I Am a Disabled Veteran and Drowning in Debt. We Are Considering a Chapter 7 Bankruptcy. – Clint

“Dear Lewis,

Well, was active duty military for 10 years got hurt and the military pushed me out, I am now a 70% dis vet, working for the FED as a GS pay grade.

I just moved from Hawaii back to Wisconsin, now in Hawaii I was making a ton more money than I am here in Wisconsin, just bought a house and have two car loans and about 41k in unsecured debt, my issue is now that I have done the move and had to pay for every dime out of my own pocket and also took about a 18k a year pay hit because of the different FED job because the FED job I had in Hawaii was about to go away so had to take a lower pay grade and move.

Well the wife and I have been trying to figure out what to do on the payments for everything, and we can pay and have been paying all secure debts and they are all current, and if we don’t pay credit debts we can afford to live but if we pay all the min payments on them we are hurting and not even able to get food, so we are now about 3 month s behind on the payments and starting to get the calls, we have never been late on any payments before and it is a bit unsettling, I have never thought that I would be in this boat to have to consider chapter 7 but here we are talking to a lawyer and trying to get all paperwork together

I guess my issue is just worring about the negitive action that might come from it, becuase I am a 70% vet and a FED worker and dont want to lose the house or cars becuase we can afford them if we didnt have all the debt from moving.

But after maxing out all the cards for the move and watching our credit scores go from 770s down to about a 590 just from having high revolving debt we figure if chapter 7 will clear it maybe we can get the score back up, but worried and feeling a bit scared about the whole thing need some support or advise…

Clint”

Dear Clint,

You are on the right path. Keep working with your bankruptcy attorney. As you said, you already did the damage to your credit by having late payments. So it is best to wipe away the unsecured debt, and your credit score will start improving right after the bankruptcy (because your debt to income ration will have improved overnight).

Based on the fact that you have no money left over each month to pay minimum payments, you would never be able to dig out of having $41,000 in unsecured debt. It would continue to rise. So it is best to wipe it away. Then by making your mortgage and car payments on time each month, your credit score will continue to improve.

Good luck!

My name is Lewis Roberts and I’m an attorney licensed in Florida and Georgia. My practice focus is consumer bankruptcy, real estate issues/closings, and mortgages. I also have Florida real estate broker and mortgage broker licenses. I am a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA), National Association of Consumer Attorneys (NACA), and a graduate of Max Gardner’s Bankruptcy Boot Camp. I enjoy helping people with decisions that impact their financial well-being.

Legal Disclaimer: This is for educational purposes only. It is not to be relied upon as legal advice. It also does not create an attorney-client relationship. No such relationship is formed with attorney without a written agreement.

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