Broke and wanna leave, but how?
March 21, 2010 1:03 PM Subscribe
DebtFilter: should I declare bankruptcy before leaving the USA for a long time? Details within.
I'm nearing financial rock bottom and I believe a bankruptcy will help me, long-term, to get back on my feet. Complicating matters, I'm seriously considering leaving the USA for a long time, for this and other reasons, and I'm wondering if this will hurt my chances at winning bankruptcy protection or, perhaps, make bankruptcy unnecessary?
Facts:
(a) I have accumulated somewhere near $20,000 in unsecured credit card debt. Same old story: had a venture I put a lot of borrowed money into and also lived on credit while out of job working on it. Venture didn't pay off, so here I am.
(b) I have no job, no income, and no expectation that will change in the near future.
(c) I have access to less than a thousand dollars in cash and perhaps another thousand worth of salable assets.
(d) For reasons both financial and personal, I want to leave the USA to live cheaply in the third world somewhere while I get my house in order, do some soul-searching and writing and so on without the pressure of having to earn a lot of money in the USA to pay for food and shelter, etc.
(e) I plan to do this this summer with a little seed money I will borrow from family and to try and earn a meager living by doing various freelance work for people and companies in the USA and Europe over the internet while I am in the third world. I do not anticipate my earnings will exceed the range of $5k - $10k per annum doing this.
(f) for obvious reasons, I'd like to have this small amount of sub-poverty-level money free of garnishments, liens, bank account freezes or any other nasty thing my creditors might be able to do to me. Hence the bankruptcy.
QUESTIONS ABOUT BANKRUPTCY PROCESS:
(1) if I see a lawyer in April to initiate Bankruptcy proceedings (chapter 7 or 13, I'm not sure which I'd qualify for), will I be able to get the necessary paperwork done before I leave the USA in, say, July? I live in New York at the moment.
(2) Will ~$2k be enough to pay my lawyer to handle bankruptcy proceedings?
(3) How long should bankruptcy take to complete?
(4) If I am out of the USA when certain bankruptcy hearings and so on are needed, can my lawyer represent me on my behalf?
(5) If all the above is unworkable, how "stupid" is it to simply skip town without a bankruptcy? I understand that debts cannot be reported to credit agencies after 5 - 6 years (depending on state) and cannot be collected via the courts after a similar amount of time. So effectively, how is gaining bankruptcy protection advantageous to just letting the time elapse and then being free of legal recourse from creditors?
(6) Small corollary to above: I have some federally-guaranteed student loans that I understand will not be discharged in a bankruptcy. I am less concerned about these because I may be able to get them into a deferment / forbearance while I am outside the USA, or might even be able to make the payments if I get them low enough. These loans compound at a very low interest rate and are therefore much less alarming than my credit debt which is compounding at ~30% every year.
(7) What are the best online forums or resources to research Bankruptcy and related issues? I appreciate any advice here but am not expecting to figure it all out via MeFi.
BOTTOM LINE: I painted myself into a corner and want to jump out. If I can get my debts wiped via bankruptcy, I plan to live cheaply and simply outside the USA without resorting to credit for some time. However, should I get the urge to return to the USA, I want to be able to eventually (3 - 5 years) have enough financial standing to be able to get a cell phone contract, rent an apartment, and maybe even one day buy a car and house. I believe bankruptcy is the best way to do all this but am open to any other suggestions. IF you want to contact me, my throwaway address is lifecrumblinglikeacookie@gmail.com.
I thank you for reading my long question and for any advice you might have.
I'm nearing financial rock bottom and I believe a bankruptcy will help me, long-term, to get back on my feet. Complicating matters, I'm seriously considering leaving the USA for a long time, for this and other reasons, and I'm wondering if this will hurt my chances at winning bankruptcy protection or, perhaps, make bankruptcy unnecessary?
Facts:
(a) I have accumulated somewhere near $20,000 in unsecured credit card debt. Same old story: had a venture I put a lot of borrowed money into and also lived on credit while out of job working on it. Venture didn't pay off, so here I am.
(b) I have no job, no income, and no expectation that will change in the near future.
(c) I have access to less than a thousand dollars in cash and perhaps another thousand worth of salable assets.
(d) For reasons both financial and personal, I want to leave the USA to live cheaply in the third world somewhere while I get my house in order, do some soul-searching and writing and so on without the pressure of having to earn a lot of money in the USA to pay for food and shelter, etc.
(e) I plan to do this this summer with a little seed money I will borrow from family and to try and earn a meager living by doing various freelance work for people and companies in the USA and Europe over the internet while I am in the third world. I do not anticipate my earnings will exceed the range of $5k - $10k per annum doing this.
(f) for obvious reasons, I'd like to have this small amount of sub-poverty-level money free of garnishments, liens, bank account freezes or any other nasty thing my creditors might be able to do to me. Hence the bankruptcy.
QUESTIONS ABOUT BANKRUPTCY PROCESS:
(1) if I see a lawyer in April to initiate Bankruptcy proceedings (chapter 7 or 13, I'm not sure which I'd qualify for), will I be able to get the necessary paperwork done before I leave the USA in, say, July? I live in New York at the moment.
(2) Will ~$2k be enough to pay my lawyer to handle bankruptcy proceedings?
(3) How long should bankruptcy take to complete?
(4) If I am out of the USA when certain bankruptcy hearings and so on are needed, can my lawyer represent me on my behalf?
(5) If all the above is unworkable, how "stupid" is it to simply skip town without a bankruptcy? I understand that debts cannot be reported to credit agencies after 5 - 6 years (depending on state) and cannot be collected via the courts after a similar amount of time. So effectively, how is gaining bankruptcy protection advantageous to just letting the time elapse and then being free of legal recourse from creditors?
(6) Small corollary to above: I have some federally-guaranteed student loans that I understand will not be discharged in a bankruptcy. I am less concerned about these because I may be able to get them into a deferment / forbearance while I am outside the USA, or might even be able to make the payments if I get them low enough. These loans compound at a very low interest rate and are therefore much less alarming than my credit debt which is compounding at ~30% every year.
(7) What are the best online forums or resources to research Bankruptcy and related issues? I appreciate any advice here but am not expecting to figure it all out via MeFi.
BOTTOM LINE: I painted myself into a corner and want to jump out. If I can get my debts wiped via bankruptcy, I plan to live cheaply and simply outside the USA without resorting to credit for some time. However, should I get the urge to return to the USA, I want to be able to eventually (3 - 5 years) have enough financial standing to be able to get a cell phone contract, rent an apartment, and maybe even one day buy a car and house. I believe bankruptcy is the best way to do all this but am open to any other suggestions. IF you want to contact me, my throwaway address is lifecrumblinglikeacookie@gmail.com.
I thank you for reading my long question and for any advice you might have.
Is there some reason why "getting a job" is not an option?
posted by Hiker at 1:16 PM on March 21, 2010 [4 favorites]
posted by Hiker at 1:16 PM on March 21, 2010 [4 favorites]
Seconding not running away, getting your loans consolidated, and taking a job you consider beneath you while you work on your next business full-time during the 2nd shift.
$20k at 10% and ten-year repayment comes out to about $265 a month. Is that too much? That's about one 8hr/day week of minimum-wage work.
I haven't been there, but that's my advice.
You could run away more effectively in the US, where you can use your existing network, won't stand out, and won't get deported. But I don't recommend it.
posted by sninctown at 1:32 PM on March 21, 2010 [1 favorite]
$20k at 10% and ten-year repayment comes out to about $265 a month. Is that too much? That's about one 8hr/day week of minimum-wage work.
I haven't been there, but that's my advice.
You could run away more effectively in the US, where you can use your existing network, won't stand out, and won't get deported. But I don't recommend it.
posted by sninctown at 1:32 PM on March 21, 2010 [1 favorite]
I am going to agree with the previous responders here. Bankruptcy was designed to help people who are really and truly out of options. I don't know that you strike me as one of those people. You borrowed the money, it's a reasonable amount, there doesn't seem to be some serious reason you can't work and pay it back over time, why don't you?
On a more practical note....walking away from the debt is pretty stupid. Dept reports for about 7 years, and that's often 7 years from the last time you made an effort to pay it (acknowledged it) not 7 years from the date you borrowed it. Not completely kosher but I see it all the time-I spend every day studying credit reports.
Also, if you leave the country for several years, you will not be rebuilding your credit. So you will come back five years from now with an ugly bankruptcy and nothing else on your credit report to show that you've learned your lesson. What we want to see from a person who declared bankruptcy is that a) there was a disaster precipitating it (why they filed-divorce, medical issues, some other catastrophe) and b) that they have borrowed responsibliy since. You would have neither of those things. So your credit will take a lot longer than five years to recover.
posted by supercapitalist at 1:35 PM on March 21, 2010
On a more practical note....walking away from the debt is pretty stupid. Dept reports for about 7 years, and that's often 7 years from the last time you made an effort to pay it (acknowledged it) not 7 years from the date you borrowed it. Not completely kosher but I see it all the time-I spend every day studying credit reports.
Also, if you leave the country for several years, you will not be rebuilding your credit. So you will come back five years from now with an ugly bankruptcy and nothing else on your credit report to show that you've learned your lesson. What we want to see from a person who declared bankruptcy is that a) there was a disaster precipitating it (why they filed-divorce, medical issues, some other catastrophe) and b) that they have borrowed responsibliy since. You would have neither of those things. So your credit will take a lot longer than five years to recover.
posted by supercapitalist at 1:35 PM on March 21, 2010
In response to the question (I don't think you were asking opinions on greed or selfishness), you should be aware of tolling- the fact that when you leave the states, there may be a freeze on the time that the debts are collectible (so any time you were outside the USA would not count toward the judgment collection period.)
if you were to leave, your debts would probably get default judgments against you (since you aren't there to dispute it).
some ideas:
1) www.creditboards.com has resources for you.
2) getting a cellphone contract, or renting a house are possible with bad credit- you just may need a deposit.
3) you could probably settle the 20k for 5-7k or even possibly less.
4) moving to a state like NY will help you shorten the period the judgments can be reported.
I am not an attorney, or a CPA. everything i said is my own opinion, and was not vetted for truth or accuracy by the obama administration, your city, state, or any branch or government or quasi government entities- just my two cents based on what I think I recall knowing. :)
posted by Izzmeister at 1:35 PM on March 21, 2010
if you were to leave, your debts would probably get default judgments against you (since you aren't there to dispute it).
some ideas:
1) www.creditboards.com has resources for you.
2) getting a cellphone contract, or renting a house are possible with bad credit- you just may need a deposit.
3) you could probably settle the 20k for 5-7k or even possibly less.
4) moving to a state like NY will help you shorten the period the judgments can be reported.
I am not an attorney, or a CPA. everything i said is my own opinion, and was not vetted for truth or accuracy by the obama administration, your city, state, or any branch or government or quasi government entities- just my two cents based on what I think I recall knowing. :)
posted by Izzmeister at 1:35 PM on March 21, 2010
If your parents would give you money to illegally immigrate to the 3rd world, they would probably support you living at home. If you get your loans consolidated, the amount you plan to drop on a lawyer and airfare to Bangkok would cover your loan payments for over a year.
Also, look at the I Will Illegally Paint Houses In France! thread for more ideas.
posted by sninctown at 1:41 PM on March 21, 2010 [2 favorites]
Also, look at the I Will Illegally Paint Houses In France! thread for more ideas.
posted by sninctown at 1:41 PM on March 21, 2010 [2 favorites]
What Halogen said. 20K is a manageable amount of debt and you can restructure it to reduce the interest to something more reasonable as long as you are willing to make some sort of regular small payments. Your plan to live cheaply "in the third world" strikes me as naive- it only seems cheaper there when you're earning a US salary, which you won't be. You don't mention a specific country and there are language and visa issues in addition to the rather large upfront cost of travel and acquiring an apartment (especially one with an internet connection, if you're serious about doing freelance work). I think you'd be much better off moving in with family in the US and taking some sort of job to pay down your debt a little bit. Try it for six months before you make any drastic decisions like declaring bankruptcy or running away from your debts. It sounds to me like you've sort of worked yourself into a frenzy over all of this and are fantasizing about running away rather than facing with the problem (which really isn't as dire as you're making it out to be). I currently have about 50K in debt but I'm not freaking out about it- I no longer use credit cards at all (I literally keep mine in a glass of water in the freezer) and I have a decent job and am slowly paying it down, and I'm still able to live my life the way I want to.
posted by emd3737 at 1:44 PM on March 21, 2010 [3 favorites]
posted by emd3737 at 1:44 PM on March 21, 2010 [3 favorites]
Do you have a specific country in mind and an idea of how much it would cost to live there? Developing countries can be cheap, but you might find it really hard to adapt to a lower standard of living. Why not try living in a nasty cheap apartment (or at home!) first, and see if you like it. I suspect you'd find that being overseas costs a lot more than you think it will.
Also, $2000 (to pay a bankruptcy lawyer) + $2000 (money from your folks to fly you overseas and the costs of getting settled there) = $4000, which is 20% of your debt. Plus this way you get to keep some self-respect.
I agree that $20,000 may feel like a lot, but it's just not that much.
posted by bluedaisy at 2:18 PM on March 21, 2010
Also, $2000 (to pay a bankruptcy lawyer) + $2000 (money from your folks to fly you overseas and the costs of getting settled there) = $4000, which is 20% of your debt. Plus this way you get to keep some self-respect.
I agree that $20,000 may feel like a lot, but it's just not that much.
posted by bluedaisy at 2:18 PM on March 21, 2010
Spend $12.99, and buy the PDF version of The New Bankruptcy from Nolo Press. It will answer just about every question you have.
posted by FfejL at 2:19 PM on March 21, 2010
posted by FfejL at 2:19 PM on March 21, 2010
Izzmeister has a point about the statute of limitations. Leaving the country, or even leaving your state, will suspend the running of limitations in most states.
No one has addressed the merits under bankruptcy laws, and I am not a bankruptcy lawyer, but I do know that the laws were tightened in the last several years.
On the other hand, there is a specific Federal law which delays legal proceedings for those who are on active duty in the armed forces. You may find the ultimate answer in your local enlistment office.
posted by yclipse at 2:27 PM on March 21, 2010
No one has addressed the merits under bankruptcy laws, and I am not a bankruptcy lawyer, but I do know that the laws were tightened in the last several years.
On the other hand, there is a specific Federal law which delays legal proceedings for those who are on active duty in the armed forces. You may find the ultimate answer in your local enlistment office.
posted by yclipse at 2:27 PM on March 21, 2010
Would you agree that Mutant knows a lot about money and a lot about living as an expat overseas? Read what he posted about a year ago.
posted by Houstonian at 3:24 PM on March 21, 2010
posted by Houstonian at 3:24 PM on March 21, 2010
Yes, $2,000 is about enough to pay a bankruptcy lawyer, at least generally for Chapter 7. You'll want to have at least $2,500 to be sure, though.
posted by Nattie at 4:37 PM on March 21, 2010
posted by Nattie at 4:37 PM on March 21, 2010
Swallow your pride and get a job. You took out a loan that you now need to pay back. When you begin a business, and take out loans to do such, you are making a risk that your decisions may not pay off and you may have to tighten your belt for years after as the price for failure.
20k is not a lot of debt in relation to other things. You CAN pay it off, not to mention that the paying of it may help you determine in the future what ventures are "worth" the risk.
I imagine that on some level it would also help keep everyone's rates lower in the long run (if you and every other person out there with debt in your range all declared bankruptcy and left the country then the agencies that loaned all of that cash would just raise rates across the board, they may not be allowed to legally do this now but if that situation arose I'm sure laws would be passed).
posted by zombieApoc at 4:46 PM on March 21, 2010
20k is not a lot of debt in relation to other things. You CAN pay it off, not to mention that the paying of it may help you determine in the future what ventures are "worth" the risk.
I imagine that on some level it would also help keep everyone's rates lower in the long run (if you and every other person out there with debt in your range all declared bankruptcy and left the country then the agencies that loaned all of that cash would just raise rates across the board, they may not be allowed to legally do this now but if that situation arose I'm sure laws would be passed).
posted by zombieApoc at 4:46 PM on March 21, 2010
What everyone else said about not running away. I don't know squat about bankruptcy, or credit, but I do know about living abroad.
- Moving and living abroad is not really cheap, if you want to continue living at your (US?) standards.
- To get proper permission to stay for a long time, you will generally need a job OR be able to demonstrate that you have sufficient freelance income.
- The income you need to prove you can generate is usually not a small amount.
- Some countries will require you to provide quite a bit of information about your CURRENT financial status (pay slips, account statements, tax returns...) before offering you the visa.
- You do not want to do this under the table and without proper residency/work authorization. It will be one more thing that keeps you from sleeping well at night (beyond running away from creditors)
If you really want to run away from the US for a while, consider one of the US territories. For physical and cultural distance, you may specifically be interested in Guam or American Samoa.
posted by whatzit at 2:17 PM on March 22, 2010
- Moving and living abroad is not really cheap, if you want to continue living at your (US?) standards.
- To get proper permission to stay for a long time, you will generally need a job OR be able to demonstrate that you have sufficient freelance income.
- The income you need to prove you can generate is usually not a small amount.
- Some countries will require you to provide quite a bit of information about your CURRENT financial status (pay slips, account statements, tax returns...) before offering you the visa.
- You do not want to do this under the table and without proper residency/work authorization. It will be one more thing that keeps you from sleeping well at night (beyond running away from creditors)
If you really want to run away from the US for a while, consider one of the US territories. For physical and cultural distance, you may specifically be interested in Guam or American Samoa.
posted by whatzit at 2:17 PM on March 22, 2010
This thread is closed to new comments.
posted by halogen at 1:15 PM on March 21, 2010