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I Have No Job. Should We Consolidate Our Debt or Go Bankrupt? – David

“Dear Steve,

I lost my job a little over two years ago and have not been able to find more than sporadic freelance work since. My wife is the sole income as of now. The problem was like a perfect storm, in that COBRA ate through our savings, and we racked up between $30,000 to $40,000 in debt (a good chunk of which was medical).

With no immediate job prospects in my future, how do we tackle our debt? Should we consolidate, go for bankruptcy? We can’t go on like this for much longer.

Thank you for your advice!


Dear David,

Unless you have a crystal ball it would be best to make a decision based on what we know for a fact or for damn near certain.

What we know is that you have spent through your savings and used credit to overcome some obstacles. We also know that you do not have a reasonable expectation of making sufficient money to satisfy your debt.

You are left with two logical options.

  1. Do Nothing – Stop paying your bills, wind up in collections and as long as the debts are in your name alone the most a creditor will probably do is sue you and attempt to garnish your wages. However, since you are doing freelance work it’s a moving target for them. Once you get back on your feet you can file bankruptcy and kill the suits and garnishments.
  2. File BankruptcyFiling bankruptcy will close the door on the old debt but what’s the plan moving forward? Unless you resolve the underlying income problem you will still not be able to make ends meet and run up more debt you can’t pay. I think you should click here to find a local bankruptcy attorney and go talk to them for free to learn what bankruptcy would mean for you.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

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About Steve Rhode

Steve Rhode
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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