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I’ve Been So Busy Caring For Everyone Else I’ve Let My Credit Go. – Marjorie

“Dear Steve,

I am about $75,000 in debt, with no means to continue to meet monthly payments, cover my two mortgages, and cover reasonable living expenses. I own a sole proprietorship and have started a not-for-profit company. Last year my total sales were $73,000.

I have two mortgages totaling $2900/month, and have long been a single parent – my youngest is 17 and will graduate high school this June. I am very, very busy with work, home and extended family and have multiple personal and professional stressors and responsibilities. I should have tackled my mounting debt a long time ago – instead I used all my remaining assets finally in 2007 to pay off the bulk of my debt then, refinanced my house in 2006 which left me with two mortgages that total a good $45,000 over the current assessed value of my house, and basically kept “flipping” credit cards to cover expenses, paying the minimum on everything.

I am pretty much at the end of the line now – my checking account overdraft is just about maxed out, and I have been maximally stressed for the last several months. Much of my life has been spent struggling with overwhelming debt and making ends meet, and I have gone overboard to have brought up 4 children, given them a good life, and carried an overwhelming load.

I am afraid to declare bankruptcy and am poorly informed about it. More than anything I want to stay in the house my daughter was born in until she graduates high school in June. I am afraid of foreclosure as my worst nightmare, and also have good potential to get funding for my not-for-profit, which is a lifelong dream I have.

My therapist recommended I check you out weeks ago, and I am finally doing it. I have an appointment with Consumer Credit Counseling service of Rochester tomorrow to hear what they can offer me, and have printed up the application for request for modification for my mortgage(s) from www.makinghomeaffordable.gov.. I feel totally overwhelmed, desperately afraid, and so alone. I am very impressed with your blog and downloadable book. I am afraid if I do declare bankruptcy, even if I can stay in my house for now, it will adversely affect my businesses. I have not missed any payments for anything – have continued to pay everything on time, and compound the debt load.

What is your best advice as to what I should do? I am determined to solve this problem and then live the rest of my life (I turned 60 yesterday) never again in this horrible and crushing financial debt – responsibly, within my means, and free.

Thank you.

Marjorie”

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The Answer

Dear Marjorie,

Thank you and your therapist for the kind words and confidence in me.

Based on what I’ve read you are a caring and compassionate person that deeply wants to help and support others. I understand what that feels like. But the bottom line is you can’t do it to the point where it damages you or your financial life. I hesitate in using the word enable but maybe that resonates with you.

This issue is coming to a head now but it didn’t begin yesterday. It began long ago when you started living a life that exceeded your means. That amount over what you could afford wound up on credit and some of that credit was latter converted to a mortgage against your home. Then the cycle continued and you went back to financing your life on the cards again, leaving you heavily mortgaged, deep in debt, stressed and feeling like there is no way out.

While you feel you are current on your debts, in all reality, you are not. The payments may be on time but that’s artificial. The only reason you are keeping those current is because you are going further in debt and using borrowed money to make you appear current.

This is the moment you will need to take some definitive action to address the situation and save your non-profit at the same time.

I would argue that being more honest, real and directly addressing your financial situation makes both you and your business stronger.

Can your bankruptcy impact you business? I suppose so but I don’t see how it would.

From what you have shared a credit counseling program seems ineffective and not appropriate in this situation. Keeping in mind you’ve been current by adding to your debt, I can’t see any reasonable expectation you’d be able to make debt management payment for five years and suddenly live within your means.

It clearly seems that a Chapter 13 bankruptcy is a more logical approach. Under a Chapter 13 bankruptcy the amount of your second mortgage may be reduced, you’ll stay in your house, your mortgage will become a priority payment and credit cards will only be paid out of what is left and you can reasonably afford.

You owe it to yourself to click here to find a local bankruptcy attorney and find one you like. Go meet with the attorney, ask lots of questions, get informed and then I think you’ll agree with me that a Chapter 13 bankruptcy seems logical.

I need for you to be strong, face these issues head on and not try to soften the blow with a “credit counseling” approach so you can be successful in your non-profit to help others.

Please email or give your therapist this URL and ask him or her for help facing this with strength, courage and a resolve to really make things better moving forward.

Final words, watch the stress, depression, internal negative talk and feelings of failure. They will drag you down. Look at it this way, if you could turn back the hands of time you’d do it differently. So there is no sense wasting a perfectly good mistake, learn from it, move forward, hold your head up high and let’s roll.

An exceptionally and ridiculously big hug.

Ive Been So Busy Caring For Everyone Else Ive Let My Credit Go.   Marjorie
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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