i am currently contemplating filing bankruptcy. the position i am in right now is that back in 2007 i picked up everything (literally) and moved to the philippines for family reasons. at that time the company i worked for was in the process on liquidating assets and I was one of them (was given a severance). so i decided that it was a good time for me to be with my family (being that they needed me) i decided to liquidate all my assets as much as i could, (alot of people will hate me for this) but i pulled out as much cash from almost everywhere i could (credit, bank, etc) and the only thing i had left behind was my almost 2 year old car which i was just going to let them repossess (but a friend took over payments for 6 months and then it finally got taken away).

so that is the back story (and i do apologize for this being so long) and here is the current situation.

*almost 18k worth of credit card debt / misc. (no payments or contact with creditors since AUG 2007)
*repo CAR balance (worth 3k; friend will split if need be)
*3k student loan (but i am going to pay the off before filing, because it wont come off either way)

right now i am considering relocating back to the states (home sick to be honest).

i do have the means to pay about 10k or so of the outstanding debt, but that would cut into my relocation fund. because since being out in the philippines i have been able to save more since i have left all my debt (i know i know, that it was not the right thing to do).

basically i have enough funds for me to be able to come back to the states and cover cost of living for about 10 months (which includes a rent, food, etc). and that is if i came back and didnt find work for 10 months. if i were to repay a large chunk of debt, i might end up in the same place again but with no fall back this time around.

now here is my dilemma, i dont know whether to pay of the existing debt (which has all been sent to collection agencies and i am no longer dealing with the main creditor) or to file for bankruptcy.

i cant really find much information about how my credit will look if i paid off the debt and then how hard it would be to re-establish my footing and get my credit score somewhere north of 700 and also start getting credit again. i have acclimated myself to not using credit (and in my honest opinion i like it much better, but you never know).

also i do have people that have offered to let me lean on them in the case i do file bankruptcy and would be more than willing to co-sign their lives away so to speak (an option, but likely a last option). and also how will that help my credit score move if i had someone that has amazing credit co-sign with me on say a car loan or something smaller like the sort (dont really know how that would work).

so after all that jibberish (again i do apologize), i can sum everything up into 3 points:

1. Pay off debt… How will Credit Look? How will i be affected in terms of getting credit(i.e. unsecured cards / loans / etc)?

2. file bankruptcy…. Save the savings… get say $500 secured card and start for dead scratch …. How will a Co-Signer help with move my credit score & getting Credit (i.e. car loan) and should i be the primary or should they be the primary?

3. stay where i am and just come back for a visit and hope i dont get detained when flying back out to the philippines.

if you made it all the way to here. i do greatly appreciate any feedback that you might have more me. and i do apologize for it being so long.

Thanks and looking forward to your response.

Lost in Debt.

I am really, really glad that you have found a way to dig out from under your debt. If you can avoid bankruptcy it is certainly the best option. Either way, it’s a hard road, and I am really glad you are meeting with success!

We came close to the situation you must have faced when you made the decision to file. We are under mountains of debt, but have found a way to increase our income so it is no longer hopeless to try to dig out.

It is inspiring to hear that it can be done.

Thanks for your comment! You are right when yous say that we no longer need credit – at least for the small things. We don’t use our credit cards for gas, groceries, clothes, etc. We learned how to manage our credit and our money.

However, we are not wealthy people, not by a long shot. We do want to own a home someday. At this point we are looking into maybe purchasing a foreclosed home in a few years (without using credit.)

I have to main goals and reasons for rebuilding my credit after the bankruptcy.

The first is to be able to finance a house if I want to. It’s not my first choice, but I do not want to close the option off for myself. Right now we rent, and I don’t want to do that forever. Especially not with my children.

So, I’m putting the time, money and work into raising my credit score so that I will have the option of financing a home someday.

The second reason is because I have learned to look at credit as a tool. You can get some great deals, and some real benefits if you manage credit correctly. I’d like to be able to take advantage of those benefits one day.

An lastly, I do feel that having available credit is a form of security. Again, it’s not my first choice. My emergency fund and my savings account are my first go-to in an emergency. But I do sleep better at night knowing we could pull the extra money from credit in the even of a true emergency.

I don’t want to limit a single one of my family’s financial options. So, while I recognize that credit should never be the first solution, I do like to have it on my list as a financial tool.

I was wondering, how do you feel about using credit this way? What has your experience with it been?

I would love to know!

Thanks,
Jenna