How To Get Out Of Debt

My Wife and I Have a Bunch of Debt and It’s Time We Deal With It

Written by Steve Rhode

Question:

Dear Steve,

In 2015 and 2016 both my wife and I got in a bunch of debt. Between us about $10,000 in various credit card company debt, $2000 in medical and then the whopper, about $15,000 in online installment and payday loans at over 100% interest.

I just found out I have a judgment of $3500 against me that was placed by the court 2 months ago and the court date was supposed to be today.

I assume more will follow. I am in California where the creditor has the right to sue for 4 years. I haven’t made payments since November 2016. It is now May of 2020.

When the money was borrowed I was expecting a promotion that would have paid the loans off early on. That didn’t happen and instead took a pay cut.

We are 60 years old, she is permanently disabled and our assets consist of $3000 in the bank and $5000 in a 401k. There is no hope of ever paying these off.

I got so overwhelmed at the beginning by all the creditor calls and what to do I ignored them. I don’t even answer my phone. There are over 12 companies to deal with.

After being scammed by a few debt relief companies I don’t know what to do.

I’m ashamed and embarrassed and totally overwhelmed. At this point, I guess I work until I keel over. Then work some more. I need help.

Based on what I told you, where do I even start? Help.

Ken

Answer:

Dear Ken,

I’m so sorry you are having to deal with this mess.

I wish I had a time machine to go back to when this all started melting down. I would have told you then, the same thing I’m going to beg you to consider now.

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Here are the facts as I read them.

  • You are 60-years-old.
  • Your wife is permanently disabled.
  • You have $3,000 in a bank.
  • Your 401(k) has $5,000.
  • You have debt you are now being sued over.
  • There is no hope of paying off the debt.

Based on those facts you should face a few facts.

  1. You are not getting younger.
  2. Your working days are shrinking.
  3. You have an inadequate amount of money saved for a safe retirement.
  4. You would benefit from some legal power over your creditors and to stop collection calls.

The logical solution here is that you race to a consumer bankruptcy attorney and talk about a Chapter 7 bankruptcy. You can find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.

A Chapter 7 bankruptcy will cost about $2,000, eliminate your unsecured debt tax-free and stop these suits.

Following your bankruptcy filing, you should then devote all available dollars to your retirement savings. You have no time to waste.

Additionally, you should embrace bankruptcy and not be afraid of it. I urge to you read the following information.


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About the author

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.

4 Comments

  • being over 60 with judgements already stacking up and disability , would ignoring the rest of debt as in “judgement proof ” be considered? there was no mention of assets or worries of loss from judgements. it sounds like having any credit is pretty much not a big deal at this point . they could use the money a bankruptcy would cost and deal with the harassment of collections.

    • John, you raise a point I hear a lot. Being judgment proof is not a protection from collection calls or being sued. You would still have to deal with being sued, losing, and then fighting to protect your funds when the court awards a judgment to the creditor. While a Chapter 7 bankruptcy has an upfront cost of about $2,000, there is an emotional cost to not closing the door quickly with bankruptcy and having creditors pursue you for years.

      In this particular case, I almost concerned about the lack of emergency and retirement savings. Trying to continue to live being “judgment proof” means not maximizing liquid savings and funds on hand.

      But aloof that is just my opinion.

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