Non-trad & possible BANKRUPTCY

[A1cfox21]

All,

I figured this may be a better place to post this as I'm not in any type of Professional school yet. Here's my situation:

Married
2 daughters in catholic school (2nd grade and Pre-K 1/2 day)
1 8 month old baby boy
1 wife- stays at home with baby

I'm an office rep/sales person for an Insurance Agent and I make roughly $32k. And starting to HATE IT!!!!!

I'm in the National Guard and make about $400 a month before taxes. I also do the 2 weeks in the summer and get a yearly bonus payment. This year looks to be about $9,500 from the Guard.

I am currently a 3/4 student at a university taking online classes (need to either commute 1.5hrs each way or go to local CC for Science classes). I get Ch 30 GI Bill benefits plus my "buy-up" and a Guard GI Bill Kicker. As a 3/4 student I make about $1,365 a month and as a fulltime I'd make about $1,821 or so.

I have 2 car loans that cost me about $760 a month. I have most of my credit cards on a debt management program which is about $563 a month and 2 that were not eligible that are roughly $100 together.

My older daughter qualified for a scholarship and so the $260 a month I pay now is mostly for my Pre-K daughter who will not be eligible for a scholarship until next school year probably.

In October I was so far behind car payments and rent and insurance and stuff that I bit that bullet and we moved in with my in-laws. Yeah I know... Not great but they are awesome for taking us in. Stupid Christmas has once again left me almost penniless. If it weren't for the joy on my kids' faces I'd be DONE with it. Oh well.

So to the point of my post!! I'm considering Bankruptcy. I cannot even maintain a household on my income right now. If I have to withdraw from classes I lose a significant portion of my income. I've been working with payday advances and paying bills late for a good part of 2008. I was in the Active military and left when my six year contract was up so that I could go to school fulltime and hopefully get into Medical school. But my debt is KILLING ME!!!! It's my fault and I know it. also my wifes... I've been advised by friends and family to file ch 7. I've been in the process of trying to get back into the Active Air Force which would relieve my income issues. But it will likely kill my chances of getting into medical school. Rotating shifts is the norm in my military occupation and deployments will all hamper my chances at finishing my science classes. Bankruptcy would significantly hurt my chances of getting back onto AD for sure. The other part is that I have to maintain a Secret security clearance for my job with the National Guard. I've heard that bankruptcies can possibly cause clearance revocation/suspensions. I honestly fell more inclined to stay a civilian at this point for many reasons. I like living where I want to and not being tied to a contract. The guard works out better for me. I really want to at least take a crack at applying to medcial school and backup healthcare professions. I'll be eternally kicking my own ass if I don't try.

I've toyed with the idea of filing ch 7 then quitting this damn job so I could go back to school fulltime. I can't help but feel bad about just asking for them to discharge all the debt that I've built up since I was 19 or so. Total debt right now is about $58k including the cars. I cannot maintain a household and pay the mins anymore as evidenced by my lack of own home.

If I were to go thru the BK and not get into any professional school.... I will in essence have burned my bridges with the military. But I really am starting to hate my civilian job. I am not cut out for sales. And I'm growing tired of my office environment. I really want to move on but I'm anchored by my debt.



Any advice? Anyone? I'll hear anyone out on this. Just lay it on me.

Does a bankruptcy impact one in the school application process or residency process or even future employment? One of my wife's brother-in-laws is about to start a Pain fellowship in the Summer. He told me I should file. He did right before going to medical school and it's worked out ok for him. I'm probably looking for more reassurance that this would be the right thing to do.

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[flip26]

First, consult a bankruptcy attorney.

Bankruptcy can definitely affect your credit worthiness, and that includes your future education loan needs, so try to figure out a way around this...and yes, bankruptcy could affect your med school applications, too - it would be revealed in a background check - and given the debt that one must incur, med schools are less interested in matriculating people who will have difficulty qualifying for loans...

Bankruptcy can also impact your ability to insure your cars, or to ever rent a car...obviously it can affect your ability to rent an apt or house...

How much is your total credit card debt? This is what bankruptcy will wipe out, but it will not wipe out things like rent or auto debt...in other words, you will still have those...

Why do you need two cars, especially two with loans? Try to reduce your car loans by getting rid of a car...or get rid of both cars and replace it with a junker...

Try to figure a way out of this by reducing your expenses, starting with the car loans...

Whatever you do, avoid getting court judgments and liens filed against you - those will kill your credit rating and will haunt you for a long time...they can be worse than an actual bankruptcy filing.

 

[A1cfox21]

First, consult a bankruptcy attorney.

Bankruptcy can definitely affect your credit worthiness, and that includes your future education loan needs, so try to figure out a way around this...and yes, bankruptcy could affect your med school applications, too - it would be revealed in a background check - and given the debt that one must incur, med schools are less interested in matriculating people who will have difficulty qualifying for loans...

Bankruptcy can also impact your ability to insure your cars, or to ever rent a car...obviously it can affect your ability to rent an apt or house...

How much is your total credit card debt? This is what bankruptcy will wipe out, but it will not wipe out things like rent or auto debt...in other words, you will still have those...

Why do you need two cars, especially two with loans? Try to reduce your car loans by getting rid of a car...or get rid of both cars and replace it with a junker...

Try to figure a way out of this by reducing your expenses, starting with the car loans...

Whatever you do, avoid getting court judgments and liens filed against you - those will kill your credit rating and will haunt you for a long time...they can be worse than an actual bankruptcy filing.

From what I understand vehicle loans are dischargeable under chapter 7. If you have the means to keep paying than you can reaffirm the loan which excludes it from the filing. I know one can no longer reaffirm credit card debt so it's all or nothing.

Unfortunately, reducing vehicle loan debt is easier said than done. I have 2 cars with a trade in value of about $17k but total loan debt of both is about $37k. No one in their right mind would buy these cars from me at what I owe for them. I've got close to $20k in credit card debt now. Dealers have practically laughed at me regarding how upside down I am.

Luckily I've kept myself out of court judgement or lien situations thus far. I feel like a slave to my debt with no way out besides sucking it up in a job I hate and giving up my dream of medicine.

 

[bigpharmD]

From what I understand vehicle loans are dischargeable under chapter 7. If you have the means to keep paying than you can reaffirm the loan which excludes it from the filing. I know one can no longer reaffirm credit card debt so it's all or nothing.

Unfortunately, reducing vehicle loan debt is easier said than done. I have 2 cars with a trade in value of about $17k but total loan debt of both is about $37k. No one in their right mind would buy these cars from me at what I owe for them. I've got close to $20k in credit card debt now. Dealers have practically laughed at me regarding how upside down I am.

Luckily I've kept myself out of court judgement or lien situations thus far. I feel like a slave to my debt with no way out besides sucking it up in a job I hate and giving up my dream of medicine.

I would seriously suggest looking at PA, anesthesia assitant, or nursing school. Usually cheeper and will allow you to increase you income quicker and spend more time with your girls

 

[Lacheln]

I think this question is akin to asking for medical advice - we can't give legal advice. The repercussions of this decision are just far too large, especially given that you have a family to think about. I would definitely just consult an attorney. Also, keep in mind that bankruptcy laws have changed quite a bit since your friend filed.

You can find a path you feel good about, there is always a solution, though it never seems to be quick or easy.

 

[futureboy]

I agree with the other posters -- you need legal advice. Keep in mind, though, that a lawyer may not be able to answer all your questions, especially the effect a bankruptcy on medical school admissions. As for student loan eligibility, check with your school financial aid department.

 

[futureboy]

I agree with the other posters -- you need legal advice. Keep in mind, though, that a lawyer may not be able to answer all your questions, especially the effect a bankruptcy on medical school admissions. As for student loan eligibility, check with your school financial aid department.

 

[Sol Rosenberg]

From what I understand vehicle loans are dischargeable under chapter 7. If you have the means to keep paying than you can reaffirm the loan which excludes it from the filing. I know one can no longer reaffirm credit card debt so it's all or nothing.

Unfortunately, reducing vehicle loan debt is easier said than done. I have 2 cars with a trade in value of about $17k but total loan debt of both is about $37k. No one in their right mind would buy these cars from me at what I owe for them. I've got close to $20k in credit card debt now. Dealers have practically laughed at me regarding how upside down I am.

Luckily I've kept myself out of court judgement or lien situations thus far. I feel like a slave to my debt with no way out besides sucking it up in a job I hate and giving up my dream of medicine.

CYA: I am not an attorney, and this is not legal advice

That's why you have to see an attorney (you will need to anyway) because in TX, you get to keep ONE car. The court would likely make you sell to second one and divide the proceeds among your creditors using whatever priority system the court uses.

Whether a bankruptcy will keep you from being accepted is something that no one can really say with any certainty; however, creditworthiness is a factor for PLUS (but not Stafford) loans, so the only financial aid that you would likely be eligible for would be Stafford Loans.

 

[exrx]

A1, sounds like you're in quite a jam. I, like the others think it would behoove you to consult an attorney before making a rash decision. Your credit history affects your life, it follows you where ever you go. You might try calling Dave Ramsey (google him) and explain your situation to him. He's the most practical and sage advisor I know when it comes to finance, he's the real deal. He helps people live debt free (mortgage and all) everyday. Also, filing for bankruptcy won't do you any good if you're looking to unload some debt without actually changing your spending behavior which got you to this point.

If you're not hell bent on being an MD/DO may I suggest nursing (CRNA). The cost to benefit ratio for school is superb. You will be able to start making money sooner. About 2 years for nursing and a year or two experience required for most CRNA programs. A number of hospitals will cover your tuition cost for the specialization. Then you can easily make a six figure income.

best success to you

 

[crazydiamond]

I'm a stay-at-home-mom as well and for the short term, right now, I think your wife needs to start working. Balancing all this on one income is difficult and a second income can really help. What did she do pre-kids? Can she do that again? If not, can she watch some kids in your home for some extra money? How about a weekened or evening job? Does she have any skills that will allow her to freelance or consult?

Any chance on moving the kids to the (free) public school? Trust me, I know how sucky public schools are and would love for my kids to go to private school as well, but if finances do not allow, then they don't allow. You can also look into moving them to a state-sponsored charter school, or even have your wife homeschool if she's up to it. Anything to save you the tuition money.

What about your lifestyle? Have you cut out your cell phones, cable TV, etc? Do you clip coupons regularly? My friend runs her household (2 adults and 3 kids) on a very tiny income and does so because she hangs out at sites like couponsurfers.com. She does not buy anything unless it's on sale or she has a coupon for. She never spends more than about $50/week for food and toiletries for the whole family.

I would avoid filing bankrupcty if at all possible. You've got to make huge lifestyle changes, though, and those aren't easy. But if you want to make this med school dream come true, they've got to be made.

 

[nontrdgsbuiucmd]

definitely I'd suggest checking what is considered "exempt property" for personal bankruptcy in your state (i.e. stuff you can keep if you file chapter 7), this will vary from state to state, i.e. in Colorado one can retain 3,000 in car equity for a vehicle to drive to and from work, up to several thousand for home assets, etc. No bankruptcy court would wipe out my mortgage and let me keep the house, or similar for a car. Some (possibly all) states have different types of bankruptcy, there may be an option that would not require you to liquidate everything if that's important to you, i.e. wedding bands, family furniture, stuff like that, often that's called chapter 13 for an individual, or chapter 11 for a company.

Another possiblity is to consider changing jobs -- particularly to a corporate office of an insurance company, given you have experience in that area, or into a claims adjuster training program. Corporate jobs in my experience, typically, pay much more than small company jobs, and corporate jobs at a headquarters location will pay even more than that.

 

[EBAMom]

I am personally acquainted with Ch 7 bankruptcy. Your exemptions will depend on the state that you live in, and some states are considerably more generous than others. The nice thing is that it wipes out debt. The bad thing is that it makes it more difficult to get private loans to pay for medical school. However, I know for a fact that it doesn't affect your ability to get Stafford loans. Since these are government backed (and unable to be discharged in the event of another bankruptcy), you will have no trouble getting these (my husband is a grad student and we were able to get the full amount of stafford loans). Private loans such as PLUS loans are basically impossible for the first five years after your bankruptcy.

In addition, it is ILLEGAL for anyone to deny you a job or admission to med school based solely on a past bankruptcy. That being said, that doesn't mean that they won't magnify another flaw in an effort to deny admission. So, you will be limited to Stafford Loans to pay for medical school. If you can go to a state school or some other less expensive option, you will be fine. That being said, your wife will have to work to support your family because there will be very little if any surplus remaining. The support of your wife and family will be even more important. However, if she's behind you and willing to work to help you achieve this dream, then a bankruptcy won't stop you.

In my personal opinion, with the economy the way it is, you won't be the only person filing bankruptcy. There will be many others, most likely a landslide in the next year or so. If you are completely miserable due to the financial strain you are facing, then you need to talk to an attorney as soon as possible. There are ways to reduce attorney fees, like assembling a portion of your own documentation and being very prepared when it comes to your own record-keeping.

Overall, bankruptcy won't stand in the way of something that you truly want in life. While it will make financing more difficult, it will also eliminate a lot of stresses, paving the way for you to make the sweeping changes necessary to pursue medicine.

 

[pam61371]

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[group_theory]

First, thank you for your service (both past and present)

I definately agree with the above posters in that you should talked to qualified professionals about your financial and legal situation.

In addition to a lawyer, might I suggest you talk to a credit counselor. A well-qualified credit counselor can help you go over your finances and may even help you negotiate lower payments on your current obligations. If you go over your finances with your wife and a credit counselor - you can determine where you can cut out some of the expenses. While it may have been hard for you to accept moving in with your in-laws, doing so was financially wise.

Be careful about credit counselors - while some are reputable, there may be some that are less than reputable and may cause more harm than good. A good place to start is the National Foundation of Credit Counseling, www.nfcc.org. Be careful since there have been scams in the past involving debt consoliation plans, etc. If the idea sounds too good to be true, I would investigate further (or get a second opinion).


Another important thing is that while you are worried about medical school admission - that's in the future. You need to worry about your current situation and your family. Cleaning up the financial situation so that if you were to attend medical school, you can handle 4 years as a student without any income without additional stressors on your finances.

 

[futureboy]

Y\Since the bankruptcy legislation changed recently (2006?), I believe credit card debt is no longer dischargeable.

The changes went into effect in October 2005, and credit card debt is still dischargeable. The above comment is simply not true. OP, please just go see an attorney and ignore the misinformation on these forums.

 

[solar3000]

Sorry for the stress,it looks like you are going through a lot! Anyway, from what I read (and i could be wrong) it looks like your lifestyle is a bit expensive. Have you considered cutting down on your expenses? instead of cellphones, get pre paid ones, selling your cars and getting cheaper ones and putting your kids on public schools ..i mean it's FREE and you wont have to worry about paying for tuition.

 

[psychometric]

Sorry for the stress,it looks like you are going through a lot! Anyway, from what I read (and i could be wrong) it looks like your lifestyle is a bit expensive. Have you considered cutting down on your expenses? instead of cellphones, get pre paid ones, selling your cars and getting cheaper ones and putting your kids on public schools ..i mean it's FREE and you wont have to worry about paying for tuition.

Could you cut down on kids?

 

[QofQuimica]

Folks, please be constructive when responding to threads here.

OP, I agree with the others who have told you that you should look into cutting back expenses wherever possible, as well as get professional legal and credit counselor advice. You also need to put your medical school dream on hold (not forever) while you take care of your current situation. You can't be dealing with this kind of personal and financial stress while surviving gross anatomy! You may also want to consider finding a psychologist who can help you cope with what you're going through. Everyone has been talking about the financial aspects of declaring bankruptcy, and of course those are important to consider. But there are personal issues to consider also, IMO. If it were me, the toughest fallout from filing for bankruptcy (much worse than the future credit repercussions) would be my sense of shame. What I'm trying to say here is, don't forget to take care of yourself as well as your finances while you go through this rough time. Best of luck to you.

 

[pianola]

Also, Florida has some specific bankruptcy laws. Just to keep that in mind. Good luck.

 

[SleepingJune]

Everyone has given great advice on who to consult about bankruptcy. I work in my school's Veteran's Services office in Financial Aid; maybe some of these suggestions would be helpful:

- As for changing your lifestyle, I suggest picking up the book "America's Cheapest Family Gets You Right on the Money." It gives step-by-step instructions for lowering your living expenses and learning to not only pay off debt, but also to save smartly. It does, however, require a big change in lifestyle if you're used to spending a lot of money.

http://www.amazon.com/Americas-Chea...bs_sr_1?ie=UTF8&s=books&qid=1231655968&sr=8-1

- Talk to your school's financial aid office. Some, if not most, schools offer an appeals process for the amount of aid you are eligible for; the FAFSA numbers don't always have the final say. My school, as an example, will raise one's eligibility if you have a significantly lower income than previously reported (ie: change in job), have a rent that is above a certain amount, have medical or computer expenses for that particular school year, etc.

- Does your NG unit have any programs for tuition payment other than the kicker (scholarships, reimbursement, etc)? Might be worth talking to them and finding out. Also, some states/schools have programs that help Iraq/Afghanistan veterans with undergrad tuition; talk to your school's financial aid office.

- Are you eligible for conversion to the new GI Bill (and do you have enough months of benefits remaining to use it after the effective date?)? It takes effect Aug '09 and, if you're eligible and registered full time, the VA will: 1 -pay up to the highest amount of in-state tuition to the institution you attend (paid directly to the school), 2 - pay a monthly stipend equal to the BAH amount for an E5 w/ dependents (paid to you), 3 - an annual books/supplies stipend of $1000 (paid to you). The benefit limit is 36 months (the months you've already used out of your GI Bill will be subtracted from that).

You can check out these links to see if you qualify and what the benefits entail:

1) http://gibill.va.gov/pamphlets/CH33/CH33_Pamphlet.pdf

2) http://education.military.com/money-for-school/gi-bill/new-gi-bill-overview


This is what I have off the top of my head; I hope some of it helps!

 

[viostorm]

I really don't have any specific advice, however I would make SURE you get your financial situation figured out before med school .... because it becomes very difficult financially in med school with a family.

If I weren't graduatiing soon, I doubt I could make it another year on student loans. As it is I work full time job at night in addition to going to med school during the day.

So I guess the point is try and minimize/eliminate the debt you bring to medical school because you will accrue plenty when you get there.

 

[dragonfly99]

You need to go to consumer credit counseling services.
Seek legal advice if you are considering bankruptcy.
Do not worry about medical school now...first you must fix your finances.
The preschool kid does not need to be attending a private school.
Your wife needs to work on getting a job, because you are in major financial trouble.
I don't quite understand the situation with your cars...but no reason to have 2 car payments if only one of you is working...find a way to sell one of the cars if at all possible, since I'm assuming you are getting deeper and deeper into debt by not paying enough on those car loans (otherwise why would the car loans be >> the actual value of the cars?).

 

[MeowMix]

I agree with the excellent advice above about fixing the financial situation first. I don't know how old you are, but you have a long path of pre-med, med school and residency. Do not forget that residency requires another 3+ years of supporting a family on about $50K/yr WHILE paying off your student loans (because the age of deferment is going away). This is going to be very challenging.

The worst-case scenario should also be part of your planning, because it's happened to other people: you get $100K of debt for MS1-MS2, and then fail Step 1. Or you do very poorly in school and have to drop out during MS1, with $50K of debt. Or, even worse, you get $200K of debt and then fail Step 2, which means you can't start residency. Any of these scenarios would be a whole lot worse than what you're facing right now. And they have all happened to very nice, smart people in my community.

If it were me, I'd get rid of car #2, take my younger kid out of private school, find a way for my spouse to get extra income, and find whatever extra income I myself could. You do not have the luxury of hating your job unless you can find another. Cut expenses. I hope you and your wife are planning ahead, because I believe it would be unfair to bring another child into your family when you together are struggling to provide for the needs of those you already have.

 

[FrkyBgStok]

This semester I book it and we had to modify the online supplement. This book is horrible, and online supplements are all right, but not great. However, the class is hard, but not because of changes - but because the code itself. Bankruptcy have changed, but it is not a whole overhaul, the most important basic things, in addition to Chapter 13 and some other small things that share the same issues. I will not change the law so that you worry too much.

1) WHAT?

2) This thread is from 2 years ago, so pretty sure he has got it all figured out. Thanks for the input.

 

[Joner]

I'd be interested to learn how things turned out for A1cfox21, even though he hasn't been active for some time.