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Question for the Money Doctors

Question submitted on Jun 28, 2013.

Question

My question is what type of bankruptcy, should I file if any. I am in about 10,000 in credit card debt and 8,000 from auto loan debt. I am 25 years old and about 3 years ago I lost my job and things started to trickle out of control. What is my best option.

Answer

Bankruptcy is detrimental to your credit rating and will stay on your record for ten years. Before filing, consider alternative ways to manage your debt. Contact your creditors and attempt to renegotiate a manageable payment schedule. Or, seek help from a non-profit credit counseling agency who will help consolidate your debt and lower your payments.

If you do not expect your employment or income status to change in the near future, then perhaps bankruptcy may be an poption. With no significant assets, and no expected income, Chapter 7 bankruptcy can give you a fresh start. Chapter 7 will cancel most, if not all, of your debt. The court will decide if you can maintain ownership of your vehicle and other property. However, you generally need a bankruptcy attorney to navigate the process and this usually requires an upfront retainer of at least a couple thousand dollars. At your debt level, you might be better off negotiating settlements with at least the credit card companies.


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