Ask The Experts: Is Bankruptcy Right For Me?

I want to know if bankruptcy is right for me. I owe about $12k in credit card debt (most of which is interest due to the fact that I haven't made any payments in several years) as well as another $12k in a repossessed vehicle that was sold by the lender and they say I owe the remainder of the balance. Along with other miscellaneous debt, I probably owe somewhere between $25k $30k. I am currently making about half of what I was making three years ago, and this debt is that old. Should I file for bankruptcy and start over? I now make between $25k and $ 30k a year. -Fausto, NV

Fausto, that's a pretty big commitment. Filing bankruptcy, chapter 7, remains on your credit file for 10 years.

I'm not saying it's not the right option for you but I'd do a little bit of work beforehand.

Contact each of your lenders and find out EXACTLY how much you owe them. And ask them if they'd be willing to work with you on a payment plan that fits in your budget. If they will not then a chapter 7 may very well be your best option.

If you end up filing I wouldn't wait too long to start rebuilding your credit. Give it 6 months and then apply for a secured credit card.

Make sure whoever the lender is that they report to all three of the credit bureaus.

In 3-5 years you'll see an amazing jump in your credit scores.

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John Ulzheimer is a nationally recognized credit expert, president of Consumer Education for and contributor to On The Money. Learn more about him at