Trying to make the best of a bad scenario - Please Help! Part 1/2

Posted by Rob on November 14, 2001 at 11:17:01:

Hello good people - today I seek your sage advice.

First, I've read about 100 posts, and read most of the website + many others in the past two days. This seems incredibly complex, or my brain simply isn't functioning as it should due to stress. One mistake many have made is not including sufficient info to assist Linda et. al. into providing comprehensive (but not legal, I know!) advice. I've tried to paint the full picture, because I NEED HELP, AND VERY MUCH APPRECIATE YOURS! ;)

In brief: I have been self-employed as an independent IT consultant for 5 years, made reasonable $, and have maintained a very good credit history. I pulled out of my business (sole proprietorship, Virginia based) on 1-1-2000. I gave all past clients 1-year pro-bono
support (I think it's terrible to leave people hanging, and I didn't need $ then!) while I examined the IT industry for my next career path.

From 10-2000 until 10-2001, I've put out hundreds of job applications, and despite a killer resume, excellent ref's and great contacts, I've acquired no job. I've recently (3 weeks ago) realized that my lack of a B.S. is likely holding me back in a hardened economy, so I've decided to return to school, finish the B.S. and get an MBA, which will take 3 (full) years.

Every day I breathe, I spend $30 on interest with the debts I accrued assuming a job was forthcoming. I live VERY conservatively, but with no income now or in the forseeable future, bankruptcy seems the likely answer, though for pride + honor + career goals (Big-5 consulting firms aren't going to like seeing that on my credit history, I'm told), I wish to avoid this if at all possible.

MYVESTA.ORG got me thinking about "negotiated settlement" but told me I need to get their full plan ($2900), and I "don't have enough to settle", so will be making payments for the next 7 years, which isn't likely affordable during my education (which I take very seriously - I refuse to work full time @ $7/hour to make payments and ruin my GPA, or take lighter classloads and an extra 1.5 years to finish school - forget it - I'd never make it).

Regardless, I have 3 years in school ahead of me, during which I will own/make essentially nothing, which affords me a rare opportunity.

Lastly, despite spending ~$20k in interest in the past year, I still feel horrible about what is happening. I'm relieved somewhat by the posts of others, that I've hung on as long as I could in honor, and that Jesus equated "compound interest" with the 10 deadly sins for a reason. All my debtors have a copy of my resume, btw, and I would have worked for half what I'm worth to make things right, but have given up hope on job prospects (as did 416,000 others last month who jumped on the welfare bandwagon). My conscience is NOT clear, but like any
dear, but destructive, relationship, it's become me vs. them, and an underdog, I'm the only one looking out after me.

So, without further ado, here is my information, with questions in Post Part II. (please excuse the formatting if it gets messy - I did my best.)

Demographics:
-------------
Age: 27
Status: SWM, no spouse or dependents
Area: Virginia (VA)

Financial History:
------------------
- Very good credit history, until this week!
- Lost $30k in stock market valuation in past 7 months.
- Very "on top" my finances, and do not have a spend problem.
(aka. No "future management" needed - just income!!)

My Debt:
--------
3 credit cards:
Credit Balance Rate Min. Paid last
MBNA $33,000 17% $500 27days (next payment due 11-14)
F.USA $9,000 15.5% $180 28days (last payment WAS due 11-10)
Disc. $6,200 19% $120 65days (oops!)

2 student loans:
USDoE $3,700 6.5% $70 Completely Current
AFSA $6,000 8.5% $125 Completely Current

Personal debt:
Folks $7,500 0% $0 ...but they're semi-retiring with little savings

My equity: (that anyone could ever know about)
----------------------------------------------
Amt. Where Notes
$6,000 Stock market Entered a $35k check into Mom's account a year ago.
$10,000 Car Paid off, being sold ASAP (Ebay)

Expenses:
---------
$275/month = food
$80/month = gasoline (mom's 35mpg econobox)
$80/month = phone
$0 mortgage/rent
$0 utilities
$0 fun (except the company of you fine people!)
++++++++++++++++++
Total = $435/month

Notes: a) Gas + phone may sound high, but I live in the middle of
nowhere, and there isn't much I can do about either.
b) Food sounds high, but am attending school 70miles away.
It will be tough to cook at home (ie. eat for less).

Also: (?)
$500/month = school (if not covered by loans due to bad credit)

My income:
----------
$0. Reported $0 on last year's taxes, will do the same this year.

(Continued on post Part 2/2)

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