“Dear Steve,
I am a married woman with 2 wonderful children. I am earn a great income in the medical field at around $80,000 per year. I am currently $47,000 in credit card debt. Without boring you with a long story, I started a part-time business in addition to my regular job in 2007. I spend $30,000 to open the business. I closed the business in December of 2009 having made only enough to pay the monthly expenses but not enough to have paid off any debt. My husband moved out in September of 2009 and outside of paying the utilities, left me to pay everything else. I suspected that he was cheating on me so I hired a Private Detective ($5,000) and then hired a lawyer (10,000). I am so disgusted with my debt. When things get tough, I work part-time to make ends meet. I have made all of my payments on time and have a pretty good credit score–725.
I would like to sell our home and move to a cheaper home. The housing market in NC is not like some of the more urban places and homes in my neighboorhood that are for sale have just sat there. Even if we did sale, after paying relator fees, there would be nothing or maybe even another loss $5,000-$10,000. Should I try to sale and just take another loss? Also, I have around $60,000 in my IRA. I am considering taking some of that out to help me with the debt. Every month, I watch my money come in and go right back out. Lots of people say not to bother my retirement but the way I feel right now, I may not make it to retirement.
KJ”
The Answer:
Dear KJ,
I’d much rather see you go bankrupt than tap the retirement funds. Those need to be protected and not drained.
Bottom line is that you are in a transitional period of your life. Your marital status has changed and the debt isn’t healing itself.
One way to look at the situation would be for you to work harder and spend the next five to seven years digging your way out. Another way to look at it is to hand the house over to your husband and let him deal with it. Bankruptcy could then give you a fresh start and then instead of dragging your past along into the future you could just get all the pain out of the way right now and spend the next five to seven years making things better for those wonderful children of yours.
I’m not being caviler on you walking away from your debt but at some point there must be things more important in life than debt. If you want, you can click here to find a local bankruptcy attorney.
Just curious, what part of NC are you in?
If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.