Bankruptcy advice for girlfriend

Submitted by squarybuttholes t3_zzrz91 in personalfinance

My girlfriend has a fairly poor debt to income ratio of something like $23k in debt to somewhere between $30k-$40k in income. The debt is split pretty evenly between a car note and credit card debt that she accrued throughout her divorce, the latter of which is slowly drowning her. She declined alimony, and that ship has sailed. She has also never pursued child support for her 13 yo daughter (from the father who is not the recently divorced), which could possibly help alleviate this burden.

My question is could bankruptcy be an option to help her. Would they take her car? I know the prudent thing to do would be to sell it but it’s an 18 Camry and she loves it dearly, not to mention it’s recently been slightly wrecked and we’d have to replace it if she did sell it. She has never missed a payment on anything and was almost obsessively proud of her credit score until it lately has begun to decline to around 600. I admittedly have little knowledge about filing for bankruptcy, and intend to do much research on the subject today.

Any advice would be greatly appreciated.

Yours always,

Squarybuttholes

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[deleted] t1_j2dcs8x wrote

[deleted]

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squarybuttholes OP t1_j2dedsk wrote

Facts. I think that’s what they tell everyone about everything in r/relationshipadvice tho. I will have the car and budget conversation with her again. Thanks

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squarybuttholes OP t1_j2dffx0 wrote

I think she would be at a break even point on the vehicle. This, coupled with her inability to purchase another car lead me to believe keeping the car at it’s fixed interest may not be the worst idea.

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biondablonde t1_j2dnuvh wrote

Debt consolidation (through a reputable program) might help, but it doesn't solve the underlying lifestyle issue. She is living a lifestyle she can't afford, period. The car is contributing to that for sure. Has she gone over her spending with a fine toothed comb to see where else she can cut back? How much equity does she have in the car?

Regardless, she needs to pursue child support - it is grotesquely unfair to her child not to do so. That money is to ensure their needs are met. I would do this before selling the car or considering bankruptcy.

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squarybuttholes OP t1_j2e9ub5 wrote

Thank you. Not much equity in the car, but as I said to someone else, she needs it for work and can’t afford to even purchase a cheaper one once sold and note paid off. She has eliminated all frivolous spending and is working more overtime now so things are looking better in that regard.

As far as child support, I couldn’t agree more. I’ll be pushing that issue a little further when we discuss it next.

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freetardturd t1_j2daz8q wrote

Is it possible to switch all the dept into one big low interest dept with a locked interest rate? 23k sounds still manageable. The future will most likely bring higher interest rates.

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squarybuttholes OP t1_j2dco12 wrote

She’s gone to her credit union and was denied a loan. I don’t know if there’s other comparable options

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freetardturd t1_j2dd8ke wrote

This is bad. Did she say that it is a dept conversion or was the denied loan a new one? At least the credit card shall be converted to sth with lower interest.

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squarybuttholes OP t1_j2de3w3 wrote

I believe that it was for a new loan but it was to include her car note too. Not entirely clear, I would have to ask her

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coltonzephyr t1_j2dn4t1 wrote

Research Chapter 13 bankruptcy. I did it years ago. It's kind of like a debt restructuring. I reaffirmed on my auto loan, which was for a Toyota I purchased new. The court basically took all my confirmed debt, lumped it together and divided by 60. I was able to pay it off early, and most importantly kept my automobile, which I needed to get to my job.

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squarybuttholes OP t1_j2e90zc wrote

Thanks. I think she needs to try some more of our local banks for a loan before we resort to that, but this is the experience I was looking for. How did this ordeal affect your credit, if you don’t mind me asking?

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coltonzephyr t1_j2fi27o wrote

OK, well, FWIW the title asks for bankruptcy advice, so...

It wrecked havoc on my credit for a while. The irony is it's easier to reestablish credit after a Ch 7, which wipes out your debt but stays on your report for like 10 years, than it is after a Ch 13, where you actually pay back what is owed. Because you can't file Ch 7 very frequently (7yrs? 10 yrs? something like that...) I had to work hard to prove myself credit-worthy. Started with secured cards, and went from there. Keeping my auto loan helped tho. And it's been close to 20 yrs ago, so it's long since gone from my reports. It was painful...but if I recall correctly, the total payment to the bk trustee was around what I was just paying for my monthly car note. So it worked out for me. As always, your/her MMV

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