Debating the Issue: Bankruptcy Part 2

Yesterday I brought a couple of opinions to my blog on the topic of Filing for Bankruptcy.

More specifically should I be Filing for Bankruptcy.

I posted two opinions. One from J$ at Budgets are Sexy and one from Brad at Enemy of Debt. Today I have one more opinion to bring to the table.

Travis ( ) has provided me the following as his opinion.

Let me start by saying the following paragraphs simply supply information, with a light
dose of my opinion. I have no basis for giving legal advice nor do I have any credentials
in credit counseling. Therefore, the following paragraphs should be taken as simply
the opinion of a man that is in debt, and working to correct that situation. The below
information, and the accompanying opinion is based upon my personal experience only.
Additionally, the below is not meant to be a comprehensive explanation of any of the
programs.

Here are four potential options you can consider:

Debt Management Program: In this kind of program, proposals are sent to your creditors such that if they accept the agreement, they will reduce your interest rate and bring your account current (stop charging late fees and over the limit fees). In return, you agree to make timely (monthly) payments until your debt is paid in full. Your account is also closed. This is the kind of program that I am currently enrolled in. When the program is complete, your debt is paid in full. It should be noted that some creditors
do not participate in management programs (I had one out of 14 accounts that fell into
this category).

Debt Settlement Program: In this program, you stop paying your creditors and your accounts become very delinquent. You make a monthly payment to whomever your program provider is and the money is put in an escrow account. Once you have built up enough funds, your provider will start contacting creditors to negotiate your account for less than you owe. Plan providers of this sort of program either charge a retainer fee for the attorneys or a “success” fee for each settled account. There are also tax implications for settled accounts. Your accounts are not paid in full, but they are “settled,” and you don’t have a bankruptcy on your record. Creditors are not required to accept a settlement for less than you owe.

Bankruptcy: There are different types of bankruptcy, and I don’t pretend to understand much about this option other than it looks bad to future creditors for many years. You can file bankruptcy on your own for a few hundred dollars, but from what I’ve read, you will most likely have to pay for an attorney to help you navigate the system.

Looking at your situation, you may give a lot of thought to option four, at least in the short term. What is option four?

Do nothing (for now). You currently have no income. You have no way to pay for any of the above programs. You are looking to move, get employment, and get your life back on track. You could consider putting your heart, soul, and energy into doing
that. Give your life some semblance of stability. Once you accomplish that, contact a professional to layout all the options in detail, and help point you in the right direction of which option is best for you.

One side note here: I don’t pretend to know the challenges you’ll face with in getting a job and a residence with creditors chasing you.

Jessica, I wish you success on getting your life headed in the right direction, and eliminating your debt!

Travis makes some good points.  And I think I like the sounds of using a Debt Management Program. It sounds to me like it would release a lot of stress from off my back.  Although, and this is weird to say but I’d really like to do this all on my own. I want to watch every single penny go to its destination. I want to deal with some of the stress because I feel like I SHOULD deal with it. I got myself into this mess, I should work my tail off to get out of this.

In the end, I think the overall general opinion is to not file for bankruptcy. I’m going to talk to all my creditors when they contact me and let them know that I can not do anything and I will contact them in a few months when I am in a better position to deal with the debts.

I will proceed in my plans to move (that’s happening June 1st no matter what!) And I’m going to start applying for jobs in the Columbus area within the next month.

Hopefully by the end of the summer I’ll be well on my way to starting this debt reduction process again! And this time, I’m taking it head-on!

I’m kicking debt in the ass!!

What do you think? Good plan? Should I go a different route? Please let me know your thoughts.

If you like what you are reading, sign up to

Tags: bankruptcy, Debt Reduction, personal finance