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I’m Having Problems With Disability Debt. – Christine

“Hi Steve!

I found your site, googling “disability debt” and was happy to see your latest post. I receive $1200 in ssdi payments a month. in addition, i worked part time, earning an additional $600 or so.

I lost my job in October, and not having that $600 means i have racked up about $2k in credit card debt (with a hefty car repair)

I owe $42,000 in school debt & am three classes away from my bachelors from a big school but having to withdrawal from my last class, I need to fork over $5k prior to registration. Since I am not working, I’ve decided to take a couple classes at the community college to provide structure (and paid via grants,that don’t touch big school!)

My AGI is close to $7k, and my ssdi payments are close to $13k… so i feel i shouldn’t be in such a bad financial position. I’m ineligible for foodstamps, utility assistance, or welfare, but do receive medicare.

My credit score is in the lower 600′s, with some stuff i want to argue over, like my employer being listed as “Ssdi” and my position “disability” or the collections account a hospital can’t identify.

My bills are as such:
$875 rent (big city)
$175 car note & $115 insurance (36 payments complete out of 60)
$75 phone/internet,
$75 gas,
$75 electric + $50 monthly deposit for 4 months. (after protesting a bill and requiring verification of meter reading they stuck me with this)
$300 loan that MUST be paid
$2k in credit cards ($40 – min payments?),
$80 gas
$120 doctors
$50 and medications $75

So I am in the hole and getting deeper, i feel my situation is hopeless, but bankruptcy really won’t fix it.

My income is fixed and $600 short. I don’t seem to be eligible for government services, I’m having a hard time finding a job I can do, being disabled. I want to finish my degree. I feel hopeless and helpless.

Do you see any opportunities or have any ideas which would ease my debt issues?

Christine”

Don’t miss our free Get Out of Debt – “How To” Guide Series on a number of topics, for loads of practical advice, tips, and help to beat back debt. – Click Here

The Answer

 

Dear Christine,

Believe it or not, you’ve got some bigger problems brewing. Unless you take action now and you are unable to pay on your student loans, you can find that your SSDI payments may be garnished, leaving you further in the hole.

You need to read this previous article, “I Have AIDS and Disabled But I’m Afraid My SSDI Benefits Are Going to Get Garnished for Student Loan Payments. – Jack“.

You may also find the story “How to Eat When You Can’t Afford To” helpful. Also take a look at “We Are Living Paycheck to Paycheck and We Don’t Know What to Do. – Cynthia“. This last article contains specific information about eligibility requirements for benefits.

It does seem grossly unfair that food stamps are calculated on income before taxes. After all that’s not really the money we have to live on.

You might want to find a lawyer in your area or a legal aid center that can review your benefit rejections. Just because you’ve been rejected does not mean you are not eligible.

On the debt front, if you go bankrupt you will have to include that $300 a month must pay loan, along with your credit card debt. All debts must be included. And as tempting as it might be, you really should not use your credit card since there is no expectation that you will be able to repay it at all. Some might call that stealing.

But on that credit card, I’m afraid at this time you have no other option but to not pay on it. You just simply don’t have the money. You’ll wind up in collections and it will hurt your credit but you can’t pay what you can’t afford.

With your income situation the way it is, I think that bankruptcy is a logical option. If you give your car back to the lender, include that debt into your bankruptcy, all together you will reduce your expenses by $705 per month and that will bring you back much closer to a break even position. The current expenses you gave me add up to $2105 per month, with the reductions from bankruptcy you will be at $1,400 a month.

Your response will probably be something like “But Steve I need my car to work?” But the reality is that you can’t afford the car and losing the car comes before cutting off the heat or stopping eating.

And let’s not forget that all of these calculations don’t even include any discretionary expenses. So you’ll have to account for every penny and not spend one more dime. I did notice that your listed expenses did not include any money for food. Is that an oversight? If so, you are even further behind than you think you are. You might just have to find out where your local food bank is and find out what free food, if any, you can get from them.

A really big hug.

Steve

I'm Having Problems With Disability Debt. - Christine by

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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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