Hello everyone,

I am new here. I live in Canada and I am a university student (ironically, a Major in Finance). So here is the scenario: I am drowned deep in debt with no way out. I have had these credit cards since 2002. Here is what I owe as of now:

VISA (Bank 1): $4440 (credit limit $4000)
VISA (Bank 2): $1550 (credit limit $1500)
VISA (Bank 3): $4900 (credit limit $4000)
Student Loan: $5000
Parents and others: $12,000 (I worry about this part the least)

That's almost $30,000 in debt and I am not even working. But here is the most serious part:

Each month I am being charged heavy interests and over-limit fees on my credit cards, sure I am able to make some payments here and there but the way these people steal money is worst than the devil. Let's take a look (at about 11.5%/12 per month):

VISA1:$42.55 +$20 overlimit fee =$62.55
VISA2:$14.85 +$15 overlimit fee =$59.85
VISA3:$46.96 +$20 overlimit fee =$66.96
All that is COMPOUND interest.
Student Loan: About $30 per month.

That's $219.36 PER MONTH (or $2632.32 a year) that I am pissing out, not funny at all.

So I was considering filing for Bankruptcy because else I will be spending the next 10 years of my life enslaving over paying ridiculous amounts of free money to these unimaginable bastards. My bank calls me the other day and tells me "Sir are you aware that you are over your limit? Is there a reason why you are over your limit?" Well YEAH, because of accumulating interests and because you keep on charging me overlimit fees that I am unable to catch up with. Bank rep:"But that fee is our legal right to take". Of course they have the law on their side. Mind you I never signed up for the overlimit fee, it only came as of effect sometime in 2004. They changed their policy over-night without me signing for it.

My question is: What effects will filing bankruptcy have on me? I do not pocess any assets at the moment. I did have a job a few months back, and I realized that everything I earned I was giving it to them in terms of interests and injust fees.

Thank you so much for any invaluable advice you can get to me, meanwhile I will be browsing around the web for more adivce.

Hi KingSonic and welcome to The Finance Forums.

As for your debt situation - two things stand out:

1. If you're not working, you've no way to work off your debts
2. What sort of budgeting plan have you in place to prevent your spending continuing to move out of control?

Maybe bankruptcy could be an option, but if you go that route I assure you, it will bite you in the ass in future - probably when you least need it.

I think what you really need to do is to take responsibility for your debts and learn to manage them. Firstly, that means getting a job and working to ensure you've got an income to pay off your debts at a suitable pace. It doesn't matter what sort of job it is - you need an income.

Once you have an income, you can look at getting a loan to pay off your credit cards. Although you've bad debt issues already, and may be charged a higher fee for it, it should still be less than the credit card interest charges and overlimit fees. You will almost certainly need a job to get that loan.

Once that's done you should be in a position to manage your debt much better - it's no longer snowballing out of control, and you're in a position to clear it at a measured pace.

It really is up to you to take responsibility and clear it, though - I know if sounds tough at first, but take it one step at a time - and do watch your spending - heck, cut up your credit cards so you're not using them any more and live with a debit card if you can.

Anyway, hope that helps.

I would get a job too. That will help lower the debts and keep you from having to file bankruptcy.

Yep, you need a job and you need it yesterday.

Bank 2 Visa is closest to its limit, get that bad boy far enough under the limit that interest won't put you over again and then stick to minimum payments for a while.

Follow suit with Bank 1 Visa, then Bank 3 Visa.

Bankruptcy is not the answer. Paying down your debts is.

Here's what will happen: Your credit score will rise just a smidge each time you get a card back to within its limit. Making your payments on time will drive it up further. Within a year or two, the improvements in your credit score should allow you to negotiate interest rates with your CC companies. Improving your interest rate will allow you to pay down your debts faster.

Focus on the credit card debt first while making your student loan payments. Once the CC debt is cleared, focust on driving down the student loan debt while repaying the personal loans. Once the student loan is repaid, make it your mission in life to repay the personal loans.

The simple, yet cold, fact is that you don't need to file bankruptcy - you need to find an employer. You might want to consider two jobs at first so you can get those cards to within their limits. Or start selling off your possessions.

Definitely go through your things and see if there are things you can do away with and sell them. Cut back on spending. If you do not need it, then do not get it. If you do not have the cash for it, do not get it.

Thanks guys. I would buy and sell stuff on eBay but I have no eBay account anymore

Well, unless you've done something to warrant having your account closed by management, you should be able to re-open it or open a new one.

If, however, you are permanently banned from eBay, you can always try Craigslist.

Besides, I think it's worth underlining that a regular job with a regular income is what you need most right now - you can eBay on an evening to supplement your income if possible.

The most important point is to get that regular pay, to pay off your debts regularly, IMO.

Actually, a regular job with a regular income (even if its a part time job since you are a student) will show a good faith effort to your creditors.

I would get a job two if I had to. And I would pay off as much as I could. And forget the extras that you want you can live without them. It is alot better to do this then to go bankrupt. And you will feel alot better about yourself.