“Dear Steve,
I work full time and my husband is disabled. We have unsecured debt of approximately $50,000 not including my student loans which are about $10,000. My husbands medical bills and increased cost of living have driven us deeper and deeper into debt over the last few years. I manage to keep all of our bills paid on time but each month have to put necessities on our credit cards.
Most of our cards have lowered our limit to what we owe and we are nearly out of credit at which point things will begin to slip into past due. Now I received a letter from the lender on our large unsecured loan ($31,000) and they are changing our interest rate to a variable from a fixed and this will increase our monthly minimum due but will not increase our repayment term. This will sink us.
I feel like a complete lowlife for considering bankruptcy, but I don’t know what else to do. Our annual income between us is only about $40,000 and with all of the medical costs and high cost of electric/gas/groceries/etc we are sinking fast. Is Chapter 7 the best solution?
Each month I have to charge necessities to make ends meet due to high medical costs for my disabled husband and our huge credit card/loan debt, is bankruptcy the right solution?
Tracy”
The Answer:
Dear Tracy,
In short, yes, bankruptcy is an appropriate solution for you to consider in this situation.
Let’s step back and take a look at your situation. The most important issues here are variables you have no power or control over. You can’t will your husband to be better or for his medical care requirements to be different. You also can wish or will the creditors to change how they have sought to deal with your debt.
I seriously doubt that you set yourself off on an intentional path to reach this point. You can blame yourself all you want but I’ve been helping people for so many years and seen so many different situations that I known deep down that bad debt happens to good people all the time.
So let’s talk about bankruptcy for a moment. Bankruptcy is the law. it is a legal process sanctioned by our country and government as a way to allow people to have a fresh start when buried below a landfill of debt they can never service.
I’m not saying that going bankrupt should not give you pause. Nor should you go bankrupt and think its a party. But everyone but you has factored your potential bankruptcy into the process. Your creditors priced the credit they extended to you based on risk and guess what part of that risk included, that’s right, bankruptcy. Your creditors know that lending is a risky game and they are big boys and girls.
So let’s look at why you might not want to go bankrupt. You think that only losers and low-lifes go bankrupt. Well that’s just not true. In fact, I find it terribly ironic that large corporations are praised for going bankrupt to reorganize their finances but consumers are made to feel like shit.
All of those negative feelings circling your head are self-judgments. The only reason your creditors or debt collectors will call you names is to manipulate you to pay, not judge you. Those folks don’t have two seconds a day to judge other people. Besides, the people calling, it’s not their money. They are being paid to do a job, collect.
I would argue with you that at this stage you have a greater responsibility to create an immediate and safer future for you and your husband then keep pouring money down a drain trying to repair the past.
My advice would be for you to absorb what I’ve said, find a local bankruptcy attorney you like, make an appointment to go in and talk face-to-face and then contemplate if bankruptcy is right for you.
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.