My husband (of 3 years) and I together make approximately $105k a year, but our debt has gotten out of control due to a job loss and stupid credit card usage.
My husband joined a debt relief program through Liberty Lending, which we still have roughly two years to complete ($24k).
That was for credit cards only in his name.
My debt consists of a high-interest loan ($10k), credit cards ($4k), and medical ($3k).
So, roughly $41k in unsecured debt. We are buying one vehicle and have a mortgage plus a home improvement loan. The total of these three is approximately $125k. We are staying afloat but have nothing much left to save.
I was considering bankruptcy and consulted with an attorney who explained that if only I filed, it would need to be at chapter 13/repayment due to our income. However, my husband filed chapter 7 in 2015, which isn’t an option quite yet.
I only see three possible solutions and wonder what your advice would be?
Do you think we should keep plugging along with the Liberty Lending loan and making the minimum payments on everything until we get everything paid off?
Or, should I go ahead and file chapter 13 on what I have in my name ($17k) and then convert it into a joint chapter 7 when that is possible next year?
I wonder if a joint chapter 13 would be more cost-effective vs. the Liberty Lending loan.
I hate that bankruptcy feels like our only way out with our income, but we are just getting by.
Thanks for your input!
It feels as if there are a couple of issues going on here. First, I would not be surprised if your husband is the spender in the relationship and you are the saver. Opposites do attract, and everyone has their unique money personality. Take my online test and discover yours here.
I went to this Liberty Lending website and it appears they are selling access to loans. In the past, I’ve had people also refer to their debt settlement department. It is tough to determine who they might be working with if they do more than just loans or act as a loan broker.
So I’m not clear precisely what product Liberty Lending might have sold him. Liberty Lending says loans, but you say debt relief program. That is apples and oranges.
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My concern is that cash flow is pretty tight, and you cannot save for retirement or even save for emergencies. Any unexpected events will land back on credit, and this circle of debt will continue.
To tackle that problem will probably require negotiation and agreement between you and your husband about reducing expenses.
I don’t think you’ve got enough data to make an informed decision just yet.
Please go back to the bankruptcy attorney and get an idea of your joint Chapter 13 payment and confirm you would be eligible to convert it at a certain point in the future. I’d hate to see you unable to convert it if your joint income was too high.
Ultimately this is a math problem wrapped in emotion, and I firmly believe you will need to gather that information from the bankruptcy attorney and schedule an appointment with my debt coach friend Damon Day to discuss your specific situation.
There is more to know before giving you the best plan forward.
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