I'm considering filing for bankruptcy, but it's such a big decision, I want to know if some other alternative might be better for me. I owe over $40,000 in credit card debt
(4 cards, 3 banks). I'm underemployed, just barely making all my minimum payments. Other than a retirement account worth about $40K (frozen now, due to divorce proceedings), I have no assets
. The debt is shared debt with my husband, but I doubt I'll ever get anything from him. Since our split, I've already paid over $20,000 off our debt by myself. The cards are only in my name, so I don't think bankruptcy will affect the divorce much.
Despite this deep debt, I have a credit score in the 700s, and no points against me for late payments, etc. I'm still able to do balance transfers for better rates, so about half the debt is at an APR under 5%, and the rest is under 18% (ie no penalty APR hikes so far). I could probably shift more to a lower rate, at least temporarily.
1) Are there options I should consider before bankruptcy?
2) If I do declare bankruptcy, but get a judgement in the divorce that says my husband has to pay back half of the $20K I paid toward our debt, will that money be taken to pay my debt?
3) Should I consider cashing in my 401K to pay this debt? I no longer work for the company that set it up.
One of my cards is due today, the rest in the coming week. If I'm going to stop paying eventually, then the sooner the better, I assume? I've never made a late payment, but I don't think I'll even have rent
money if I pay the minimums on my cards this month...