Posted on: 13th Nov, 2006 08:32 pm
one of my cousins who is about 32 years old and he is planning to file bankruptcy. he is has debt of around $12,000. he doesn’t have a stable job.
he has talked to attorneys and loan consolidators about filing bankruptcy or go for debt consolidation. people who have given him advice say that there isn’t much difference between then when it comes to your credit score, in other words both will have a similar impact on your credit score.
but i advised him not to file bankruptcy as his debt was not that big and if he is able to pay his loan consolidation bills regularly that will help his credit..
did i give him the right advice?
he has talked to attorneys and loan consolidators about filing bankruptcy or go for debt consolidation. people who have given him advice say that there isn’t much difference between then when it comes to your credit score, in other words both will have a similar impact on your credit score.
but i advised him not to file bankruptcy as his debt was not that big and if he is able to pay his loan consolidation bills regularly that will help his credit..
did i give him the right advice?
Only 12k and thinking of filing bankruptcy, he must be kidding!!
I think you gave him the correct advice. I personally take bankruptcy as the last option. Going for debt consolidation will be a much better idea as filing bankruptcy will have debt cleared but will appear in his credit report for 7 years. And more over for at least two years he will not be able to qualify for new credit without a very high interest rate.
I think he needs credit counseling, this will help him to develop a budget and work with creditors to help him pay off the debts.
Thanks,
Jerry
I think you gave him the correct advice. I personally take bankruptcy as the last option. Going for debt consolidation will be a much better idea as filing bankruptcy will have debt cleared but will appear in his credit report for 7 years. And more over for at least two years he will not be able to qualify for new credit without a very high interest rate.
I think he needs credit counseling, this will help him to develop a budget and work with creditors to help him pay off the debts.
Thanks,
Jerry
you didn't mention whether he owns a home or not -- he should refinance to handle his debts if his credit standing is still respectable -- $12,000 isn't that much debt if he owns a $120,000 with $50,000 still due on the mortgage.
No he doesnt own a home. He is living with us.
Well then, if he is paying you to live there, perhaps you'd consider putting him on title, refinancing the debt into the current mortgage, and telling him to get some stable employment, since his portion of the living expenses just went up $100/month. In this way, you help him get back on his feet, correct his credit standing in a relatively short time, allow him the responsibility needed to grow out of the debt situation he's in, and you don't really incur any cost. My reasoning for putting him on title, at the time of refinancing? He'll now know how important getting back on track is to you, as well as to himself -- and, he's not likely to mess it up.
Otherwise, some tough love is in order.
Otherwise, some tough love is in order.
Thanks for the advices. I feel at this point of time credit counselling is very important for him. And I also feel that adding him in the title and refinancing is a good option, but I cannot decide on it until I discuss this with other family members.
Thank you all once again for your advices.
Thank you all once again for your advices.