I Need to Get Out of Debt But I Don’t Know What to Do and I Want to Avoid Bankruptcy


Dear Steve,

I am $80,000 In credit card debt. I have about $60k in 0% credit cards of which I transfer back and forth for a 4% fee every 1-2 years. I have about $20k on a card I actively use and try to pay down for about 10% Interest. I don’t have the income to pay off much and still live at the same time. A lot of this is medical debts or a result of medical problems, not shopping too much.

I am afraid to declare bankruptcy and I am also very afraid to trust one of these debt consolidation companies – all of which I feel are just another scam. (What benefit do they add? I rent and cannot afford to damage my credit. (Credit is impeccable besides high cc debt).

I do not own anything but was hoping one day in the future…. also I don’t want prospective employers to see I declared bankruptcy. I really am at loss. I don’t know who to trust as it seems like everyone is trying To sell a product to you.

What is the downside to using a debt consolidation company? Damages credit rating etc??

What are the downsides to bankruptcy?

What would you do if you were me? (Again I have NO credit Problems or any defaulted payments. It’s all perfect. Just tons of debt).


You are stuck in a very common rut. You are trapped in the need to take action but the fear of taking the wrong action is holding you back. Debt problems are simple math problems wrapped in emotion. A lesson you are painfully learning.

First off I would suggest you use The Amazing How to Get Out of Debt Calculator to compare your options. The online calculator will gives you a comparison of the pros and cons of each plan.

It sure sounds as if you are hesitant about bankruptcy. Most people are because they don’t know the truth about bankruptcy. But the issue about bankruptcy is not to believe everything you’ve heard about it.

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Is paying off your debt through a credit counseling or debt consolidation loan a better option? Well it depends on a number of factors. While it might “feel better” today the pain it might cause in lost retirement can be huge. Use this online calculator.

It doesn’t really matter to me that your credit is impeccable because that’s not the most important issue to consider. Credit can be easily rebuilt. And is your credit really impeccable with a high debt to income ratio that hurts you or the constant shuffling of cards? Those actions can lower your credit score.

The primary issue here is your continued living on the sharp edge of a financial disaster. If you are currently saving for retirement and building up your emergency fund is far more important that the next 12-24 months of your credit.

While you don’t want prospective employers seeing you filed for bankruptcy, is that really a bigger fear than setting yourself up for massive failure in retirement? Maybe it is? Only you can answer that question.

If you are currently unable to save for retirement, build up your emergency savings account and protect yourself now, any repayment plan that leaves you exposed like that will be a big risk.

So let’s deal with facts.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

The reality is if you wanted to put your debt behind you in the fastest period of time for the least expense and most legal protection, then bankruptcy would be the logical solution. You should read Those That File Bankruptcy Do Better Than Those That Don’t and So You Are Going to File Bankruptcy. That’s Good News. Congratulations.

You are right where your creditors want you. You are on time with payments and just shuffling along making them money through interest or balance transfers. Your current plan is the dream of creditors. Creditors care about maximizing their profit, not your finances.

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And I totally understand that you are unsure of who to trust to give you good advice. It seems like it is darn near impossible to find someone who can give you a comprehensive overview of your total situation and options available. You don’t need a salesperson, you need a debt coach who can guide you through. You need someone experienced who can help you make the best decisions possible that includes reality and your goals.

Frankly I would suggest you work with an independent debt coach like my friends Damon Day or Michael Bovee. They will help you evaluate your overall situation and help you wade through the muck to find a better future.

Or, you can keep doing what you are doing and expect the future to look much like today.

It’s time to live through facts, not fear.

Damon Day - Pro Debt Coach

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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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