I owe less than 10K in credit card, medical, and private educational loan debt. I just found out that I am being sued for one of these cards, but I have not yet been served. I was once told by a lawyer that bankruptcy would be a bad idea for someone who owes as little (comparatively) as myself, but now that I am about to be sued I’m not so sure.
I was un/under-employed for a while (which is how I got behind on my payments) but am now gainfully employed. However, even without luxuries my monthly income is less than my monthly expenses, even before making payments. I have been able to settle some of my debts or to make monthly payments, but I have a few outstanding ones with whom I have not been able to negotiate.
I am trying to avoid going to court at all but would have no problem making payments of around 200 dollars a month. I reached out to a consumer credit counselor and they gave me a Debt Management Plan which did not include all of my outstanding debts (which I provided to them) but did include a credit card I have which is in good standing (which they pulled from my credit report).
Because I work long hours and have no privacy at work, I am communicating with them primarily via email but am having a hard time getting answers. I have not accepted the plan/signed any paperwork, so I feel comfortable continuing to seek alternate advise but my fear of being served at work has me antsy and unable to really focus on anything, including managing this debt. I have been trying to get a lawyer but once they hear that I am wary of bankruptcy and would need to make monthly payments for representation, they stop returning my calls.
– would bankruptcy be a good option, since it would stop the lawsuit and since I cannot afford to settle all of my debts on my current income? as I understand it, having a judgement against me would be about as bad as a bankruptcy anyway, and I truly cannot afford the lump sum this creditor is asking for.
– would a debt managment program be a better option, even though it would not stop legal action (I assume) and I cannot seem to get the current company I am working with to recognise all of my debt?
– should I attempt to settle with the company suing me (immediately) as well as those that have yet to pursue legal action (in the meantime), instead of waiting to enroll in a DMP?
– is there anything I am not considering?”
It’s the age old problem of how much debt is appropriate for bankruptcy. Some feel there is a numerical value but the reality is it’s not the number which is important, it’s the protection bankruptcy gives you that is key.
In a bankruptcy approach you sound as if you’d qualify for a chapter 7 bankruptcy. Your debt would be discharged in a couple of months, except for your student loan debt. You didn’t give me a breakdown of the individual debts in the $10,000 so i have no way of knowing how much student loan debt you have.
I’d also like to know the balance of the debt you think you will be sued for and what type of creditor is it?
The reality is there is a range of possible solutions but more information is needed to point you in a more definitive direction.
Is there any chance of increasing income at all or raising some money by selling so stuff?
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