Financial Opinion Question

[Bkpkchck]

I have a situation that I am really too embarrassed to ask family and friends. I do not have a trusted financial advisor because...well... I have never had enough money to need advise about it. I am 40 and have in the last few years gotten my money under control and most of my debt paid off.

I was married last year and at the time of my wedding the only debt I had was my car payment and a credit card I had used for some of the wedding expenses.

My husband is a different story. He is about $25,000 in debt all total, more than half of that are medical expenses left over after the insurance paid and he has been paying a little along but not really making a big dent. The rest of it is credit card debt he "won" in his divorce (the ex-wife's spending sprees).

We want about 10 acres of land with a house to homestead. I know for the area that we want to be in that land doesn't come cheap because of the towns and tourist attractions nearby (Western NC Mountains).

I was raised to pay your bills and not take shortcuts or assistance of any kind. I was taught to work hard and be honest with my fellowman.

My question is..... would it be terrible for my husband to file bankrupcy so we can save and put that $25,000 toward a downpayment on our future and dreams? Or should we pay what he owes and try to save what we can and delay our dream a bit longer? I want to do what is right but I also know that those medical expenses were inflated because he had insurance and that credit card debt is mostly interest. The actual goods and services were paid for long ago.

Thank you ahead of time for honest and constructive responses.

[J.T.M.]

25 K is a lot but at the same time it isnt . The two things about med bills to remember is :
1. interest free
2. they are negotiable .
sell the used car for 10 k and offer it up as pay in full , you might be surprised

[paradox]

Originally Posted by Bkpkchck

I was raised to pay your bills and not take shortcuts or assistance of any kind. I was taught to work hard and be honest with my fellowman.

I think you answered your own question. As much of a pain as it is, he legitimately owes those bills. The fact that much of it is interest does not mean there is less of a moral obligation to pay it.

Also consider this, bankruptcy stays on your credit record for YEARS. So you will likely still delay your ability to buy that land and throw yourself into a high risk credit rating that causes you to have to pay high interest on anything you do for a very long time.

[MO_cows]

I would not file bankruptcy. $25k isn't very much in today's world, so unless your income is extremely low, you probably wouldn't be considered bankrupt anyway. Bankrupt means you owe more than you CAN pay, not simply more than you WANT to pay.

I agree with JTM - try to negotiate settlements for a reduced amount. You probably need to save up some cash first. If you can offer them the reduced amount right there on the spot, they are a lot more likely to take it.

Good luck!

[Danaus29]

Why should the op sell their car? No car in many places means no transportation. No transportation = no job/paycheck.

Now if the op had stated they have 5 cars and need only 1 or 2 then I might agree with the "sell the car" advice.

To the op, you can check with most banks to see what kind of credit you can get for the purchase of a homestead. Many banks will give you a ball-park figure without having to fill out a loan application. Or you can use one of many on-line mortgage calculators where you put in your monthly payment (be sure to give yourselves plenty of wiggle room for taxes and insurance) and see how much you can afford to spend on a house and land.

[where I want to]

Bankrupcy means only that, while you don't pay those bills, others do. By the very question you ask about it being so terrible, you already know the answer you believe.

There are plenty of people whose perspective is limited to what gets them what they want and devil take the hindmost. There are people whose need to maintain a good opinion of themselves would keep them from doing it.

That is a personal choice to make as to whether you would be ok with doing it when it is not a neccessity. A million opinions will not answer the question for you.

I will say that $25,000 is a car and that is rountinely paid off by many people within 5 years. If you want to pursue a bankrupcy, I would check to see if the net to you after fees, lawyer bills, etc would be worth it just as a matter of understanding.

[Yvonne's hubby]

Originally Posted by Bkpkchck

I have a situation that I am really too embarrassed to ask family and friends. I do not have a trusted financial advisor because...well... I have never had enough money to need advise about it. I am 40 and have in the last few years gotten my money under control and most of my debt paid off.

I was married last year and at the time of my wedding the only debt I had was my car payment and a credit card I had used for some of the wedding expenses.

My husband is a different story. He is about $25,000 in debt all total, more than half of that are medical expenses left over after the insurance paid and he has been paying a little along but not really making a big dent. The rest of it is credit card debt he "won" in his divorce (the ex-wife's spending sprees).

We want about 10 acres of land with a house to homestead. I know for the area that we want to be in that land doesn't come cheap because of the towns and tourist attractions nearby (Western NC Mountains).

I was raised to pay your bills and not take shortcuts or assistance of any kind. I was taught to work hard and be honest with my fellowman.

My question is..... would it be terrible for my husband to file bankrupcy so we can save and put that $25,000 toward a downpayment on our future and dreams? Or should we pay what he owes and try to save what we can and delay our dream a bit longer? I want to do what is right but I also know that those medical expenses were inflated because he had insurance and that credit card debt is mostly interest. The actual goods and services were paid for long ago.

Thank you ahead of time for honest and constructive responses.

I would first try to negotiate a cash payoff of the debts in exchange for getting them reduced. This is quite often "doable". If you could get them reduced by half, you are way ahead of the game, then you take out a loan if need be and pay them off. Your next step is to pay off that loan ASAP... devote every nickel possible to getting it paid. Once you are debt free, then start saving every dime towards getting your own place. Unless you have some very compelling reasons to stay in the high rent district.... I would shop around for much cheaper land in other areas. The Ozarks still have some reasonable prices, as does Ky and TN.

[Bkpkchck]

I think you are all right. I do know what I should do. I guess it is hard because I didn't incur this debt, he did. As a 40 year old newlywed who has always taken care of myself, I am having a little trouble incorporating this into the "what's mine is yours and what's yours is mine".

We both work full-time and make decent money. If we pull really tight we can make this work. Lord willing and the creek don't rise.

Please don't think badly of me for considering it.

[paradox]

Most everyone faces something like this at one time or another. I would highly recommend the Dave Ramsey snowball method as the way to get rid of the debt quickly. It makes the process go faster but also gives you a chance to feel those little victories along the way that keep you encouraged and on track.

[where I want to]

Originally Posted by Bkpkchck

Please don't think badly of me for considering it.

Never- even if you chose to do it because you thought it was right for you. I do think badly of people who dismiss the question as unimportant. Good luck no matter what you do.

[J.T.M.]

Originally Posted by Danaus29

Why should the op sell their car? No car in many places means no transportation. No transportation = no job/paycheck.

Now if the op had stated they have 5 cars and need only 1 or 2 then I might agree with the "sell the car" advice.

To the op, you can check with most banks to see what kind of credit you can get for the purchase of a homestead. Many banks will give you a ball-park figure without having to fill out a loan application. Or you can use one of many on-line mortgage calculators where you put in your monthly payment (be sure to give yourselves plenty of wiggle room for taxes and insurance) and see how much you can afford to spend on a house and land.

Your splitting hairs.I used it only as an example because I figured she , unlike others, would see it as an example only . Keep the dang car , sell the ice box ... see how that works

[7thswan]

First, you can negotiate your bills ,there are places localy that can help do this.
2. You will not beable to get a loan for house/property for 3 years if you go with bankruptcy.
3.Immediatley upon doing whatever you do,start rebuilding your credit.
4. Bankruptcy might make you sell some things,you are only allowed a certain amount in 'goods' jewelry,cars,ect.
all I can think of right now...

[plowjockey]

I would love to have $25,000 worth of debt.

Bankruptcy is for people and businesses, who need it.

You don't. The bills are yours to pay, inflated or not.

Welcome to the club.

[emdeengee]

The first step should be for your husband to negotiate his medical debt to see if it can be adjusted.

The interest on the old credit card debt is part of the debt. It is irrelevant that the actual goods and services were paid for long ago. Interest is part of the contract so it is owed.

I would not contribute to paying off his debt. Instead I would let him pay it off while you save for your down payment. You should figure out how long you want him to take to pay off his debt and this will give you a monthly $ amount that you can put into a savings account for a down payment.

[fordy]

..................He should have filed Ch. 7 , BEFORE you'll got married ! Now , he should still file Ch.7 in HIS name ! Why , should HE pull you into HIS Mess ? Maybe you should cut him loose , (annulment) and let HIM deal with His financial problems , you had nothing to do with . , fordy

[Yvonne's hubby]

Originally Posted by Bkpkchck

I think you are all right. I do know what I should do. I guess it is hard because I didn't incur this debt, he did. As a 40 year old newlywed who has always taken care of myself, I am having a little trouble incorporating this into the "what's mine is yours and what's yours is mine".

We both work full-time and make decent money. If we pull really tight we can make this work. Lord willing and the creek don't rise.

Please don't think badly of me for considering it.

Yeppers, when you get married, you get the whole package..... warts and all! I am sure you can work this through if you are determined.

[plowjockey]

Originally Posted by fordy

..................He should have filed Ch. 7 , BEFORE you'll got married ! Now , he should still file Ch.7 in HIS name ! Why , should HE pull you into HIS Mess ? Maybe you should cut him loose , (annulment) and let HIM deal with His financial problems , you had nothing to do with . , fordy

How about he just pay his bills?

If you buy a milk cow on credit and the cow dies (or dries up), you're still supposed to pay for it.

or, at least it how it used to be.

[fordy]

Originally Posted by plowjockey

How about he just pay his bills?

If you buy a milk cow on credit and the cow dies (or dries up), you're still supposed to pay for it.

or, at least it how it used to be.

...............I never detected anywhere in the original post that he had any assets to pay his bills ! I'd think she would only get hitched , after , he had shed his liabilities . And , I agree , he should pay what owes ! , fordy

[Yvonne's hubby]

Originally Posted by fordy

...............I never detected anywhere in the original post that he had any assets to pay his bills ! I'd think she would only get hitched , after , he had shed his liabilities . And , I agree , he should pay what owes ! , fordy

One would think so, but obviously that is not the case this time round. I cant fault her for that though, I have pulled the same stupid stunt myself a couple times.

[Bellyman]

There are different forms of bankruptcy. Chapter 7 pretty much wipes all of the debt out and you start over. Chapter 13 is more of a restructuring.

about 10 years ago, we ended up in a situation where my ex had declared bankruptcy. And somewhere, there was still something with my name on it. I still don't know where. All of the sudden, even though I'd never made a late payment, my creditors were demanding huge interst rates despite "locked in" low rates. It snowballed to a point where we simply could not pay it. What was perfectly doable before the credit bureaus got involved was impossible after their little "glitch".

We tried various ways of fixing it but nothing we tried helped in the least. Finally, we did seek the help of an attorney that helped us through a Chapter 13 bankruptcy. And no, we did not get off "scott free". Not even close. We had a very fair judge that basically told the creditors that they would get their principal back but not all of that bogus interest. And we made payments for something like 5 years or so, and not small payments either. But now it's over.

I have no guilt over doing a Ch 13 because the creditors WERE paid back. I haven't pulled a credit report in quite a long time so I have no idea whether all of that is still on there or not. We did get one credit card since then and basically use it for online purchases and pay at the pump kinds of situations. It gets paid off in full every month so there is no continuing balance. It is handy and I feel it offers a tad more protection than using a debit card, although I do use my debit card.

It doesn't hurt to talk with an attorney if you want to know what is possible and what is realistic. Bankruptcy doesn't always mean you're "free". Sometimes, it's a smack back at the creditors from a judge that says, 'hey, back off, you're only entitled to just so much".

FWIW...