Ok, so I'm a year into a divorce. My soon to be ex has brought up filing for bankruptcy. I think this is a bad idea. I would rather try something else, like some sort of credit re-financing, than to file bankruptcy. Right now, we are not making ends meet. I'm getting suffocated by the bills right now, and she contributes 0 to the finances. Long story, and I don't need any advice that is all 20/20 hindsight right now. Anyone have any good advice about how to get out from underneath? Selling our house is last option for the moment, due to poor market. We would lose at least 50K to sell. I'm looking at paying child support and alimony. I make good money (90K yearly) but am not stable financially at all. Thanks.

 

If you are making 90k a year and have a "wife" who works and doesn't contribute, you started out in a hole.

Call credit card companies and ask to settle.
Close or freeze any CCs that have breathing room.
Call mortgage company and ask for extension.

Get a good lawyer. There is one here in Charlotte who advertises/specializes in representing men throughout a divorce.

I'm sorry you're going through this and will hope and pray for the best for you.

 

Oh yeah, trade your cars in for beaters.

 

kickthebitch....

 

Yeah, the credit cards have to go. You'll then need a little cash to ask the small accounts to settle for a much reduced amount or not get paid at all. IMPORTANT, any negotiations you do MUST be in writing. If they agree to a settlement over the phone and you send them the money with no written agreement, you'll still owe the balance. You'll have to start at the smallest and work to the largest account. If you have any assets that are worth anything, truck, cars, boat, guns, etc, unload them now. You can always buy again later when you recover from this. Eating out is gone and eating beans is in. Like Dave Ramsey says, "you're gonna live like no one else so you can live like no one else". I can assume you now know if you don't have the dough, you don't need it.
So what's up with the wife not paying part of the bills? Does she work? What's the divorce say? If she's not paying, you need to get the court to change her mind and maybe a parting of debt...if that's available in yer state.

So folks, here's a man making nearly a hundred grand a year and can't pay his bills. Learn from his mistakes. If you can't pay cash for it, you don't need it. I've never seen so many people making decent money that can't pay their bills as there are now. What going to happen if things REALLY get bad like they were in the late 1920's? If you have debt, credit card bills that you can't pay off in one month, you're already in trouble. There are no guarantees that your job will be there tomorrow. Even Gov't jobs may fold so don't think it can't happen to you. Don't put yourself thru the misery jump n is having to deal with. It makes for a lot of sleepless nights.

Hope you come out of this okay bud but there's probably a bump in the road...or two.

 

Instead of closing CC's, you need to stop using them. Destroy the cards if you have to.

Closing open credit accounts is as bad as maxing them out to your credit score. Having un-used available credit looks great to the creditors and pads your credit score, don't screw yourself by closing them.

I would suggest selling off what you don't need, and trying to consolidate what you cannot get rid of or need.

 

There are agency's that specialize in helping you consolidate all your bills into one monthly payment to help reduce your debt. Look into some of those. As has been said, sell what you don't need, turn off cable TV for now, get rid of the cell phone and get a land line, buy hamburger instead of steak and no eating out, cheaper internet service might be slower but it is cheaper and you can always get back to normal once you're on your feet. If your soon to be ex isn't contributing to the payment of the bills, take any cc's she has away from her. If she's not going to help you get out of debt she certainly shouldn't be allowed to run you further in! If you have joint accounts, separate them, give her what you would be paying for child support and alimony and make her pay her own way, she's going to have to start doing that anyway once the divorce is final.

Good luck.

 

Well I am sure the divorce lawyer is sucking you dry too.

Keep in mind that the accounts were set up with you as responsible so your divorce decree will not mean anything if she doesn't pay her part of the bills, you will still be responsible. Iron out these issues and make sure they are paid before your divorce is final.

If you file bankruptcy, you will likely end up having to do a Chapter 13 anyway and pay back a portion. That is going to depend on the judge...anywhere from a penny on the dollar to the full amount over 5 years. Settling your debt will still not leave you with good credit. It will show accounts settled but is a big black eye on your score. Usually creditors won't talk settlement until you are 60-90 days past due as well.

I understand not wanting to lose money on the house but it may be a good thing to rid yourself of the burden. If she keeps the house and misses payments, you will be in hock for it still. It may take many years for the housing market and prices to return.

The other thing depends on how much debt you are carrying.

You are probably looking at 25% of your take home income going to child support plus a similar amount for alimony. You may have no choice if you are only working with 30-40k at the end of the day for yourself.

 

Let me add my $.02:

1) I would certainly look at selling that house, if I were you, and moving into something more affordable. Take the $50k (or more) loss, get out from under that mortgage you may have to pay on after the divorce, and get into "more affordable" housing. As others have stated, if she misses a payment, and the mortgage is in your name, it will affect YOUR credit.

2) Take away HER credit cards in YOUR name or in joint accounts NOW !!! If she is not contributing money to pay the bills, she should not have ANY way to create those bills. I know, hindsight is 20/20, but if she can't pay, she shouldn't be able to play.

3) Speaking of those credit cards: Once you get those cards back, destroy hers, and put yours away. Continue to pay the bill off as best you can at this time.

As far as credit counseling, I have mixed feelings about that. I have used this budgeting formula that works wonderfully:

- 70% of your net pay goes to your monthly bills (rent/mortgage, utilities, food, clothing, transportation, etc.). Of this amount, the MAXIMUM that should go to rent/mortgage payments is 35%.

- 20% of your net pay should go to paying off credit debt. Once your credit debt is zero, this money should be going to an emergency fund until you have 6 months net pay in savings, and then split 50/50 to emergency fund savings and to a retirement savings fund (IRA/401k/deferred compensation).

- 10% of your net pay SHOULD be going DIRECTLY into the emergency fund savings, but at this time you should apply these savings to the credit debt to get rid of it ASAP (THE BIG EMERGENCY right now).

If you are wondering where I get this formula, it comes (mainly) from a book called "The Richest Man in Babylon". It should be required reading in today's schools. It is a fictional account of how a man became the richest man in Babylon by using the above formula, how he taught it to others, and they also got out of debt and became wealthy. It is well worth the purchase price and reading (IIRC, under $10).

At this time, I would personally talk to all your creditors, and explain the situation to them, and how you propose to pay off the debt. Many creditors in this economy are glad to get any type of payment, and if your show responsibility and that you have a plan to pay the debt off in a reasonable time, they may very well be willing to work with you. You might want to consider a consolidation loan to pay off the credit cards, but I would wait until AFTER the divorce is finalized.

As far as the vehicles, I would look into selling them, and getting vehicles you can pay cash for and maintain (mostly) yourself to save money. I have done this myself here recently; the only vehicle I own right now is a 1995 F150 regular cab short bed Eddie Bauer 2WD with a 4.9 and a 5 speed. This vehicle is paid for, very reliable, gets good gas mileage, and is relatively easy to repair.

As for the divorce, you will have to pay alimony and child support, IF SHE WINS CUSTODY. I would think with no income, she would have a hard time getting custody. I would HIGHLY recommend that you get her to get a job and to pay a portion, up to 50%, of the marital credit card debt, unless you can prove it is more than that. That should be a MAJOR part of the divorce settlement. And fight for full custody of the child for yourself, as you are the one with the income and can support the child.

In case you are wondering, yes, I did learn most all of the above from direct personal experience. I also learned from watching others getting a divorce or going through credit problems, and helping them through the land mines to safety. Believe me, I have seen some real doozies for divorces, not to mention all the people that got into debt way over their heads. The credit/budget information has helped many people over the years get out of debt, and on a road to wealth.

I wish you the best in this mess, and may you get the best settlement possible. And please, learn from this experience, and help others in the future.

- Bill

 

Sorry to hear brother, I'm going through it right now and money is so tight it isn't funny. Now, compound a divorce with a DUI at the beginning of the year and all the fines that come with that. I tell ya, if it wasn't for my sister and one good friend I wouldn't even be typing this right now.
Just got done with mediation last week. I spent the first hour crying, the second hour mad, and the third hour furious. 1300 a month child support for two kids. She gets half my retirement once i retire. I get half of hers (she doesn't have much currently compared to me. Will not let me claim the kids on taxes,,wouldn't let me claim them one year and her the next. All I got was to claim the oldest every other year. She had a female lawyer and she is also a vindictive bunt (replace with word that rhymes with bunt.) Im behind in almost everything, thinking about bankruptcy myself.

Don't know how im going to make it even a year to be honest. Good luck man.

 

The reality is that unless you can prove that she is totally unfit (documented abuse, drug abuse, etc.) you will likely come on the losing end of the custody battle. Women traditionally win that one and dad is lucky to get visitation. So plan on child support. The fact she isn't working will be a positive for her as it will lead to you supporting her through alimony.

You are in a no win situation. I would purge assets and retire any debt you can. This will benefit you in the long run. The cleaner slate you can start with the better. As I said before, the courts don't care about divorce decrees. Whoever signed for the debt is responsible. If the card is in your name, then it is your debt. In her name, it is hers. Joint then it is both of yours.

Even though closing accounts will hurt your credit score, you don't want her running up bills either. I would close all accounts and not just "close" them like the credit card issuers will do but make sure no further charges can hit. Using the card will often reopen a closed account otherwise. Taking her card away won't help because she can call them up and get a new one in a day!!!

Finally don't talk bad about your ex in front of the kids regardless of what kind of bunt she is as it will only make them dislike you. Love them when you have them and be the best dad you can be to them.

 

K-Mac. Raja that sir. Suprisingly, the kids are doing very well with this. They are pretty much the only thing keeping me going at this point. The ex and I are pretty much cordial to one another and I don't say anything bad about her in front of the kids. I see it daily at work (deputy sheriff) how people use the kids in a bac situation and I would never do this to my kids. We just try to have as much fun as possible when I have them.

As for credit score, we short sold our house right after I moved out and that killed my score. I went from mid 7's to a 509. Ouch. I don't see how much worse it could be if I filed bankruptcy. Haaaa. Just taking it day by day at this point.

 

I think you should talk face to face with someone who can tell you the pros and cons of bankruptcy for your specific situation.

I am NOT advocating bankruptcy, just saying if you are headed there anyways, it might be better to begin rebuilding sooner rather than later.

FWIW, lots of folks will be going through bankruptcy in this economy. So if/when things rebound, home and car lenders will have to find a way to make loans to those folks, or they will lose out on lots of business.

 

It is definitely worth talking to a bankruptcy attorney, but don't do anything until after the divorce unless you do it jointly with the ex wife. Otherwise you could be saddled with more debts from the marriage.

A good attorney in your area should be able to do a free consultation and let you know your options.

 

Well this is the reason I counsel my sons to choose their wives wisely as well as to wait until at least 25 to get married.

Since marriage is for life, as God commanded, nothing good will come from a divorce.

As a Christian I would like to see the Old Testament laws of stoning come back. At least 90% of marital issues are the wives problems. It started in the Garden of Eve and hasn't stopped.

Personally I would say suck it up and try to reconcile with your wife without giving up your authority as husband and father.

Good luck.