I have found myself in over my head. I've collected a lot of medical bills (mostly from having my son). I have around $30k and I'm not sure if I should just file bankruptcy or something else. I've never been behind before, but this is totally unexpected. Does anybody recommend some other routes? What should I do?
Any time you find yourself in debt over your head, as you described, it can be emotionally challenging. The first thing to remember is that this is a financial issue, not a moral one. You need to approach it with logic and reason, not emotion. There is only one question that needs to be answered..."How much of this debt can you realistically repay?" If you can repay all of it in a reasonable period then do so. If you can't repay all the debt, but you can repay 30% to 60% then a settlement program would be appropriate. If you can't repay at least 20% to 30% of the debt, then bankruptcy would be your final option. Don't rush into bankruptcy until you have considered the other options, especially for medical debt. Future lenders will view a bankruptcy more harshly than settlement on medical debts.
But, how will debt settlement impact my credit? I've had pretty good credit until now, and I don't want it to go down the tank. Doesn't debt settlement appear to be the same as bankruptcy on my credit?
I have gone through debt settlement myself. I can tell you that it does have a negative impact on your credit at the beginning but as your debt's get settled your debt to income ratio goes up making the credit score rise. It really depends on how long you are in the program to how bad the effect is. The longer you are in the program the longer the effect on your credit.
The company I went through posed some great questions to me that made me think.
She said, "Sir, what is more important to you right now." A.) staying in debt over your head but paying all of your bills on time for the sake of credit
or
B.) getting your monthly payment down to an affordable place so you can get out of your debt in less than 40 years time.
She then told me credit is repairable and if I continued paying just my minimums it could take 40 years or long to pay off my debt. She also advised me that living pay check to pay check could set me up to be one disaster away from file bankruptcy(which is scary.)
I had a friend who file bankruptcy 10 years ago and he is still trying to get it off of his credit report and has been disqualified from some job opportunities because of bankruptcy (crazy).
Everything that was said made sense. I was breaking my back and for what just to have a great credit score. I was giving all of my creditors everything I made.
PayDay was the worst day every for me because I got to see the pretty numbers on my check but I had to give it all away. One of my friends said PayDay was like "Mother's Day," to him. I asked him "why do you say that?" He said because, "I have to pay this Mother and that Mother." I kind of felt the same way. Except in my case I felt like a charity because I was always giving my money away to my creditors.
All things in life come with a sacrifice. It is your choice your credit or your life. Me personal I chose my life and life is some much better. Just remember one key thing CREDIT IS REPAIRABLE! Life is too precious and too short to give away to creditors all of your life.
Do your homework though because there are companies that are scam artist but there companies that are awesome hardworkers that have their clients in mind first.
