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For Two Years I’ve Been Contemplating Bankruptcy

By on June 16, 2017

Question:

Hi Steve, First, love that you volunteer saving animals, I actually do the same!

The reason I write you today is that for nearly two years I have been contemplating filing bankruptcy.

Four years ago I came down with a debilitating disease and had to quit working altogether. Moved back with mom for day-to-day help as I was temporarily disabled. Before this, I was healthy, excellent credit in the 800’s, full-time job, behind on saving for retirement, but about 20k in savings. You should know that I am single and 45 years old, with only one family member around -mom.

I am now approx $80,000 in debt from not working and just recently in the past 4 months had to stop paying monthly minimum payments therefore falling behind, but beforehand was never behind on a payment. Now score is in 500’s.

I had been paying enormous monthly payments to keep a float for the past few years and high interest rate credit cards.

I have now depleted my savings and only have $30k in an IRA – so basically no retirement.

Last year I started working part-time in a commission situation which is not consistent but allowed me to start getting back on my feet.

I have now made enough to pay off a good chunk of the debt and had hoped for a couple more large commission checks to come in that would allow me to pay off all the debt completely but this hasn’t happened and I cannot wait any longer and now have to make a decision.

I am not in remission but can now manage to work full-time again so I have just started looking for a job, but who knows when I will find something.

I do not own a home but would like to.

So my question is should I pay off some of the debt, while maintaining the high minimum payments on the rest of the cards that would be left while keeping some of it to live off of while looking for work OR should I suck it up and file bankruptcy given the magnitude of debt allowing me to have some reserves to live on and put some of it into my retirement OR should I try to settle this debt?

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Honestly, I’m so confused. I know I could pay this off within a year of working full-time, but I do not have any retirement and I’m not a spring chicken, nor do I have anyone to help if I were to relapse and something were to happen to mom. I want to set myself up to have some security for the future, but part of that is also buying a home which in reality probably won’t happen now for at least 5 years given my current credit score; with or without paying off the debt. I would love your opinion on my situation, I have asked numerous friends and no one will give me a straight answer. I think they are afraid of guiding me either way.

Also, I have been trying to use the debt calculator for a few days now and it is not calculating…would love to see that work so I could run the numbers!

Thanks in advance for your help and thank you for all you do for the fur-babies!

LC

Answer:

Dear LC,

Hugs to you for helping to save the furbabies as well. I just got another flight request a few minutes ago so I’ll soon be off to save some more dogs.

With compassion, the quick answer is you should have filed bankruptcy a long time ago.

When people face similar situations they often make the mistake of trying to repair the past instead of the future. But I get why people delay and it’s tragic. Debt problems are math problems wrapped in emotion and those emotions lead to unclear thinking and less than optimal decision making.

Here are the facts. Your delay in correcting this situation is robbing you of the ability to save as soon as possible for retirement. Without this you will retire poor and that’s going to be a hell of a dangerous situation. Just use my calculator to see how much delaying saving is going to cost you. And here is another surprising fact, Those That File Bankruptcy Do Better Than Those That Don’t.

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The irony here is the fear of bankruptcy has created a situation that has left you more harmed and damaged than bankruptcy ever would. Read So You Are Going to File Bankruptcy. That’s Great News. Congratulations and Life After Bankruptcy.

I’m working on getting the debt calculator fixed for you.

Think about it like this, if you don’t put this behind you as fast as possible and start making the future better, you will not have the time or resources to save more fur babies.

Your homework is to read How to Find a Great Bankruptcy Attorney and go get a better and safer life now. Please keep me posted on your progress in the comments below.

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About 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.

6 Comments

  1. nyquil762

    June 16, 2017 at 12:44 pm

    Great article. This highlights the fact that most file bankruptcy a bit too late. I get how we as consumers feel a moral obligation. However, this example is more typical of what happens when consumers wait too long. We should manage ourselves just like GM, IBM etc. When companies run into cash-flow issues they use whatever legal means are available for them to use.

    • Steve Rhode

      June 19, 2017 at 10:07 am

      That’s why I always say, debt issues are just simple math problems wrapped in emotion. But it’s getting through the emotion to reality and logic that is the battle for nearly everyone.

  2. LC

    June 16, 2017 at 11:04 am

    Question asked.

    • Steve Rhode

      June 16, 2017 at 11:05 am

      Question answered and I’m sending you a big virtual hug as well.

      • LC

        June 16, 2017 at 12:53 pm

        Thank you Steve! I guess I knew that would be the answer and yes, I feel like I have waited too long to file – all the money I spent on minimum payments – ugh!! BUT, like many I had hope that I could salvage the situation a different way. Looking forward is the only thing to focus on now and creating security for the future!

        • Steve Rhode

          June 19, 2017 at 10:05 am

          I can’t express in words how much I feel your pain. Let’s not forget I went bankrupt in 1990 and lived through the whole experience. The irony is people like you and me feel shame and pain when making that decision. We drag our feet and try to find any other solution. But we do that not for logical or financial reasons. We do it for perceived emotional reasons. Yet when companies are in financial trouble and file bankruptcy, their stock often goes up.

          Now this little post will put this in an entirely new context. Read https://getoutofdebt.org/85363/moral-hypocrisy-avoiding-bankruptcy-good-enough-church

          It’s time. Congratulations for taking action and moving ahead. If I was there, I’d give you a big hug and I can’t wait to hear about your new and better future.

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