We’ve Spent All Our Savings Making Payments But Still in Debt. – Norman

“Dear Steve,

I am presently laid and cannot find work! Between my wife and I our income is $661.00. We have about $39,000.00 in debt. That includes 2 vechicles credit card and irs bill. We do not have a home ,rent and have no other bills.We have only 1 and a half years to pay on one vechicle, and four on the other. I know times are hard but I have fallen behind on vechicle payments and dont want to lose or hurt our credit.I have never fell behind before and have traveled all around the country for work only to find 1 to 3 months of work.I have tried to talk to loan companys to refiance but they say no. I have gone through all of our savings to survive but losing ground quickly.

Please advise me? I thought maybe If I could combine all of the bills total $39,000.00 and lower the payments we might have a chance? Right now for everything we are paying around $1,300.00 a month.

Norman”

Dear Norman,

Tis is one of those times I wish I had a magic wand and could go bank in time. It would have been a much more effective investment back when you started to use savings to pay bills to go bankrupt.

Spending through your savings only leaves you out of savings, not out of debt. Now don’t blame yourself, it’s a typical error people make. They are so afraid of missing payments or hurting their credit that they run through the cash and are still in trouble.

The time to fall back on savings or an emergency fund is when you have a short-term need that can be replaced with income coming in. When you are struggling to find work, there isn’t any income coming in to fund the savings account so it just smaller and smaller till it runs dry.

At this point you need to stop making any payments to your credit card companies. You also need to click here to find a local bankruptcy attorney and go talk to them about your situation. Bankruptcy is the only option you have that gives you any legal protection from creditors.

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If your credit score was above 660 then a peer-to-peer lender like LendingClub.com might be a possibility but I’m really worried you just don’t have the current income to support a debt consolidation loan payment.

Sincerly,
Steve

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.

Damon Day - Pro Debt Coach

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