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Should We Be Looking More at Bankruptcy? – Kirby

“Dear Steve,

Looking back, I see that while I thought I had a decent budget in place, I was not budgeting correctly. I did not have money set aside for simple things like new shoes or car maintenance. Whenever an unexpected expense came up, I just put it on the credit card and didn’t worry about it much.

Everything was “ok” until about 4 months ago when my wife lost her job. She managed to find a part time job to help, but no full time work as of yet.

Over the past few months to make ends meet, our savings has been wiped out, I’ve stopped contributing to my 401k, we’ve stopped putting any money into savings, and we are just barely able to make it from month to month.

We haven’t had to start making any decisions like “do we pay the phone bill or do we pay the credit card bill” yet. Nor are we behind on any payments yet. However, we are on the razors edge of loosing it all. All that needs to happen is a few hundred dollar car repair and we are in serious trouble.

This past week, we spoke with a debt management company. Money Management International to be exact. They have compiled a plan for us that with a $420/month payment plan, we could have our ~$20k in credit card debt paid off in about 58 months. However, I fear that even on the DMP, we will be just as close to loosing it all for the next 58 months (rather then it taking closer to 30 years because we can only afford the minimum payments on our cards). I don’t want to hurt our credit and I don’t want to start getting phone calls from collectors. It just seems like no matter what we do now, we are only 1 minor car repair or some other bill of a few hundred dollars that will put us over the edge.

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Do you think in our situation, a Debt Management Plan is a good idea (and we just hope that unexpected bill doesn’t shot up) or should we be looking more at bankruptcy?


Dear Kirby,

To be direct, based on what you shared, I think you should be looking more at bankruptcy and here’s why.

The MMI debt management plan appears to leave you one unexpected issue away from it failing. If you did not have the debt management payment you could instead begin to save that money in an emergency fund to protect yourself.

Imagine what life would have been like in the past few months if you had not managed to save money previously?

At this point the most important question you need to ask yourself is if it is wiser to use the next five years to try to fix the past or to rebuild a better future. If you feel looking ahead to the future is the better idea then click here to find a local bankruptcy attorney.

I know you don’t want to hurt your credit but either way there is going to be some credit pain. After bankruptcy, credit can be easily rebuilt and I even wrote a guide on how to do that.

You might want to read what Lisa just sent me about her experience in facing her debt and deciding on bankruptcy.

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.


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.

About the author

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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