Just stop paying? Feel like I’m out of options…

Seeking Advice
1

Hi everyone,

I’m a 28-year-old who’s been on my own for around 10 years now, with no family or close friends for support. My debt’s piled up over the years just trying to keep up with payments. It’s gotten to the point where I’m borrowing to pay previous loans, juggling balances, and my score has been stuck between 610-650. Here’s where I’m at:

- SoFi loan #1: $36,366
- SoFi loan #2: $18,516
- CitiBank loan: $18,343
- Credit card #1: $9,768
- Credit card #2: $9,016
- Credit card #3: $7,607
- Credit card #4: $7,436
- Car loan: $13,231

This debt has been a long time building up. I’ve never missed a payment, but I’m getting nowhere, just paying minimums and moving balances around. I’m left with barely $100 each month for myself, sometimes less if anything unexpected comes up. I even had some gambling struggles a few years back (stopped and got help since), which added to the mess.

I make about $71,000/year now, but between debt and medical bills, it all gets eaten up. A counselor from work suggested Chapter 7, but I’ve looked into it, and I might not qualify with my income level here in Austin, TX.

Chapter 13 seems like an option, but it’s hard to face the thought of 5+ more years of struggling. I’m just tired. If I just stop paying (except for the car), what would actually happen? I know wage garnishment isn’t allowed in Texas for personal debt, but could I still get sued if my employer is based out of California?

I’m at a loss and need some way out. Between Chapter 13 or just letting it go, both choices seem like they’ll damage my credit for years. Just need some guidance here.

2

If you live in Texas, you would have to be sued there, not in California.

Also, Chapter 13 plans don’t always mean paying off 100% of what you owe. Often, interest is reduced or even removed, and sometimes only part of the balance is repaid. These plans can be complex, though.

Are your SoFi loans personal, or are they student loans? If they’re student loans, especially federal ones, there might be some options available if certain new policies pass. Student loans can be harder to discharge in bankruptcy, though.

The income test for Chapter 7 isn’t always just about income level and family size, so you may still want to run your situation by a bankruptcy attorney. It could help to get some counseling as well, especially if you’re feeling down. Walking away from your debt is an option, but it may be good to talk through what you want your life to look like as you go forward.

3

@Landyn
Thank you so much for your response. It actually brought tears to my eyes.

These are all personal loans—didn’t get a chance to go to college since I lost my mom at 18. It’s been a tough road ever since. I’m going to look further into Chapter 7 and get some legal advice on Chapter 13. I’ve been dealing with depression (taking meds for it) and not having a support circle makes it harder.

Thank you again for your advice. I’m really grateful.

4

@Ari
It’s rough, especially with depression—it affects everything, including money. You’re on the right path, just keep moving forward. Things can improve, even if it takes a little time.

5

I agree with the suggestion to look into Chapter 7. With that much debt, paying it off would take ages even with help from a debt management company.

Get in touch with an attorney as soon as you can. Most offer free initial consultations.

6

Don’t base your decision on what you’ve read about Chapter 7—you might still qualify. There are free consultations with attorneys where they can walk you through all your options and what could happen if you decide to stop paying.

7

@Jin
Thanks for that! I’ll definitely check with an attorney.

8

If debt consolidation won’t work, bankruptcy may be the next step.

9

If you don’t want to risk being sued and having your wages garnished, keep paying. Maybe take a financial management class to help out.

10

I’d say consult with a few bankruptcy attorneys if you can. The sooner, the better.

11

My advice would be to file for bankruptcy and talk to a lawyer. Don’t waste any more time.

12

I feel for you, man.

But here’s the good part: you’re not giving up. You’re already on the right track.

Go see an attorney. They’ll take it from there. I’ve worked with lawyers who were way smarter than I could ever be on this stuff—they know what they’re doing. They may even tell you to stop paying certain things and save money to settle each debt or help you file for bankruptcy if that’s the better option.

Don’t try to tackle it on your own. Let a professional handle it.

13

In Texas, the statute of limitations on debt is four years, so you won’t necessarily be getting calls or lawsuits for the next decade. You could stop paying everything except the car loan, ignore the calls, and save as much as possible to settle each debt. You’ll probably get the best settlement offers after 4-6 months of missed payments, or a bit longer after charge-offs. Your credit will take a hit, but that’s better than drowning in debt. Best of luck.

14

@Cai
I really appreciate your insight! I’ll consult a professional and bring up these options. Planning on keeping the car, but will explore other paths too.