endlesszeal

My friend (true story) is in a bunch of debt, around $20,000, and no way in hell is he able to pay it back. He works with me at a part time job and barely brings home $1100/monthly gross and his minimum payments are around $450/month.

If he files for bankruptcy, would he have to pay back his debt back? I think all of is debt are credit cards, so no government, auto or home loans. I helped him searched a little, but I don't want to give him bad advice and f**k him over because I hardly know how car payments work.

On wiki, it seems like he will fall under Chapter 7 or 13. According to the FTC website, if he files for Chapter 7, he needs mandatory advising before and after the filing in addition to passing a means test. If he is successful in filing Chapter 7 he doesnt owe anything. However, if he does not pass the means test, he will fall under Chapter 13 which they construct a plan for him to pay back his debt.

Lastly, will any of this affect his chances of going back to school? I dont remember if bankruptcy affects government fin. aid, but surely private loans.

If any of this is wrong, please correct and advise. He went from an income of $45k/yr to $15k/yr and I honestly told him I dont think he can pay back his debt in his situation.

Thanks a bunch fellas.

TurboMirage

he could call his debtors and strike a deal...

B

Filing bankruptcy is just about the last thing you want to do if you ever want to own anything (ie, a new car, a house, etc).

20k isn't really that serious of debt.

trasfer it to a 0% card and keep doing it once a year until it's paid off. interest is what kills you from getting any where.

SlushboxTeggy

I'm with B. Or see about debt consolidation.

|Chaz|

I've heard of worse situations. This is why you shouldn't buy things on credit. You just never know what may happen.

I wouldn't file for bankruptcy unless he has exhausted all of the other solutions first.

Jeef

Why doesnt he get another part time job if he cant find a full time? Credit cards suck.

2000Si

except no one 20k in debt will ever come close to getting a card or account worth that to transfer it.

B

amount of debt does not necessarily denote credit worthiness.

you'd be surprised how easy it is to do this. especially since you're not taking on new debt, just moving it.

2000Si

you have to consider debt to income ratio. when I tried that, it never even made it to my credit report.

92stoccord

This. Get a job, hippie.

invisibledemon

i vote get another part time job.

hard up for cash? go wait at a real nice restaurant.

join the leagues of us who work two shitty jobs to keep afloat.
although i only do it bc one (that i hate) offers benefits, i actually like the other.
but, unlike most people out there, im doing what i need to do, not just looking for the easy way out.

Celerity

I partially agree with just about every post here.

20k isn't enough to declare bankruptcy. I had to (And am still working out deals) at $120k (Lots of that are IRS too, which bankruptcy doesn't cover)

And even at $120k people are telling me to just work things out.

There are two types of bankruptcy to look at here. Chapter 13 and Chapter 11. Chapter 11 Allows you to keep your things, it just stops the repo man for 5 years. And you have 5 years to work out a state-approved payment plan. Chapter 13 is where the state comes and takes everything (Not everything, just things that are in danger of being lost and pleasure items) but you get to walk away from the debt. They will allow car ownership up to $3500 in value, no bikes, no boats, no house. Just enough to get by.

Both cost over $2000, with a Chapter 13 costing $3500. You can't put it on a credit card and then go bankrupt (People used to do that)

__________________

corvetteguy78

Debt consolidation is the same as not paying your credit cards...you pay an orgination and they negotiate on your behalf. He's better off calling them directly and structuring a plan on monthly payments. Also, if he does negotiate any kind of settlement with them, let's say he owes one credit card for 10k and they let him settle for 5k, that 5k he didn't pay is considered income and he will get tax forms next year and he will have to pay on that 5k.

i've been there with 25k debt in credit cards....it easy to use them, it adds up fast especially when you have someone else helping you get there. It's a tough whole to crawl out from too. I did it though, but i was also making 58,000-66,500 a year

Like B said, Bankrutpcy is last option...But with 15k income, that's harsh...i am thinking about it now and he may actually want to consider it. He should seek out an advisor.

But first he should try to get another part time job(easier said then done i know) and look at cutting back on his expenses.

__________________
Goodness Reflects the Light; And Evil Bares the Seed to all Darkness; These are Mirrors of the Soul; Reflections of the Mind--Choose Well

92stoccord

Sounds hott.

SlushboxTeggy

You have to "smudge" your income. Credit cards take you at your word, they don't double check it. I used my real income when applying for a 0% APR card. Got a balance of $500. Thanks, that's useless for my balance I wanted to transfer. Submitted a balance increase form with an "inflated" income. Got the limit increase I needed, and transferred my balance.

Credit cards don't care as long as you are paying.

corvetteguy78

Isn't that the same problem we had with Mortgages....giving people to much credit who could not afford it.....

corvetteguy78

endlesszeal

Im pretty careful with money as such that I wont ever charge my credit card unless I know I have enough to pay it off that month. I only use it to "build credit."

Anyway, thanks guys for the very useful suggestions. He's tried debt consolidation and they said his income is too low. I also suggested debt settlement, but he would have to hire an attorney?

As for another part-time job, he's tried looking, as well as I have, and there isn't much except retail and fast food at minimum wage. Also, he's going back to school and it'll be extremely rough with 2 jobs and school. However, this is up to him to suck it up or not (I did 15units + 30hrs of work and that was fuckery).

How does the credit card balance transfer work? Ive heard of Discover giving you like 1 year or 18 months with 0% interest. So say I have like $5k in credit card debt, I can get a Discover card and transfer that $5k to it and make payments and no pay additional fees or interest? But Im sure there is a limit to how much you can transfer?

Im trying to give him as many options as possible besides bankruptcy as well because I heard from another friend he got denied a job because he had bad credit.. Didn't know that can happen.

Again thanks a bunch for the useful insight. On a tangent, I'll be mowing lawn for extra income this summer for a trip to Japan. Any recommendations on cheap places to stay and eat there? Particularly in Tokyo and maybe Osaka?

2000Si

I'm fairly certain that nitpick is one word.

invisibledemon

I like how you say no part time jobs "except fast food and minimum wage"

makes it sound to me like he doesn't want to actually work. fast food at minimum wage is a better step forward than sitting at home complaining about being in debt. that's going to get you nowhere.

anybody can find a job, problem is people think they are better than the jobs they can find.

I'll do whatever job I can find if I needed to get out of debt or afford something that I needed.

B

$8 > 0 / hr.

Does he have any skills? what's he in school for?
big junk? do gay porn.

Jeef

I have seen some part time going for 12-15 an hour. I have a side job that pays atleast $20.

endlesszeal

im located in a pretty rural area where anything over $10/hr is rare outside a real profession (licensed/certified/degree). and like i said hes planning to go back to school. if you can do 2 jobs (50+hrs a week) and go to school full-tome, kudos to you. he's looking into criminal justice or accounting.

skill wise, he was a blackjack dealer for 4 years and thats about it. he's asian so any hopes of porn will be gayporn or she-male porn. i heard little asian boys are the in thing for those kinda people.

either way, im giving him options and opinions. itss up to him to decide which route he takes and how bad he wants to get out of debt. I, for one, will never do fast food unless it was at In-N-Out. Just saying.

SlushboxTeggy

You have the first part right, but be aware that some cards have transfer fees. I chose the Chase Slate card. While it didn't have the longest 0% APR (I think its 12 months), there was no balance transfer fee. And as far as I know, you can transfer a balance as big as your limit on the card.

B

There's plenty of better paying jobs than slinging burgers. Like, the deli at a gorcery store. Anyone can use a slicer, but since you might chop off your finger, it pays more.