Should i file for bankruptcy? I'm 21 and most of my biils are from 3 years ago.?

Question

I can't afford to pay for all these collections and i've had bad credit before i could even have credit. Like i've had a sprint bill since i was 16, which is impossible. I don't own a house, i have a 1300$ monthly income, i'm in college and ready to start a small business with both of my brothers. They both have really good credit (660 - 700). 1 is 22 and the other is 19 years old(i'm 21). Can i start off fresh and build credit after i file bankruptcy? I have a repo from late 2005(7,000$),sprint bill from like 2003(300$), wamu collection from 2006(300$) an internet bill from last year(199$) and like 2 other collections.

what options do i have?

Answer 1

Start paying stuff off. Cut back on buying stuff, leave the business for another year, or let them start it on their own till you're financially ready to become a partner, but get that back-payment stuff paid off.

Bankruptcy is NOT the answer. As someone mentioned, it's a 7 year stain. That means 7 years of worse credit than you've currently got. You can't apply for a lot of loans, and it'll make it really hard to get things like a car or mortgage. You have a monthly income, so what's the problem with paying down some of those bills? You only owe $7800 in old credit. Start with the smaller ones, get them paid off in 2 or 3 months, then tackle the big one. Get that one paid off over a year and a half, and before you know it, all your debt's gone. And I'm only talking about paying between $300 & $400/month in bills. If you can afford that, then do it. Take on another side job, or work for your brothers.

It's really up to you what you do, but I heavily advise against claiming bankruptcy.

Answer 2

You have a couple options. You could make payment arrangements with each of these companies and start to very slowly pay off the money you owe. That would probably be the best solution.

OR

You could declare bankruptcy... but then you would have NO credit for seven years. You wouldn't even be able to build credit for seven years. You won't be able to get a loan, or much of anything. You won't be able to get a phone, house, car, apartment... anything you don't already have for seven years. This could end up being a huge problem if you're trying to start a business with your brothers.

Definitely try to make payment arrangements. The companies will work with you. They want their money and if the only way you can pay it is very slowly, then they'll accept that and should work with you. The fact that you'll be starting a small business would give you some extra cash to pay off the money you owe as well... assuming you keep your $1300/mo. job too.

It takes a few years to start making decent money with a self-owned business, so don't quit your current job and rush into that one (especially with the economy the way it is right now). Do both until things pick up.

Answer 3

Sounds like you have a history of buying things that are beyond your means.  If you are gong to start a business, then there would be no better time then now, to learn how to manage your money.  I think you should consider paying off your previous bad debts.  Though, declaring bankruptcy would be a way to start over.  However, you menitoned you are in college.  If you are on any type of student loan or receive any type of financial aid, declaring banruptcy would jeopordize it.  Also, any type of bankruptcy would be a neon sign on your credit report for 10 years.  It would also be a hanidcap for seeking employment that does that does background checks, especially with any government entity.

Answer 4

You should call them all and set up a payment plan.  You owe so pay.  You enjoyed the services they provided and agreed to the terms at the time.  Why should they lose out.  Your business goals should be on the back burner to you prior committments.  Bankruptcy is a 7 year stain and will not allow you to get any other credit.