I Am In Constant Anxiety About Our Debt. – Amy

“Dear Steve,

I am married with 2 young children under the age of 5. My husband has been out of work since the Fall. He is under a non-compete which makes it difficult for him to find work in his field until November 2010, at which time the non-compete expires. I include this info because there is a real possibility of our income increasing. But struggling until then.

I am working full-time and make about $40,000 gross. We purchased a home 3 years ago and are current on all of our payments. We may be just a little “under water” — by a few thousand dollars– or we might have just struck even given how home values have fallen. So have no equity. Not able to refinance b/c our mortgage is not held through Fannie or Freddie– and we owed more than 90% of the value of the home.

We are current on all of our bills. However, the ONLY way that this is happening is that we are putting what we can on credit– so digging ourselves deeper and deeper and deeper into debt. We owe $33,000 on our credit cards. I didn’t know that we owed that much until I added it up the other night and had a subsequent anxiety attack. I keep having them whenever I think about our situation.

We also owe probably $35,000 is student loans (currently in forbearance/deferment)– we went to grad school and came out with a lot of debt.

We owe about $3,000 on our van and are paying about $176/month on it. We own our other car. (which I’m praying does not die on us).

My husband is home with the kids right now and they are in care only one day a week so that he can job hunt/go to interviews.

Thank goodness we live in a state that helps working families afford health insurance — it is the only way that we have it right now– through a State program.

My husband has about $27,000 in a 401K. I have about $6,000 (but can’t access since I’m still employed at the same place).

We have made a series of bad choices that have led us to this point in time. I regret them all horribly and am so ashamed of where we are at.

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We have about $3000 in savings and maybe about $3000 (“extra”) in checking that I have been hording just because I have no idea what is going to happen from day to day.

I still need to read your piece on All about Bankruptcy b/c I have a lot of unanswered questions.

I just can’t stop thinking about all of this.


  1. What do we do next? Keep using credit to “float us” until the Fall? (We have additional credit to use fortunately/unfortunately) What is the point of no return? I feel like we might be there. Where we’ll never be able to pay all of this off no matter what we do. Use the $3000 in savings to pay off the van so at least we own that/it can’t be taken from us? Try to sell our home? File for bankruptcy?
  2. Any advice you can give will be very much appreciated.
  3. It is a strange relief just to put all of this out here into space. I can’t stop thinking about it all. My husband suffers from depression and I want to protect him from all of this as much as possible. we talk and he knows that things are dire– but neither of us have any idea about what to do.


Dear Amy,

First, I need for you to stop focusing on the past and turn around to face the future. Whatever mistakes you made, learn from them and don’t make them again.

If it is possible for you to rent a suitable living place cheaper than the cost of the mortgage than you might want to think about making plans to move to a rental and hand the house back to the bank.

If you were not paying your bills would you be able to use that money instead to get by on? Would it be enough to make a difference? If so then the time has probably come to stop paying the bills, let them go into collection and use the money instead to make it through the month. Once you default on the bills you will get collection calls, it will hurt your credit and down the line you may be sued but all of that can be stopped cold with bankruptcy. Being in collections sucks but trying to feed a family on a meal of paid bills sucks more.

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The goal right now is finding a way to make it through the month just paying for the basic minimums to live. Until your husband can go back to work in his field he should suck up his pride and go apply at all the temp agencies in town and take whatever assignments they can send him on.

The key to this transition will be increasing income, lowering expenses by not paying them, or a combination of both.

I know you are stressed and anxious but that is primarily because you are constantly worried about what will happen and waiting for the other shoe to drop. You are tensely poised in a reactive mode. I need for you to instead be proactive and take charge of your debt by coming up with a plan on how to either pay it or discharge it.

As part of your proactive research I want you to click here to find a local bankruptcy attorney to go talk to. Go, listen, ask questions and educate yourselves what bankruptcy would mean for you. Talk to the bankruptcy attorney before you payoff the van.

Please update me on your progress by

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.

Steve Rhode

2 thoughts on “I Am In Constant Anxiety About Our Debt. – Amy”

  1. Your not alone there are millions of people all across the globe that are suffering from financial hardship in Iceland which you may not be aware of the whole population of 300,000 people and almost every Icelandic bank are bankrupt.TOO BIG TO FAIL NOT HERE.But back home we show bankers and investors there was no risk in risky investments because the taxpayers will be there to bail them out.

  2. Thank you for getting back to me so quickly, Steve. I really appreciate it. I will contact a bankruptcy attorney and discuss our options. I think contacting temp agencies is a good option for the meantime. The only tricky part is making sure that he would be bringing home income above and beyond what we would be paying for child care.

    I think hearing about our options will be helpful. And holding off on paying off the van wise.

    I know we’ll get through this. Thank you for your advice.


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