Scott Writes Me and Asks For Help – “We Are Behind And Overwhelmed”

Scott wrote to me at GetOutOfDebt.org and asked me the following question. If you have a question you can visit GetOutOfDebt.org and ask for my free help also.

“Dear Steve,

We have too many bills and not enough money. We owe $30,000 in debt besides my mortgage. We are behind about 1-2 months are most bills and are overwhelmed. We have only owned our house for 4 months and cannot do a second mortgage.

Please suggest a solution.”


First off, I completely understand and remember what it was like living through those days. There is nothing fun about it. The motto I adopted at that time was “At least I’m not on fire.” The situation might look bad but trust me, it can always be worse.

I remember the day I had two telephone appointments to help people. The first person was 8 months pregnant, living in her car and getting beaten by her boyfriend. She worked at a top 500 company as well. I hung up the phone with her and the next appointment just a few minutes later was from a woman that wanted to beat her husband because he was unable to provide for her and buy Martha Stewart paint to redo the house. It is all relative.

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

Too many bills and not enough money is a guaranteed recipe for something to change in your life. It is an unfortunate lesson that just because someone will lend to you does in no way mean that you can actually afford it. Take a look at the bank lending mess that is demolishing Wall Street. It’s all because of stupid lending.

People are getting in over their heads every single day because they feel that the bank or lender would not give them credit if it wasn’t manageable for them to afford it.

What saddens me most about your question is that you’ve only been in the new house for four months and you are already running into tough times. Most commonly I see people in situations like you who just qualify, move in and then a lot of expenses land on the credit cards. Once those bills go up, they can be the tipping point into nothing good.

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Since you are already behind on your bills, your credit report and credit score are already damaged. That’s a fact so let’s put that aside for now. You credit can be repaired latter once this situation is properly resolved.

You have three possible course of action. I’m listing these in no particular order.

  1. Debt Management – You could go into a debt management program and see if your credit card monthly payments could be reduced enough to give you some breathing room. But you need to know that a debt management program is not binding and your creditors could change or eliminate and concessions they might give you at any point moving forward. A debt management program might be a good short term solution if you want to try that first.
  2. Bankruptcy – Your debts are overwhelming and the good news is that you probably have little equity in your home. If legally eliminating your credit card debt would be enough to make a difference in your financial life and allow you to better make it from month to month then I urge you to speak to a bankruptcy attorney and have a free bankruptcy review about your situation. Before you decide if bankruptcy is right fo you, talk to the bankruptcy lawyer and get all the facts.
  3. Adjust Lifestyle and Budget – As ironic as this might sound, the easiest thing to do is often the most difficult for people to execute, futzing with the budget. If we just look at your situation from a mathematical point of view, it can be repaired by reducing expenses, increasing income or a combination of both. Every dollar you do not spend remains in your pocket and can be used for debt reduction and paying bills. If you want to some help to adjust your budget, take a look at the Mvelopes website.

Scott, the bottom line is that none of these are perfect solutions, but they are possible paths to follow to get your financial life under control so you can live within your income again.

Please let us all know how things turn out for you. We care and want to know.

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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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