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.
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.
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.
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.