My question is at the end if you want to skip my long winded narrative.
Hi, I'm back after a few months away. I received a mortgage modifcation earlier in the year (3% fixed, via NACA). Also made the last payment on my auto loan, and made various other cuts to my budget, with the end result of now paying about $1100 less per month than I was last year. Unfotunately, it's not enough... still barely treading water some months, other months hundreds of dollers in the hole. The big problem is that I have about $61,000 in credit card debt. Most of it is at very low interest rates, but the monthly minimums are about $1200 and I can't afford that much, not to mention that it will take forever to pay it off. Met with a credit counselor to discuss a debt management plan, and she recommended bankruptcy because no debt management plan would be able to reduce my payment to much below what it is now. This what a bit of a shock, and it's been a few weeks now and I've had a chance to digest the thought of bankruptcy and do some research. My wife has been a tougher sell, she firmly believes in honoring our obligations, as do I, but I think she's finally come around now and sees bankruptcy as our only option. We both work, I work at nights to receive differential pay, we both have other extra jobs throughout the year. There really is no good option for us to make more money. We have stable jobs, which is the most important thing in this economy. We don't feel that it's worth it to quit are jobs and try to get something with higher pay right now, it's just too risky. We've got young kids, finally got the house loan modified, now we just need to do something about all this credit card debt. We both have student loans as well (about $50,000 total, about $600 month) that we need to continue to pay.
Sorry for the long story, I just honestly feel like we have no other choice now but to file bankruptcy, despite the shame we both will feel over it. We even got rid of our family dog to try to save money. We've done everything we can, and it hasn't been enough. I'm sure a bankruptcy attorney will be able to answer most of my questions, but I do have one about credit. We are currently current on ALL of our accounts. Never been late on a credit card account, because we've always borrowed off other cards to stay current. The only blemish on our credit is the 180 days late when our mortgage was in forbearance, and I've tried to get that repaired but the credit agencies won't change it and Bank of America won't respond to my requests. There is a note on the credit file that Bank of America will remove the negative status after three years, and it won't stay on the credit as long as other types of negative accounts. So my questions is about the credit card accounts:
Is there any difference in our credit scores/reporting if we go into Bankruptcy while current on our credit cards, as opposed to them all having negative status when we file? Will our credit repair faster, or does it even matter once you file Bankruptcy? I know this is probably an unusual situation to file bankruptcy while current on our accounts, but we we were also current on our mortgage when we started the modification process. It doesn't mean we can afford our debts, just that we're good at bouncing money around and borrowing. At some point, that road ends and that's where we are now. Anyway, any help/advice would be helpful.