“Dear Steve,
I’m 28 years old, have a 17 month old son, sole provider currently (my girlfriend is in nursing school). I have $28,000 in credit card debt, $15,000 student loan debt with Sallie Mae, currently trying to sell my house since I am quickly becoming unable to pay my mortgage. I owe my mother $16,000, which I borrowed to pay off my divorce settlement with my exwife. I am in sales with a base salary of $40k plus commission, which means I’ll make about $50k this year, however, sales have slumped, so I cannot see making that next year.
I have absolutely no savings, my paycheck is essentially gone before I even get it (in other words living paycheck to paycheck). I let my Dad “borrow” a total of $25,000 over a period of about 4 years, I now know that I will never see that money again (he got the same from my brother, stole close to $100k from my mother, and “borrowed” more than that combined from his brother). We believe he owes the IRS, but have no way of knowing where all our money went, all we know is that we are all screwed and will never see it again. That’s the jist of it, I guess.
How can I possibly get out of this credit card debt? My Sallie Mae student loans are really a non-issue being that I have gotten that interest rate down to 1%. As far as paying my mother back, she is not putting any heat on me whatsoever, however, she needs it more than any one, she is 58 and has no retirement at all because my dad pissed everyone’s money away. Should I file bankruptcy and eliminate my credit card debt? I don’t really want to do that, however, I’m not sure if I really have a choice at this point. In my opinion, I need a “fresh start”. Any help you can give me will be greatly appreciated. Thank you for your time.
Drew”
The Answer:
Dear Drew,
I certainly understand your desire to avoid bankruptcy. The thought is admirable but unrealistic.
You are almost a classic bankruptcy case with debts beyond your control and facing a reduction in income.
Unless I’m dead wrong here it sounds to me that rather than climbing out of the debt hole you are slipping further down the slippery slope. I would not be surprised if you told me that much of the $28,000 of credit card debt was just to help makes ends meet and for routine stuff.
I think it is realistic to say that based on your income projections there is no reasonable expectation that you will be able to continue to service your debt or that we can expect your father to suddenly repay you what he owes. Sadly, this isn’t close the the first time I’ve heard about this kind of situation with a parent. Shit happens.
From this point forward I don’t think you should assume that bankruptcy is the only way out but I want you to go see a local bankruptcy attorney you like and discuss your situation. After an open and frank conversation I think the bankruptcy attorney will come to the same conclusion as I have.
The reason I do not want you to assume that bankruptcy is the only way out for you is simply because I want you to go to that bankruptcy appointment to learn and investigate, not just going through the motions. I need for you to be as fully informed as possible so you can see that this was the most logical and best route out of the jam you are in.
Hold your head up, make the appointment, and do what you’ve got to do.
Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.
P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.
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.