I have $180,000 credit cards debt and no assets, each month I can only manage to pay for the minimum, what should I do? Should I declare bankruptcy?
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Thank you for the question. In answering your question, I'd like for you to think through these questions below:
1. "What is your current and future employment goals?"
2. "What is your current and future income?"
3. "How did you accrue this level of debt?"
4. "Do you receive or pay any government benefits?"
5. "How likely are you to file proceedings against anyone or an organisation in court?"
6. "Do you travel overseas regularly?"
7. "What does financial freedom mean for you?"
All these questions are relevant to your decision. Bankruptcy will have a major impact on any of the above listd questions and we'd encourage you to seek legal advice before you make any decision to that effect.
Generally, bankruptcy may last for about 3 years, 1 day, once declared. If you declared bankruptcy personally, you'd have to appoint a trustee to work with you and your creditor to achieve a fair outcome for both parties. Most personal debts - including the credit card debts you mentioned - may be forgiven. However, if your income exceeds a certain bracket, then you may have to make compulsory payments or you may not be able to enter this agreement at all.
Bankruptcy declarations are listed on a public register. It is also listed on your credit file for a period of no lesser than 5 years. This may have an impact on your future ability to get credit and most importantly your ability to get employment, maintain your current employment or run a business. You may also find that you have restrictions on overseas travel.
Now, let's consider the alternative. It may be beneficial to review your money matters with a qualified financial adviser. This will give you an opportunity to explore different avenues of helping to manage this debt in a matter that may not have unnecessary impacts on your future earning capacity and lifestyle choices. A financial adviser will work with you to understand all income sources and look at the best way to tackle this debt as the best way depends on your personal circumstances such as age, income, other commitments etc. It is important to also understand the history behind the credit card debt accruing to such levels. After which, most advisers will work with you and/or creditors to come to a reasonable payment arrangement that may help in reducing the burden on you and keep you on track to becoming debt free and thus enjoy future financial freedom.
Frankly, there isn't an easy way in paying off $180k of credit cards. Once an assessment is done, a qualified financial adviser will be able to provide you with all your alternatives, including bankruptcy. It's very important to understand the entire picture before making any decision in isolation.
While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.