Should I Just Stop Paying My Debts and Student Loans?


Dear Steve,

I have around 40k in unsecured debt. I only make 49k a year. I have a home and 2 vehicles. All current. I’m current on all debts but I’m about to get behind. Its getting to hard. I have a job and I own a business.

My business is going to close at the end of the year. Should I use it as a reason to file bankruptcy or should I just stop paying my debts and see what happens?



Dear Daron,

Like most debt issues there is not just one clear answer to the simple question.

In the largest view, debt problems are math problems wrapped in emotion. So let’s strip away that emotion and underlying emotional cues that drive stinkin’ thinkin’.

If you are about to get behind and not have the resources to keep making payments then the choice of defaulting on your debts today or a month from now is not important.

Making partial payments will only delay the end game here.

The situation can only be repaired by increasing income, reducing expenses, or a combination of the both.

Now it’s one thing to go the novice route and just default on your debt and panic. Instead, let’s approach this with a smart business process. Before you can make good choices and come up with a plan of action you first need excellent input.

Since the issue involves some student loan debt and it might be private student loans, I would encourage you to start with an attorney with experience in this area who is licensed in your state.

You might to look at My List of Student Loan Attorneys You Should Consider for Assistance. If there is nobody there in your state then I’d suggest you first find a bankruptcy attorney before you default, come up with a plan of action you both agree on, and follow their advice. In that case you may want to read How to Find a Great Bankruptcy Attorney.

Defaulting on your debt has consequences like a credit hit and collection calls, etc. But not coming up with a plan that might include defaulting has one guaranteed result, fear amplified by poor decisions.

Keep me posted on what you decide to do and fill me in along the way by posting updates in the comments below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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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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