I would suggest that a bankruptcy is your best option,
since you have limited assets and income, a simple chapter 7 would wipe out all your debts,
and you do not have to worry about paying balances or interest.
Your other options will only delay the issues,
a debt consolidation program may allow you to pay 50% of the balances, however your credit rating will go down, and you will owe to the IRS any debt that was charged off as income.
In a chapter 7 you will not owe any tax on the discharged debts,
also after a few years your credit score will improve.
Paying minimums do not help you, and a bankruptcy should be considered.
Thanks for your quick response. What about the 401K, and possible money I'll get in the divorce settlement -- would they be affected?
your 401k and other retirement accounts will be protected,
divorce funds could be taken, and that may be an issue, where you may want to consider filling bankruptcy after your divorce is final.
Is it really as "all or nothing" as it seems? No point in trying to pay off one bank, for example? Also, I do have two smallish medical debts that have just gone to collections. Is there any way to look "better" or "worse" in this, or will my credit be equally demolished (temporarily, at least), no matter how I go about it?
If I file post-divorce, then the settlement won't be affected? If I stop paying my cards now, do I need to file right away, or how long should/can I wait?
Your credit already would have taken a hit due to the medical debt, your score will go down somewhat, but since you have no high balances and collections after the bankruptcy it will get better faster,
Also, in CA personal property to a limit is exempted, meaning you can keep much, look at the exemption list linked above
You can file the bankruptcy at anytime, collections and judgment take time so you will have one year or more,
Thanks for the link. One year or more for..... what?
It would take one year or longer before a creditor tries to sue you or collect from you,
when you stop paying the debts,
in fact you should top paying them now if you will be filing bankruptcy
Is there anything I can do now that will help me when I start trying to build my credit back up?
not unless you want to pay the creditors,
I have no intention of going on any spending sprees, but how does it work, if I use credit cards after I've stopped paying them off? (sorry -- after this I'll stop asking questions, and look at the links you sent more)
I guess my question is, How is it decided how much debt is discharged?
you should not use them anymore,
if you have to make sure it is only for minimal purchases,
typically I advise clients not to file until their last use was 6 months
all debt will be discharged, if you qualify for a chapter 7, which is based on your household income,
and household expenses,
Do I wait to file until I'm sued? Does that make any difference? Should I tell the banks what I'm doing, or just let them figure it out? Ok. Now I'll stop. :) thank you
you can tell them you are going to file, they will stop harassing you,
you can wait even after a lawsuit
thank you so much for your help.
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