I’m 22 with around $20K in credit card debt. I managed to keep up with minimum payments for a year but didn’t see any progress. I lost my job last month, found a new one, but now I’m falling behind on my car and credit card payments. Should I consider filing for bankruptcy or work harder to pay it off? I recently started learning car painting for extra income, but the car market is slow. I earn about $52K a year and will graduate college in two years.
Debt Breakdown:
- Credit Card 1: Minimum $490, Balance $15,053, 27.99% APR
- Credit Card 2: Minimum $120, Balance $3,330.29, 27.99% APR
- Car Payment: $530, 20.99% APR (Had no co-signer when I got it at 19)
- Rent & Utilities: $1,150
- Storage Unit (Split with girlfriend): $100
- Groceries: $150/week (for me and my girlfriend)
- Family Support Overseas:$300
- Gas:~$260/month
- Subscriptions: Disney+ ($9.99), Adobe ($19.99), Netflix ($6.99), Crunchyroll ($9.99), Spotify ($9.99)Potential Side Hustle Ideas:
- Car Flipping:I have skills in car repair and paint/bodywork.
- Car Painting: Doing it occasionally but no consistent leads.
- Freelance Photography: I have editing skills and decent photography experience but haven’t monetized it.
- Freelance Product Design: Currently learning AutoCAD and could offer design services in about 6 months.
- Selling Clothes Online: I can sew and tailor clothing.
- Turo:Considering renting out my car, but struggling to get the capital needed.
- Marketing for Local Companies: Combining photography skills to do product shoots for businesses.
I believe we would need more information about your circumstances in order to be of greater assistance. Which bills do you have each month? Is there money spent too much on eating out? or while shopping?
There are two primary fixes for you. Reducing costs or raising revenue. Can you eliminate any extra streaming services that you don’t use frequently?
You could consider debt consolidation to lower your interest rates and monthly payments. I went through bankruptcy for a similar amount of credit card debt back in 2017, and looking back, I wish I had filed sooner. I was able to keep my car because I finished paying it off right before everything was discharged. After a couple of years, I got a few credit cards to rebuild my credit and managed to buy a house last year. I still earn the same amount as you, have a credit score in the 700s, and the bankruptcy is still on my record. I was struggling to make even the minimum payments and couldn’t make a dent in the principal. When the debt was discharged, I felt such relief it was like I could finally breathe again.
Yes, I see. I’ve already had calls from several debt collectors, but the monthly amount they were looking for was in the mid 400s.
I filed for Chapter 7 bankruptcy. Here’s a quick summary I found that explains the difference between Chapter 7 and Chapter 13:
Chapter 7 focuses on discharging unsecured debts like credit cards, personal loans, and medical bills. It looks at your assets at the time of filing, protects those that are “exempt” (usually most of what you own), and wipes out most or all of your debts.
Chapter 13, on the other hand, allows you to catch up on secured debts like your home or car while still discharging unsecured debts. It’s more about creating a repayment plan for secured debts you’re behind on, rather than eliminating everything at once like Chapter 7.
Does the girlfriend not contribute or work? Why are you paying for two people’s meals and a storage unit?
When you’re drowning, you can’t be sending money home to support your family. Additionally, you must reduce to only one subscription.
If you’re in school, you can utilize student loans to assist pay for living expenses. Then, you can use that money to pay off these 28% debts with something much smaller that can be postponed until you graduate. I know, I know, you’ll hate me for advocating more debt.
OP Personally, I think you should pay it off. Your credit will be affected by bankruptcy for seven years. It will therefore be difficult to rent, buy a car, a house, etc. You can be disciplined and pay off those twenty thousand.
My initial inquiry