40-year-old single mom, 2 master’s degrees (still paying off at $700/mo), always gainfully employed as a clinical social worker, currently at same job past 8 years and currently at $66k/yr. The problem: after becoming pregnant 3 years ago, my ex dumped me, I relocated back to my hometown and moved in with my parents (so, no rent to pay), but the costs of raising a child alone, without child support, and a couple of EXTREMELY fraught court cases in 2 states, neither of which is resolved and both of which are spitefully carried out by the ex who has no intention of stopping his fruitless motions against me, has left me about $1000 in the hole every month, all paid by credit cards, and current debt has risen to about $36k.
My monthly take-home pay, after putting 10% into a 401k and $5 into a Dependent Care pre-tax account, along with the usual health care expenses, is about $2800. Monthly expenses, including childcare, are about $3800. My credit card debt is approx. 36k, with interest ranging from 15-30% on the cards. I pay every bill on time every month, approx. $1250/mo, but cannot get out from under the interest. My income is unlikely to change. I do not know if my child support situation will ever change. Should I declare bankruptcy to get rid of the credit card debt that isn’t going down?
Logically the answer is yes.
When faced with an impossible situation we have to let the math tell us what is the logical solution is.
You’ve said your credit card payments are $1,250 and you are $1,000 in the hole each month. You’ve also given me the impression you’ve paired back your discretionary expenses as well.
From my point of view with everything you’ve been through, you should look at a bankruptcy filing as a wonderful legal opportunity for a new and fresh start. You should absolutely read So You Are Going to File Bankruptcy. That’s Good News. Congratulations.
Now some people may say you should stop the 401(k) contributions but that is ridiculous and shortsighted. You should absolutely continue those contributions, especially if your employer provides some matching. Retirement is in your future and you need to save and prepare for that even when you are facing money troubles.
Once you do file bankruptcy, just focus on finding a way to live within your income and don’t immediately leap to get back on your own. Take a minute and relax. Get back into a situation where you can build your emergency savings account each month to get back on a solid footing.
I sure hope the issues with the ex can be resolved in the near future so your life can move forward.