have been given credit!) has two credit cards. Against my better judgement he got them anyway. I JUST found out this week how much he has rung up on them. OH my GOD!!!!
Over 18 grand on two cards. We are sunk here! The interest alone is more than he can pay. I only work as a freelance artist. Work is spotty and low paying. Not at all a "regular income."

Now what to do? I had him call one of those credit councelors. They can get one card down. I think it was 40¢ on the dollar. And lower interst. BUT the other won't budge! AT&T universal. They cut the interest just a hair and that's all! Too much on it to do a balance transfer to the other card and besides, he can't do that THEN get credit counceling to do anything for months.

We own our home. I modest fixer upper at under 40 grand. We JUST paid it off this year. Wanted to start fixing it but that will have to wait now.
My kid is starting HS. I have SOME money invested towards college. Stocks mutual funds etc. Not much but a start. Seems we wont' be able to add to that now.
(I could KILL my husband at this point!!!!!!)

So question here.
IS it at all possible for HIM to file bankruptsy and just get rid of these cards?
Or possibly a chapter 13 which at least freezes interest? (And would kill his chances of getting cards again later???)

And if so, I do NOT want to file. I have one big credit card bill of 4,000.00 I consolidated my own debts onto that at a fixed 9% and fully intend to pay that off. I have a few other cards I use for internet purchases or emergancies. I keep those paid off!
Can HE file just for his two cards and not have to touch the house? Or my good credit?
Or do they have to take the house first??? (Second morgage is NOT an option in my mind! He will only do this again!)

Finally, any advice on these credit counceling agencies? Is it ok to give them "power of atturney" over his cards? What's a fair fee for their services.

Lots of questions I know. Any and all advice would be helpful.
Thanks.

 

[bigun]

You may have too much equity in the home to file a Chapter 7. Depends on how much below $40K the home is worth.

http://www.thebankruptcysite.com/bankruptcy-exemptions/federal.php

How much does he earn and, is it above or below the median for the state?
Are both names on the deed to the home?

 

[artmaker]

I doubt we can but here,
I believe the total cost of this house was 32,000.00 And it is paid in full now.
And yes, my name is also on the deed.

His earnings. well... pretty good. Truck driver. BUT the interest on his credit cards is over 400.00 a month! That's about all he can pay on them. Never get paid off that way.

I do NOT want to be part of this bankruptsy assuming he can do that. I have credit card bills that I can pay. (Not stupid enough to get over my head.) Actually I went through a chapter 13 years ago with a dumb mistake on my taxes. Took years to pay, ten more years of zero credit. Don't ever want to do that again. But in HIS case, zero credit is a good thing.

Lets assume we cannot do the bankruptsy thing.
What about credit counceling services I hear about all the time? Is it normal they get power of atturney? What are normal fees to expect? And if one credit card won't budge, like this one service told him already, are there any other options?
Would a personal loan say from a credit union to pay these off be better?

(Damn him anyway!!!!!) grrrrr.

 

[bigun]

If his income is above the median for your state, it's doubtful he can file a Chapter 7.
His best bet may be a Chapter 13 where all disposable income will go to unsecured debt.
Get him to a lawyer and get all of his options explained.
Debt negoitation is what you're talking about and it usually ends badly. At a minimum, he'll get a 1099C on the forgiven amount that may create a tax liability.
A personal loan won't help unless, he closes those cards so they don't get run up again.

 

[artmaker]

Debt negoitation is what you're talking about and it usually ends badly. At a minimum, he'll get a 1099C on the forgiven amount that may create a tax liability.

OK, what does that mean and why?

He's got several consolidation places written down to call tomorrow. One is a non profit. One he called already said they could get one of those cards down to something like 40¢ on the dollar along with their comission. But the other won't budge. So this won't help much. He also explained this will screw up his credit but only temporary until after it's paid. Then his credit actually improves. (I find that hard to believe.)

Freezing the interest would be fine. We'll pay off the principal. But how?

And how can I find out what the median income here is?

 

[bigun]

You are not talking about debt consolidation, you are trying to negotiate a settlement with the CC's. The drill will be, he stops paying the cards and saves the money to pay an eventual settlement. Problem is, many credit card companies will file a lawsuit sooner rather than later knowing you do have some access to money if you are going to settle. Plus, some will take the commission and do nothing.

http://www.usdoj.gov/ust/

Scroll down to "means testing information"

If you really want to screw his credit and get out from under the debt-here's the easy way. Just stop paying and let 'em default. At about 120 to 150 days late, you get some offers in the 50 to 60% range [for a payoff}. SOme will let you make intstallments of 3 or 4 payments. Just be sure you get the deal in writing. Go to IRS site and type in 1099C in the search function and see if this will create a tax liability.

 

[artmaker]

HI,

I looked up the mean for our state as 62,480 We are definately below that!

I seriously doubt we can do bankruptsy though. Not while owning a house, and with a few investments (Towards my kids college!) I like your idea of letting them ride long enough. BUT if we own a house, I bet they would go after him. It's not like years ago when he'd let this go. What could they take?

I got my terms mixed up too. Not debt consolidation, but debt counceling. He's got a few phone numbers to try today. They claim they can reduce the debt. We really need the interest frozen! We'll pay the debt. But that interest is more than he pays now. Spiriling out of control here! That one credit card AT&T universal wont' budge either.

Say that site you posted has a wealth of information. Thanks! My husband does not want bankruptsy. He wants to see if some service can reduce this to a point he can pay it off.
Personally I think he needs to get rid of the interest or it will never get paid.

I wonder if a personal loan with lower interest would work. Pay off the credit cards, then only have one payment to them with a more reasonable intererest rate?

agh. So lost here.

 

[bigun]

I wonder if a personal loan with lower interest would work. Pay off the credit cards, then only have one payment to them with a more reasonable intererest rate?

Sure it would work. You just can't run those cards up again or, you'll have a personal loan to pay plus, more credit card debt.

 

[artmaker]

Hi again, I wanted to wait until one of the people he contaced replied. Now.... I'll paste in their reply here. SURE looks like a hard sales pitch to me.
What do you think? My husband is thinking about the settlement paragraph. And I'm all for him loosing his credit. (Keeps him from doing this again.) But would it effect mine? I have no intention of adding my cards to this. But we ARE married. Does that matter?
Thanks.
oh also, I did use the post to atturney on this site. So far NO reply. (Other than the autoresponder.)

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