I Work for the U.S. Postal Service and Always Made Good Money But Now I Can’t Afford My Bills. – Eric

“Dear Steve,

I have gotton myself into a mess. I work for the U.S. Postal Service and have always made “good” money. However, my hours were recently cut in half and I now can’t pay for all the debt I accured.

I don’t have enough equity in my home to qualify for a refinance or equity loan to pay off the debts. I applied for the home modification program with my mortgage holder (Chase), but didn’t qualify because my gross monthly income vs monthly mortgage payment is less than 31 percent.

The program doesn’t take into account all of the other debt. I’ve had my home in the market for over a year, listed at 6 percent above payoff (just enough to cover the realtor fees). I don’t see the home selling anytime soon. I can’t afford to pay all of my debts. Do I stop making payments on my mortgage and lose my home or quit paying the credit cards?

I’ve tried to get a loan to get my head above water, but with my high debt to income ratio, no one will lend. I’ve read up on short sales, deed in lieu, foreclosure, bankruptcy, etc, and I just don’t know what to do.

As of yet, I havn’t been late on anything at all. I depleted all of my savings and sold everything that wasn’t nailed down to maintain my payments up to date. However, I am now 100 percent broke with $2400 in bills due this week. I thank you so much for your time and consideration.

What do I pay…where do I go from here?


Dear Eric,

With the U.S. Postal Service basically insolvent as well, future job prospects look slim for many there I’m sorry to say. Email and the Internet have really impacted the old letter and junk mailings of yesteryear and revenue is way down.

I’m glad you’ve already made it through the “selling stuff” phase. You can now see that was a temporary fix at best. Now that the good stuff is all gone there is nothing left to sell to limp along another month so now is the time to face the situation head on.

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I think we need to look at this situation based on your current base income. The first thing is to stop paying the unsecured credit cards. From what you’ve said that will wind you up in bankruptcy. If you can afford your mortgage payment without your credit cards then go meet with a local bankruptcy attorney and talk about a Chapter 13 bankruptcy. If you can’t afford the mortgage alone then this is the time to think about handing the house back to the bank and looking at a Chapter 7 bankruptcy to wipe out all of the debt and start over.

In essence your USPS career went bankrupt. The Post Office had to hit the reset button and adjusted hours and salaries to get a fresh start. It’s just trickling down to you now.

Starting over sucks. But in many ways it’s like a forest fire. The wildfire clears away the weeds and allows the forest to grow healthier again. And it does. Your financial life can grow again after bankruptcy.

Please update me on your progress by

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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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