Is debt relief a good idea, filing bankruptcy
Member since 2020 · 79 posts · 13 votes
Is debt relief a good idea, filing bankruptcy
Most Popular Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votesWhile personal circumstances can vary, it will be a unique situation indeed if $10K in debt should force you to declare bankruptcy.
I bet that you can pay off this debt in 1 year or much less.
Here is a link to 100+ bartending jobs currently hiring in Toronto. The base is $17.20, plus tips. If you receive no tips and put in 100 5 hour shifts, you will be done. With tips, you could pay off the entire balance by March 31st.
Then, you can save the next $10,000 for your down payment by June 30th. Or $30,000+ by EOY 2025.
If you don't like Bartending, how about being a waiter, busboy, driving for uber, or some other side gig? This is what I did when I was 23 and trying to save up my first down payment.
If you don't pay off the debt, and declare bankruptcy, good luck getting a loan. You won't be 6 months of hard work from buying, you'll be 6 YEARS. from buying a property.
There are exceptions where bankruptcy can make sense, but this isn't one of them, in my view, based on what you've shared.
14 Replies
- 1yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
While personal circumstances can vary, it will be a unique situation indeed if $10K in debt should force you to declare bankruptcy.
I bet that you can pay off this debt in 1 year or much less.
Here is a link to 100+ bartending jobs currently hiring in Toronto. The base is $17.20, plus tips. If you receive no tips and put in 100 5 hour shifts, you will be done. With tips, you could pay off the entire balance by March 31st.
Then, you can save the next $10,000 for your down payment by June 30th. Or $30,000+ by EOY 2025.
If you don't like Bartending, how about being a waiter, busboy, driving for uber, or some other side gig? This is what I did when I was 23 and trying to save up my first down payment.
If you don't pay off the debt, and declare bankruptcy, good luck getting a loan. You won't be 6 months of hard work from buying, you'll be 6 YEARS. from buying a property.
There are exceptions where bankruptcy can make sense, but this isn't one of them, in my view, based on what you've shared.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @MIchael McCUe:
Money isn't easy to save and $10,000( my debts) is a ton of money I want to save for a downpayment, I'm just starting so I don't have any money I would like to save $60,000 to buy a rental property, I think I could do it in 5-6 years, my brother filed bankruptcy and they relieved him of $6000 in debt from cash money.
a list of my debt
Gst Hst Tax 4500 income tax from working with my dad I owe
Scotiabank credit card 1400
Canadian Tire credit card 500
cash money loan 2400
Belair 600
echelon 600should I pay the 10k back in the next while or should I file bankruptcy like my brother as It won't be for years until I am able to get a downpayment for a rental house anyway.
$10k in debt does not seem like it is worth filing bankruptcy as you also will have the filing fees to file bk and if you use an attorney it could be another $5k, To me if you can save $10,000 a year then start saving and pay off that debt, as filing bk will hurt your credit wehere paying off these debts will improve your credit. BK is a last resort and I would not recommend it for only $10k, but every situation is different. To me the rewards do not come close to outweighing the negatives in this situation.
7e investments53 Reviews - Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes1y
@MIchael McCUe Wrong ,..... Saving money isnt your problem , spending it is . First sell off things you dont absolutly need . Second , there are 7 days in a week , work them all , it solves 2 problems , you wont have time to spend money and you will be making more .
You have to want it , this means sacrifice . Stay at it for 2 or 3 years and you will have your down payment
- 1ySimon W.Business MemberReal Estate Consultant · Lehigh Valley PA & New York City · Member since 2013 · 1k+ posts · 661 votes
$10k and you are thinking of filing bankruptcy? I never even would've thought of that.
I think you need help with just money management.
- 1yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
Start by looking where your money is going and why you have so much debt. Stop using the cash money as those are only going to get you deeper in trouble with their fees and interest rates. Look to see how you can earn extra money while also cutting your spending. Bankruptcy will affect your ability to borrow for a long time and unless you know why you got in that position and change that behaviour, you aren't going to be any further ahead.
If you think you can save $60K in 5-6 years, you can also pay off that debt in a year and then take the next few years to start saving for the down payment. A $60K down payment will get you a $300K property (assuming your income is high enough and debt low enough to qualify for a $240K mortgage).
- Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes1y
Pay it off and then buy a new primary and turn your current home in to a rental. Of if you’re currently renting. Buy a new primary and rent rooms to relatives/friends/co-workers. That way you need 1/2 to 1/3rd the downpayment. And you could buy a second home a year later and still need less cash.
- Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes1y
Get a second job.
There are (3) 8 hour shifts in a day.
Look into getting a temporary job doing something easy that pays well.
Look into getting into a skilled trade as an electrician or a plumber
Work more spend less.
$10,000 might seem like a lot to you and it is to your circumstances but its doable.
Good Luck!
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes1y
I'll jump on board with the others.
If you can't manage what you currently have, you won't manage additional income from investments. This is why so many people earn large sums of money quickly (lottery, sports, entertainment, etc.) and end up broke.
Take Dave Ramsey's Financial Peace University. Learn to control your spending and pay off debt. Instead of wasting 20 hours a week on your phone or TV, work a part-time job to accelerate paying down the debt and saving.
My 17-year-old daughter is still in high school, but she saved up $20,000 in 14 months as a waitress in a town of 10,000. Any healthy adult with an average IQ is capable of paying off $10,000 in debt and saving at least $30,000 in two years.
The DIY Landlord Book4.7248 Reviews - 1yColleen F.Pro MemberInvestor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
@MIchael McCUe I get it, it feels like an incredible weight that you could easily lift with bankruptcy. To some on here that is not much money but you measure it in relation to your income, my guess is it is a big % of your income. I have a son in a similar situation, he went 6 months trying to get decent work and had other issues. Earning 50 k/year like he is, that would be 1/5 of what you make to pay it off. All the while you have to live. Even so I would not recommend filing bankruptcy. Paying this off is the start of learning how to invest and live well. There are two ways to do this decrease spending and increase income. You have lots of income suggestions, work on them and remember it isn't forever. Then look at every dollar you spend. Where does it go, do you need to spend it? Coffee shops, fast food, subscriptions, even consider what groceries you buy. Come up with a budget. Pay off the highest interest debts or consolidate into a lower interest rate. See if you can roll anything into zero interest cc and knock off the higher interest stuff. You don't say what you do but consider finding a career path job that might give you better income if that is an issue. Where are you living do you have the possibility of a roommate? Cheaper housing? You can do this without bankruptcy and if you continue those new habits you can move on to buying an investment. Think of the debt payoff as a trial run for your investments. In the end you have this weight lifted and you learn better financial management.
- Investor · Rochester, NY · Member since 2016 · 576 posts · 358 votes1y
Concentrate on increasing your earnings rather than on not paying off your debts.
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesHere are the negative consequences, in regard to real estate, of filing bankruptcy
Quote from @MIchael McCUe:
Money isn't easy to save and $10,000( my debts) is a ton of money I want to save for a downpayment, I'm just starting so I don't have any money I would like to save $60,000 to buy a rental property, I think I could do it in 5-6 years, my brother filed bankruptcy and they relieved him of $6000 in debt from cash money.
a list of my debt
Gst Hst Tax 4500 income tax from working with my dad I owe
Scotiabank credit card 1400
Canadian Tire credit card 500
cash money loan 2400
Belair 600
echelon 600should I pay the 10k back in the next while or should I file bankruptcy like my brother as It won't be for years until I am able to get a downpayment for a rental house anyway.
1. Credit (loans) become much more difficult to obtain and if available you pay a MUCH higher interest rate with a much higher down payment requirement
2. Much more difficult to raise EQUITY capital through partners
3. Much more difficult to syndicate investments
4. Much more difficult to convince sellers to owner finance
5. Much more difficult to convince sellers to do a subject to transaction
6. Almost impossible to obtain a line of credit
7. May affect your ability to work in the financial field, or in any managerial position of a company that’s raising venture capital
8. Since the BK must be disclosed in any securities offering, you would not be able to be a partner in a syndicator/sponsor type deal
9. You will need to provide an explanation of the circumstances surrounding the BK every time you apply for credit, apply for a job, apply for a bank account, etc.
Bottom line is if you’re working day labor type jobs for small companies and live on a cash basis it might not affect anything. If you’re have ambition either for a career as a management/ professional/ entrepreneur or becoming a real property investor then you’re going to bat with 2 strikes. - Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1yYou appear to be in Toronto, so the laws may be a bit different. But, in the US when a bankruptcy is filed, the court appoints a trustee to go over your finances and your actions leading into it, in detail. That means anything that is questionable gets a closer look. They are very intrusive. You are limited in your options if something worse should come along later, such as a large investment going bad.
Quote from @MIchael McCUe:
Money isn't easy to save and $10,000( my debts) is a ton of money I want to save for a downpayment, I'm just starting so I don't have any money I would like to save $60,000 to buy a rental property, I think I could do it in 5-6 years, my brother filed bankruptcy and they relieved him of $6000 in debt from cash money.
a list of my debt
Gst Hst Tax 4500 income tax from working with my dad I owe
Scotiabank credit card 1400
Canadian Tire credit card 500
cash money loan 2400
Belair 600
echelon 600should I pay the 10k back in the next while or should I file bankruptcy like my brother as It won't be for years until I am able to get a downpayment for a rental house anyway.
If $10,000 CDN is a show stopper for you, how do you expect to manage a $600,000 CDN property? Your solution is to increase income or to decrease expenses or both. Your life style has lead you to this situation and you must change your lifestyle in order to be successful with real estate. - Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes1y
Look up Dave Ramsey. He is good for the basics like money management and not being stupid with your finances. You don't need to worry about buying a property when you can't manage your finances. Cut expenses and work, no way around it. Even if you filed bankruptcy you will still rack up debt again if you don't fix the actual issue
- 1yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
OP. Looked at your background and posts. Looks like you’re around 26. Have been in BP for about 3 years and made several posts.
Recommend the following.
1. Switch gears on your REI strategy. Work on your living cost versus doing the normal buy a duplex and out $69,000 down. This is a separate post for you to make. Stop reading and thinking about rental houses at this stage. You need to both build up cash and also a career.
2. Personal expenses- car? Downgrade if needed. My truck for college cost $100.
3. Personal assets- sell them
4. Clothing- buy at the second hand store. A lot of that is brand new. I buy for my worker families in Belize and take to them. On 1/2 price days I spend $250 and get nice clean clothes only with retail value of around $2,000. Pay $2 to $4 per item.
5. Food- buy a box of 1 gallon freezer bags. Buy a 20 pound ham and cut into 3 sections. Ham for Brkfst/lunch/dinner. Buy the 10 pound leg/quarter chicken bags. Split up into smaller bags. Go to the food pantry and pick up blocks of cheese. Sam’s or Costco or order at your grocery store. 50 pound bag of beans and rice. Boxes of pasta or ramen noodles. Normally buy eggs but they are too high right now with bird flu. Get a crock pot. Buy 50 pound sack of potatoes. Get the russet or white potatoes. They are cheaper than red potatoes. Buy a 50 bag of onions. If you want hamburger have your meat store take an Arm roast and fruit hamburger. This is 95% lean. From one cow versus 100 cows trimmings, and a $1pound cheaper. Etc. Etc
6. On Sunday- buy one bottle of beer or go to Taco Bell.
7. Work- weekends or nights get a job stacking groceries or at the hardware store. In older neighborhoods where yards need some help. Offer $100 service to clear and cut back yard. Sundays see if they need Sunday newspaper drop off. Wash dishes at the local restaurants.
Start small and Make Your Big Mistakes Early.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.