“Dear Steve,
Divorce pending, upside down on house we’ve had for 16 years (don’t qualify for the HART program for re-fi), two credit cards are maxed ($27,000+) and now we’re both paying rent/mortgage since I moved out into a condo. It’s put a huge strain on the finances with additional monthly costs associated with the second house. Something has to be expendable and we have 3 kids so we need the home to be secure (no foreclosure at all) and bankruptcy shouldn’t be an option. Money is way too tight.
I have even been turned down for a secure credit card ($300) recently due to debt-to-income too high since I’m still listed on the house and I was hoping to be approved before my credit goes south. My credit scores are really good but won’t be for long if I default. I haven’t paid either card in February and prior to that never missed a payment. For the last two or three months prior, they raised the minimum and I’ve paid what I can but they aren’t happy with that.
What is the smartest thing to do right now with the credit card companies sniffing that something is coming? I haven’t answered their calls. Should I work with them? I’m afraid to open up for dialogue because I’m sure even if they offer to cut the payments in half, it’s still $400+ per month & I cannot afford that.
Can they garnish my wages? What is the best approach heading into a bad situation? Avoidance doesn’t seem like it will work for too long and I don’t like living like that. What can I do?
Jennifer”
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The Answer
Dear Jennifer,
Thank you for contacting me for help.
Your question struck a familiar bell and your words remind me of the emotional movement people go through as I described in the denial and bargaining stages of the Seven Stages of Debt.
Let’s look at the situation based on the facts you shared.
- Your divorce changes your dual income single household to two households.
- Essentially the creation of two households increases your overall financial demands.
- You are already maxed out on your credit cards.
- Money is way too tight.
- You have not been able to pay the minimum payment.
- You are worried about getting your wages garnished.
This situation is a math problem surrounded in a layer of messy emotions and stressful relationship issues. But the math doesn’t lie.
You say, “and bankruptcy shouldn’t be an option” but the fact is it is a real and logical option here.
Correct me if I’m wrong but what you shared seems to scream the house is no longer affordable, the bills are starting to collapse, you are falling behind, and hiding from creditors.
So honestly, what kind of environment do you want to create for the kids? Do you want to this be a situation of stress, fighting and fear or do you want to start being proactive and working towards a solution to reboot your financial life as fast as possible and move forward towards a safer future?
There is no obligation for you to do anything you don’t want to do but just because facing bankruptcy is hard, doesn’t mean it’s not the right decision.
Without cutting the ties to your old debt, show me the math that says you will be able to meet all your obligations within your income and still have money left over to save every month. That’s not a picture you painted for me.
In fact I would say based on the facts you gave me, it might even be tough to make ends meet even if you moved back in the house and lived life like before.
I suggest that you click here to find a local bankruptcy attorney and talk to them for free about your situation.
The time has come to stop running from the situation but to turn around and start guiding how this is all going to play out.
My advice is to stop dodging the creditors and start talking to them. Hiding from them doesn’t change the situation.
And is avoiding being sued and getting your wages garnished, then the legal protection afforded to you under bankruptcy is the only way to stop that from happening.
Bankruptcy Articles and Posts You Must Read
To get ready to read the information below with the right frame of mind, please first read How Do I Get Out of Debt Quickly? Change Your Mindset.
Bankruptcy Advice
- How to Know if You Should File Bankruptcy
- So You Are Going to File Bankruptcy. That’s Great News. Congratulations.
- Easily Rebuild Your Credit After Bankruptcy
- The Truth About Bankruptcy Success Rates
- How to Get Out of Debt Calculator
- How Long After Bankruptcy Can I Buy a House?
- Is Bankruptcy Sinful and Bad or Right and Moral? An Examination
- What Does the Bible Say About Bankruptcy? Is Bankruptcy Scriptural?
- How to Get Out of Debt. The Honest and Unvarnished Truth
- The Emotional Seven Stages of Debt
- Getting a Job After Bankruptcy
- Chapter 7 Bankruptcy – What is the Truth?
- Low Cost / Pro Bono Bankruptcy Resource Locator
- Bankruptcy Should Be the Last Resort Many Say. But That’s Just Not True
- The Ethical Considerations of Bankruptcy
- Is Bankruptcy Right For Me?
- 14 Reasons You Should Not Avoid Bankruptcy
- How to Really Discharge Your Student Loans in Bankruptcy. Many Can. But Never Try.
- Life After Bankruptcy: How to Quickly Have Great Credit and Dumb Mistakes to Avoid
- How to Find a Great Bankruptcy Attorney
- You Have Not Failed if You File Bankruptcy
Life After Bankruptcy
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