I'm $250,000 In Debt, Should I File Bankruptcy?

0:00Zander shops all the top term insurance companies to save you money get started at Zander.com. So I got this pilot debt that I've accumulated over the past couple of years. It started with just a small consumer debt and an auto loan started working on that and then this past year I had a four wheeled accident but put me in a pretty big bind with a bunch of medical debt. I'd unfortunately dropped my insurance and I forgot to sign myself up for my own when I rolled into my new job. So I got a pretty hefty pile there. Oh man. So yeah I'm kind of leaning between is it a go into chapter seven and just wipe the whole slate clean or I've gotten meant to the point where my income and expenses are all leveled out and I'm actually able to start paying down debt. How much is the medical debt?

1:01210,000. Oh wow. Okay. Do you now have insurance? Currently? Yeah. Okay. Yeah. I've always had it. I just forgot for the one year and I thought I'd be fine. Oh man. Got got didn't you. That's the odds of that are so crazy. Okay. So the 210 is that the only debt? No. I have 19,000 in credit card debt that has went to collections. 18,000 on a auto loan that I had let go to reposition. 4,000 on student loans and then the 200. Okay. Was the credit cards in the repo a result of this injury? Is that kind of no. Tell me more about that. They would have been. Yeah. They would have been prior. So years I've been following you guys for like 10 years now. I had worked my way down on credit card and then we'd moved to Lincoln and I built it back up during that old moving process and just never paid more than the minimum so that that was there and then

2:07with all those adding up the auto payment was just killing me so I should stop paying on it. Oh boy. Okay. But you said you're steady now. What's your income today? What do you make? What do you bring home every month? So before tax I'm 82,000 a year and then plus a bonus but my take home monthly is about 4,700. Okay. And the bonuses do they hit at the end of the year? Yep. In October and just last year we got a very minimal one. Like what? Like this year ends up being 2000. Okay. Okay. Okay. So I would not do bankruptcy. I know that that probably feels tempting but I think what's going to end up happening is you don't have a whole lot of money to give these creditors obviously. You have a little bit but you don't have much and so I would start working with them on some sort of settlement pretty soon. How long have these been due? Have any of them

3:10rolled into collections? There are basics every family needs. Food, shelter, transportation, and term life insurance. Term life is simple. If you pass away it pays money to your family so they can keep paying the bills. Protecting the people you love is part of winning with money and when you're ready to do that go with who I trust. Zander insurance. Zander shops top companies to find the right coverage at the best price and they've earned my recommendation for nearly 30 years. Go to zander.com today. Have any of them rolled into collections? So all of the cards are the medical is I think one of them has. It was like a $20,000 one. The rest is still with the the billor. Yes. Yeah. Okay. So for the one that's rolled into collections you're now positioned to make some sort of a deal and I would just do them one by one and roll them off you know whatever the smallest credit card is I'd go over there and say this has been

4:10in collections for X amount of years and I'd stack up a little bit of cash so for instance what's the smallest credit card that you have in collections? I think there's like three of them that are about $500. Okay. You pay us? Yeah but you're not paying $500. I'd go to them and I'd say I can give you 100 bucks and they're going to take it and you're just going to scratch them out just like that. The thing is get it all in writing and I would just let them know I'd be like this is just the tip of the iceberg of the debt that I have so if you think that you're getting any more money than this you're not and and just be on them the same way you're they're on you just call them and call them and call them and say here's my offer here's my offer and they might come back and say what about 250 fine at this point it's low enough yes go ahead and take whatever deal they offer but for the bigger ones when you start getting into that medical debt yeah you're going to really whittle it down and the key is try to save up I don't know 50% of what what it is or try to save up I don't know 40% of what it is cash so you can be prepared to offer that money

5:12in cash. Okay. So with the auto one that I rolled over in the collections they are wanting to do a settlement for really cheap I like I said 18,000 is what I owe and they're wanting to do 900 the only thing that was concerning me is that they list on there that they will file a 1099 on that and I was kind of confused. Well that's the least of your worries. $900 settlement on an $18,000 dollar debt on a card you're taking that and you deal with it so the 1099 Jade that's just their way if that's how they're writing it off and then they because they're eating this big time that's about them that's you have no choice in the matter yeah yeah yeah and it's a small amount of money so back to Jade's point like same thing on if somebody told you you were going to get some 1099 income and then you're going to go to a thousand dollars worth of landscaping you would hold back right 30% just to be safe so you're just thinking about that talk to your tax pro because you're

6:13starting to knock stuff off so don't be concerned about that yeah so what you need to be looking at is if you're trying to settle this it's really common that you could settle a debt for anywhere between 30 to 50% of the balance if it's already in collections so that's kind of the range that you want to aim in and if you know it's a couple years old yeah push for that that 30% of the of the balance okay that's kind of where you want to be you want to make sure that you have that lump sum and you want to make sure that you have all documented I mean this is when you get that letter this is the one that you eliminate and you put it you put it in ice you you know put it in ice and keep it forever okay that's true I love that yeah so Damien yeah I mean you are actually working through this the right way you don't need to file bankrupt so you just settle these things one at a time now the big question is are you learning your lesson oh it is it is learned many times over yeah yeah well and here's the deal we ask that by the way not to put any kind of shame on you

7:16but really so that there's some conviction that's developed out of this you know what I mean because none of us are sitting here without anything dumb you've heard say it for decades I got a PhD in DU and B so but this is the key right get through this but never again yeah no I this is not a journey ever one day again that is that is for sure and you're gonna have to deal with some I mean the truth is you can't afford to pay all of these so when 800 pay me is going to be blown up your line and that that right there speak to that more detrimental yeah speak to that because you actually walk through that how does not just Damien but other people that experience give them that mindset what their options actually are well number one it it feels detrimental because they're calling you all the time and they it makes you feel bad about yourself right and that's the trap I don't want you to fall into because you do have a plan and you're sticking to your plan and that's really what you have to tell them and if you even choose to pick up you know you pick up and you say hey this is my plan your next or I'm getting to you next and

8:20when I get to you you better be ready to make a deal uh-huh so that's kind of the way that goes I'm more telling you it as a friendly warning if you get to the point that you're able to make some minimum payments there you could but it's not really going to help you when it comes to settling it yeah we're really good advice so hey up there is a way seems like you've got the will now and uh we're cheering you on and better days are ahead here but you've got to finish this you got to clean up your mess and then we can rebuild after that Zander is the best place to find term life insurance to protect your family visit zander.com for quotes today