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Should I go bankrupt?? Or should I suck it up and pay what we owe?? Sooooo confused...

Asked almost 3 years ago - Sacramento, CA

Bankruptcy

I am 26 years old and married. Live with parents because our house went for short sale. We owe 25,000.00 total in credit cards (we have 6 credit cards.) Currently, we are both working but we want to get another house soon. The problem is we'd like to pay all of our debt before saving for another house. This seems an eternity away though. Should we just suck it up and pay what we owe? Currently, we have a savings account and my entire check goes in it. We're saving for the total amount of each credit card we owe. Currently, we're saving for the most expensive card, which is 8,000.00. Currently, we have 6,000 saved up to pay the 8,000 card. HELP!!!...Should we consolidate....go bankrupt??

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Attorney answers (2)

Clifford Sculley Bordeaux

Reputation Level 10

Answered over 2 years ago. Bankruptcy Attorney in Pasadena, CA.

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I would say that it depends on your income and your ability to repay the $25,000. If your combined gross income is less than the state median for your household size (around $60,000 for a family of 2), then you would likely automatically qualify for a Chapter 7 bankruptcy, which would allow you to eliminate the credit card debt. Even if you are above the state median, you might still qualify (but you would need to meet with a BK attorney to run a "means test"). Most bankruptcy attorneys offer free consultations, so it is worthwhile to at lesat meet with one.

Depending on the value of your assets, you might even be able to keep the $6,000 in bankruptcy. Based on the short sale, your credit is already in very bad shape and it is unlikely that you would be able to qualify fo the best mortgage rates anytime soon. Therefore, if you qualify, I would lean toward a bankruptcy. With a fresh start, you could work on saving a downpayment and you would probably be able to buy another house in a few years.

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David C. Garner

Reputation Level 15

Answered almost 3 years ago. Employment / Labor Attorney in Gridley, CA.

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Bankruptcy is going to make it difficult to get a new home, and bankruptcy itself is harder to do. In addition, a court may well take the bulk of your savings to partially satisfy the debt on those cards anyway.

Since its a relatively small amount and you are almost half way there, I would recommend paying them off and avoiding bankruptcy. It would be helpful to have a lot more facts, but bankruptcy stays with you for a long time, and the fun "finance anyone" days are over.

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