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     | Tuesday, February 27, 2001 - 03:46 pm  He's 25, and two years out of school. He's got approximately $19,000 worth of credit card debt, and another $12,000 or so due on his student loan. He only makes $26,000 a year (pre-tax). He's struggling to make minimum payments, though his credit right now is impeccable (not a single late, ever, and a good 5 year or so history on most accounts). Obviously the student loan isn't dischargeable, however, does anyone think it would be wise for him to seek ch7? He was considering getting a debt consolidation loan and closing the credit cards... Would this be wise? Obviously CCCS isn't going to help too much here seeing as that his rates are already decent (around 12-14%)... Thoughts?
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| | Tuesday, February 27, 2001 - 04:23 pm He can't qualify for Juniper? "0%* fixed introductory Annual Percentage Rate (APR) on all purchases and balance transfers High credit lines—from $5,000 to $100,000** No balance transfer fees A 14.99%* variable APR on purchases and balance transfers after first 5 months" I have no idea what their approval requirements are, but it sure would be good to know.
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| | Tuesday, February 27, 2001 - 06:13 pm Juniper requires that your credit score be 680 or higher, heard this from a rep. Juniper only extends credit to people with excellent credit as they put it.
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| | Tuesday, February 27, 2001 - 06:53 pm Thanks! 680 isn't THAT high, considering the excellent deal they offer. 720 wouldn't have surprised me. I assume both scores and employment have to be impressive to get a $100,000 credit line. This just shows how you can get money as cheap as free when you don't need it. $100,000 at 12% interest is $1,000/month interest. Compare that to free for 4 or 5 months. I wonder if the balance transfer limit is lower.
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| | Wednesday, February 28, 2001 - 05:14 am Does anyone think that ch7 might be advisable? I'd hate to see him get into even more debt... -Dave
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| | Wednesday, February 28, 2001 - 11:08 am I wasn't suggesting MORE debt! You reduce debt by increasing the principal payments. If your friend pays 12% interest now, he would save about $950 by not paying interest for 5 months. In don't know how Juniper's billing cycles are calculated exactly and of course it takes a while to complete the balance transfers, but he could expect to save at least $800. He shouldn't take those savings to spend at the bar or whatever he likes to do, he should use it to PAY DOWN THE PRINCIPAL. $19,000 isn't much for someone who makes $60k/year. I have no idea how much he makes, but you mentioned he went to school. I haven't seen his budget, I know nothing about him, his potential to earn more, or less ... He has good credit now. He can expect to spend many hours disputing, the bankruptcy itself costs a few $$$, and he might be spending substantial amounts on credit card, cell phone, whatever deposits. Many of the best offers won't be available to him for a while. No crystal ball here!
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| | Wednesday, February 28, 2001 - 12:39 pm Well I'd say oweing a total of $31,000 ($19,000 in credit cards + $12,000 in student loans) for someone making $26,000 is a serious financial problem. I would consider bankruptcy if I were in this situation. But if he soon might be making a lot more money then maybe he should preserve his good credit...
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| | Wednesday, February 28, 2001 - 02:38 pm I overlooked that he makes only $26K, that's not much assuming he has a college degree. But even if he discharges the 19K, he still has to pay the student loans. Depending on his line of work, the bankruptcy might be a factor for promotions or new job opportunities. The bankruptcy can show FOREVER for jobs with over 75K salary. We also don't know the credit scores, they could be low already even without any late payments. On the one hand $19,000 is a lot, on the other, just look at the money people spend on new cars or rent for nice apartments.
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| | Thursday, March 01, 2001 - 05:56 am Sorry, but IMHO, $19K is NOT anywhere near enough debt (not including the student loans that can not be included) for somebody to file BK over, especially with perfect credit and a recent college degree. That would be ignorant. Anyone with a college degree should be making more than $26K a year. I'd say, take Christine's advice. Get a card with a teaser rate or low fixed APR, make some minimum payment for as long as it takes the college graduate to obtain employment worthy of his/her degree.
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| | Thursday, March 01, 2001 - 06:07 am He's in the publishing industry, and unfortunately an entry-level editor only makes around that much $. Hardly enough to live on, and even less when you've got that much debt behind you. I don't forsee him making over $75k anytime soon, but who knows...
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| | Thursday, March 01, 2001 - 06:39 am Here's my two cents If your friend is going to file banruptcy, he'd better consider it soon. With today's political climate, it's probably going to get much more difficult. He may have dificulty if he hasn't missed any payments or had any late. This is essentially proof that he's able to meet his obligations and the court may not discharge the debt. You get the black mark for filing whether you get anything discharged or not. I agree with Christine's advice to try to get a better rate on the CC debt. In addition, he can apply for a forebearance on the student loans claiming financial hardship. He won't be required to make payments while the forebearance is in effect but interest will continue to accrue. He can use the payments that would have been sent to the student loan to hammer down the CC debt. You generally have to reapply for the forebearance every 3 or six months depending on the studen loan servicing company. That BK will also show forever on any mortgage application over (not sure of the number but I think it's $150,000.) I don't know about where you live, but here in MN you'd be lucky to get a 100 year old farm house with a wrap around strip mall for that price. Chr's
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| | Thursday, March 01, 2001 - 07:40 am Well, I can't see how not missing any payments would have anything to do with being able to get a ch7 discharged. The courts don't pull your reports, and the only possibility would be if the creditors raised a stink, which is easily defendable... He lives with his parents, and has absolutely no money left over after bills to even rent an apartment or pay utilities... I'm going to help him negotiate with his banks this weekend to get a better rate... Anyone know what the best 'language' is to use with them to avoid them doing something like closing his account? We obviously don't want to lead on that he's having trouble meeting his obligations. I'll also mention the forbeearance option..
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| | Thursday, March 01, 2001 - 08:24 am Here's my two cents. I filed at age 22 (1996) with a siginifactly smaller liability but also making about 21K. I've felt the fire of Bad credit but at the same time I know I'm better off now than if I would have tried to pay off all of the creditors. Every situation is different. I can understand a RECENT college Grad making 26K out of college. Remember guys we all don't live in Californ-i-a. In the southeast I see it all the time even in generally great paying fields. I don't suggest that he files bankruptcy. I like what the other guys here are saying about alternate methods. The student loans are really hard to discharge so he'd still have almost half his debt with 10 years of BAD CREDIT. A second job along with transfering balences to a lower APR card would be much better than bankruptcy. If he calls the student loan people they could give you an extention of forbarence for reasons of financial hardship. They do this all the time. That may still add interest but he could focus more on the higher interest credit cards. As far as the student loans go he could earn some extra money through part time volunteering with Americorps (americorps.org). They will pay back about $5000 in Student loans total for some volunteering over a period of two years or more. They are NATIONAL and have many different ways to serve. He'd do good to check out there website. It even tells you whats avalible in your area. He could also join the National Guard or Army Reserve. Since he has a four year degree he'd be immediatly brought in as a SPECIALIST (E-4) with a 2 day a month part time job that pays $100 a day. Also there's all kinds of programs that could get him up to $8k in bonus money, and there is also student loan repayment programs with them. I'm not a recruiter (smile) and this route "aint" for everyone.
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| | Thursday, March 01, 2001 - 08:36 am DT: >> Well, I can't see how not missing any payments >> would have anything to do with being able to >> get a ch7 discharged. If you walk into a federal bankruptcy court with perfect credit (albiet with balances on account) and a job, you're going to have a much more difficult time convincing a federal bankruptcy judge to discharge your debts because you've got a track record of being able to meet your obligations and pay your bills on time. You don't just "get" a bankrupcty simply because you've just decided that your existing debt is 'too much' for you to handle. You (your attorney) have (has) to prove a serious hardship case (income is much less than outgoing debt, unable to obtain the $$ via alternate means (i.e, a consolidation loan, etc.), etc.). A judge isn't going to let a perfect credit jockey discharge tens of thousands of dollars worth of debt simply because he/she no longer likes the terms or interest rates that he/she is paying. A federal bankruptcy court is NOT Burger King - take my word for it. Chris: >> That BK will also show forever on any mortgage >> application over (not sure of the number but I >> think it's $150,000.) Absolutely false. Nothing 'shows' on a mortgage APPLICATION unless YOU put it there. As for your credit history at each CRA, a BK can only be reported for a certain period of time. A chapter 7 is reported 10 years from date of discharge. A chapter 13 is reported 7 years from date of filing.
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| | Thursday, March 01, 2001 - 09:43 am John, I wasn't saying that you could walk in being perfectly able to pay your debts and walk out with a discharge. I was stating that if you can show that those debts are causing an extreme hardship (ie, unable to rent an apartment, pay utilities, etc. because your debts equal or are more than your income), you wouldn't have a problem getting a discharge. Whether or not your ch7 gets discharged has absolutely nothing to do with your payment history. The judge will never KNOW your payment history unless a creditor disputes your right to a discharge (which I suppose would be more likely for someone with a perfect payment record). You can have a perfect payment history and still have an undue hardship. It's called responsibility for your actions.
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| | Thursday, March 01, 2001 - 10:06 am Reality check: >> That BK will also show forever on any mortgage >> application over (not sure of the number but I >> think it's $150,000.) I've NEVER seen that happen. However, it COULD happen any time, as that's what's in the FCRA. I'm sure that the data is available, as a special OPTION to the credit report. I just haven't seen it used. When you're only in your 20's, I think you should consider that this option MIGHT be used in the future. Re. hardship/late payments for bankruptcy: Late payments aren't a necessity, since many people USE their credit cards and INCREASE the balances. That means, they charge more than they pay, yet they still don't have any late payments. However, I have no idea how the pending bankruptcy reform will change the requirements.
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| | Saturday, March 03, 2001 - 11:03 pm I filed chapter 7 with "perfect" credit. I never had a late payment, no collections, judgements, nothing. Problem was I was borrowing from mastercard to pay visa. Every month I was getting further in debt because I didn't have enough money to pay my debts. Rather than be late, I would borrow more. My lawyer asked me if I had collectors calling and I said no that I had not been late yet. That was the only time it was brought up. The trustee never even said a thing about it. Just my 2cents
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