We've Had Great Credit for So Long I'm Scared of Bankruptcy

Question:

Dear Steve,

Hello, and I want to say thank you for helping us.

Here it is in a nutshell:

I’m a 75-year-old woman.

My husband is 72.

We met late in life, and we have no children.

We have an apartment in a rent-control property, and we own a property that gives us a modest rental income.

My husband survived brain tumor surgery in 1990 and is a brain-injured adult who now has a seizure disorder.

From 1996 to 2006, he was a software engineer, but he had to accept a retirement package 16 years ago because his company was hiring foreign workers to replace his whole department. He has memory problems, a sleep disorder, and a severe hand tremor disability, which inhibit his ability to work 9-5 jobs.

I’ve worked as a teacher, trainer, weight coach, tutor, and more until 2016. From 2005 to 2012, I also cared for my destitute mother in dementia, had COPD, atrial fibrillation, and was a cancer survivor.

Although she passed away in 2012, her situation caused additional financial hardship, extreme stress, and emotional trauma.

We have four sources of income:
– our two social security checks
– our IRA/Annuity Check
– our rental income on our property

Our combined household income is about 67,000

Our combined credit card debt is about 66,000

My credit score is about 800 (I never missed a payment in 50 years).

My husband’s score is high too. (not sure of the actual score)

Our property is managed well, and we are still paying all of our bills on time.

Loan companies like Discover, SoFi say our debt to income is high.

Debt Settlement companies try to scare us or force us into signing contracts.

Debt Management will only increase our monthly expenses.

We talk about bankruptcy all the time, but it’s terrifying when you have had excellent credit your whole adult life.

Is there a way out of this misery?

Does anyone have an idea that we have not explored?

Judy

Answer:

Dear Judy,

You have certainly been through some dark places and terrible life events. However, having lost my father to dementia, people can’t appreciate the toll on the caregiver.

The first thing that struck me is if you’ve thought about applying for Social Security disability for your husband. He can collect on both at the same time. For more on Social Security Disability Benefits see this page. You might have a narrow window to apply because of age, but it is worth a shot.

I completely understand the emotional hesitancy to consider bankruptcy. You’ve done an excellent job for decades, and filing bankruptcy can feel like you’d failed or somehow less of a good person.

But those feelings are not fact. Instead, financially stressful situations are just math problems wrapped in emotion.

The math makes things pretty clear. But, the emotion holds us back or makes us second-guess our decisions. Then we are just left doing nothing. And so we stay stuck.

I think it is too early to say if bankruptcy is right for you; I’d suggest having that conversation with my debt coach friend Damon Day.

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

But here is what I can say with certainty, you should not rule out bankruptcy IF IT IS RIGHT FOR YOUR SITUATION.

Your situation requires a unique solution that debt management, credit counseling, or debt settlement program will probably not give you. You don’t need a one-size-fits-all product. Given your property situation, it would help if you had a little of this and a little of that.

There is a way forward here, and I think you owe it to yourself to take fear and emotion off the table here and concentrate on the math.

Once you’ve identified your goals, a route to get there can be planned. Damon can help you with that.

The last thing I’m worried about is if there is an excellent way to get through this. My primary concern is that you act emotionally or hastily, which makes the situation worse.

Please come back and post an update about what you decide to do. I care about you.