[MUSIC] Hi, there, Michael Bovee with
Consumer Recovery Network, and welcome to our YouTube
DebtBytes channel. Today’s reader question that I’m
going to address is one that, actually it’s happening
more frequently, in the last, I don’t know, ever
since the recession, maybe 2007, 2008, job market decline. People are going into
retirement, thinking about retirement or are in retirement,
well into retirement, and unable to keep current with unsecured
debts like credit cards. I have a reader question here
today that is related to that, that states, or asks,
what is the best thing for me to get myself free from
all of this debt and stress? Should I file bankruptcy? Going into retirement this June. So it’s 2016, it’s January,
you’ve got six months to deal with what amounts to an
underwater mortgage after having taken out a second and a whole
bunch of credit card debt, $25,000 of credit card debt. So, in this scenario for Marcy,
she has limited income starting in June between social security
and a limited pension of $2000. And, her home is
underwater by tens and tens of thousands of dollars,
and credit card debt of $25,000. Meeting those minimums is
going to be impossible starting in June. So, why wait? In this situation and in many
people’s situation, for six more months, and I don’t care if
you’re watching this video and you’re approaching retirement
in five years, ten years. You are not going to
be able to earn income in the same way that you were
leading up to your golden years, to your retirement years. And you should try to
preserve as much of your finances as possible in that situation because your
earning potential is limited. So, regardless of
whether you’re Marcy and going into retirement in
six months or six years, in this situation, $25,000 worth
of credit card debt can be wiped out for, if you’re
doing a Chapter 7 bankruptcy, anyway, national average
cost of that, $1800. If you’re in some of
the coastal cities, it might run
a little bit higher. Then, as you get inland, like
where I’m at, you can start to look at total cost for a Chapter
7 being more like $1500. That means that settling
debt for let’s say, half of the 25,000
is 12,5 12,500. Compare that with filing
bankruptcy at 1,500 and obviously, on a dollar basis,
on a cost basis, that route, because it’s unaffordable again,
we can’t afford to keep payments going, so that’s a foregone
conclusion, right? There is no repayment anymore,
that’s unaffordable. So you have to weigh, okay,
well I can settle maybe for less and
assuming settlements for half, but you can actually settle for
much less than half. We talk about that
on other videos, but let’s assume half and
then the cost basis. Now, let’s look at the mortgage. It’s never gonna be,
given what she shared, it’s $80,000 in the red, so she
is completely underwater on that and probably won’t bounce
back in her lifetime really, just being honest. You might be in a situation
where you have limited equity in your place, maybe $5,000,
$10,000 of equity. Maybe that’s worth
hanging on to but if you can shed
an unaffordable mortgage and a second mortgage in the process
of a bankruptcy, and find amore affordable living
situation, why absolutely. Okay, because again, your
earning potential is going down. You’re not thinking of your home
as an asset if it’s underwater and you have no chance at
getting even or building equity. It’s something to shed. It’s a dead weight, really. And that’s a hard decision
to make and I get it. Relocation, giving up on
something or a condo or a home that you’ve lived in for
many, many years and the neighbors and things like
that and then maybe for others, it’s just not that
big of a deal. And it’s time to move on to
greener or warmer pastures. Since she’s in the upper
northeast and I’m thinking, I want some warmth around
this time of year, too. So, should you file bankruptcy
as you head into retirement? My answer, absolutely,
unequivocally, yes, and actually Marcy, I wish you would
have filed it years earlier and preserved some of
your earnings and savings as you move into
this new phase of your life. And I think you’re
gonna enjoy it, I think you’re
going to have fun. I think you’re going to
remove all the stress through the bankruptcy and
not holding onto any misconceptions about needing
your credit for anything. Right now you need your cash,
and so I hope that you make an informed decision, talk
with a bankruptcy attorney and get informed about what
that means for you. If for whatever reason,
you learn that Chapter 7 is not an option for you, post about
that in the comments below,. After that, consult with
the bankruptcy attorney and we can talk about it further. Anybody watching this video
faced with the same kind of questions for yourself, you are welcome to post in
the comments for feedback. See you on the next video. [MUSIC]