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Bankruptcy or Credit Counseling, Which is right for me?

Islip, NY |

I'm 22 years old, just graduated from college in May and am in way over my head when it comes to credit card debt.

In my few short years as a credit card holder, I managed to accrue over $20,000 in credit card debt. I had a full time job lined up coming out of school and then days before starting the position, the company went into a hiring freeze and eliminated my position. I got a summer job to help make the monthly payments but by the end of the summer, it was impossible for me to keep up with the high monthly payments and obscene interest charges. Now, I'm having trouble finding a 9-5 job in this economy and will probably be settling for a position that I'm overqualified for, just to keep some money coming in. Having said that, I'd rather go through credit counseling than mar my credit for the next 7 years with bankruptcy but without a steady job, I'm worried to negotiate any monthly plans that I might be unable to keep up with.

Being 22 years old, many years away from looking to buy any property or a car, would the mark on my credit really be that bad for me? Or might bankruptcy be an acceptable choice? I don't own property, a vehicle or any other major assets, I'm currently unemployed and plan to move into New York City in the near future so I will be renting for the foreseeable future. Any help you can provide would be GREATLY appreciated. Having the collections agencies calling everyday is causing me a great deal of anxiety and I need to get a handle on my finances.

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Attorney answers 2


Note that I am not licensed to practice in your state.

You need to contact the CCCS (Consumer Credit Counseling Service). They can evaluate your entire situation and let you know if bankruptcy should be an option. Don't take bankruptcy lightly and it should be your last option.

First talk to CCCS. Think about opening up 0% or low interest rate balance transfer credit cards to transfer the high balance credit cards onto. This way, you still have the debt but the interest rate will be lower.

Next, you might want to hold back on moving to NYC. It's very expensive out there and unless you can afford everything, you're going to get yourself into more of a financial mess than you currently are in now. If you're living with your parents, then stay put until you're back on your financial feet.


My colleague gave you an excellent suggestion when he suggested that you contact a credit counseling agency to see if you can work your way out of this mess. However, your particular situation may leave you with little choice. Credit counseling assumes that you have at least some income to use to pay back your creditors; if you're unemployed, you don't have that income.

Meanwhile, you might consider investing $20 or $30 in a phone answering system and screening your calls. Although you will need to pay attention to the creditors' calls, you needn't do so when they call. Let them leave messages for you, then you call them back when you're able to deal with them. It's their job to attempt to collect the money you owe to their clients, and they do that by being rude; they do that with everyone they call, so don't take it personally.

If it turns out that you must file for bankruptcy, IT IS VERY IMPORTANT THAT YOU HIRE AN ATTORNEY TO HELP YOU WITH YOUR CASE. Bankruptcy used to be pretty easy to get through and it was one thing that people felt comfortable doing on their own, but since the Bankruptcy Abuse Prevention Act of 2005 there are lots of potholes for the unwary to fall through. A good lawyer will help you avoid those potholes, and that lawyer will be worth every dime you have to shell out to him or her.

No one on this board can answer whether bankruptcy is necessary or right for you. That analysis has to be done with all of the facts and figures and with your particular situation in mind, any more of which I strongly DIScourage you from posting on the internet. I can tell you that a bankruptcy remains on your credit record for 10 years after the matter is discharged, and that it can be a hurdle to overcome, especially in the years immediately following the discharge, in the purchase of a home or the lease of an apartment (i.e., you may need to get a co-maker for your NYC apartment lease), car, student loan, or other major expenditure. However, it is a hurdle that can be overcome with time and towing the line (i.e., use credit responsibly).

Is bankruptcy "acceptable"? You'd join throngs others who have at least one bankruptcy in their past. Be aware that this turn of events will upset your parents, it will definitely upset your creditors, and, as I stated above, it will stay with you for ten years after the case is discharged; a lot can happen in 10 years. But you are learning a sharp lesson in the wisdom of living within your means. Not a bad lesson to have at age 22.

Good luck.


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