Ask The Get Out of Debt Experts

I Don’t Believe You Will Help Me for Free. – Mona

“Dear Steve,

I stumbled onto your website quite by accident, and have been reading the various articles and information you’ve provided. I am amazed that you would offer your services of financial counseling totally free, as I’m reminded of the old adage – ‘if if sounds too good to be true…’ However, out of sheer desparation, I’m going to take the chance and provide you with information about my current situation. I’m trusting your promise to safeguard my privacy.

Sole sources of income: 1) A full-time job with a decent salary of $39,000/year, 2) An “as needed” transcribing job that earns an average of $100/month (after taxes). (I have the bare minimum of taxes taken out of these checks).

Expenses: 1) Mortgage payment – $372.21/month (payoff balance -$ 29,144.41) 5% interest
2) Equity line of credit – $145.17/month (payoff balance $13,372.74) 6.20% interest
3) Discover Balance $14,439.16 – (making minimum monthly payments) Interest rate – 14.99% on $11,528.69 of the balance, 23.99% on the remainder of balance – $3,040.22
4) Citibank Balance $16,393.53 – (making minimum monthly payments) Interest rate – 4.99% for the life of the balance of $14,984.15 – on the remainder – 19.99% – $ 1,553.63
5) US Bank Balance $7,718.53 – (making minimum monthly payments) Interest rate – 11.99% on the total balance
6) Other household expenses (not including mortgage) utilies, gas, food, etc… paying out an average of $500/month

I have a coworker who did a consumer debt reduction plan but he has had numerous problems, including more than one supboena because he isn’t paying his credt card obligations. Inherently, I have a problem with these types of companies because I feel that I acquired this debt of my own volition and it’s my responsibility to pay it off in full. I hasten to add that I am no longer using credit cards and have not been for quite sometime (I fully recognize the error of my ways).

While I was able to negotiate the 4.9% fixed interest on my Citicard, I’ve been unable to get US Bank or Discover to lower my interest rates. At this stage of the game I feel like I’m just spinning my wheels and not getting ahead. The income I earn from my very part-time transcribing job (avg $100/month) I use to help pay for household expenses (gas, food, etc…) I usually just cash this check and try to live on that cash, only writing checks for my other expenses (utilities, mortgage, CC bills, etc…). I eat out, on average, once a month, and shop at thrift stores for clothes as needed. I don’t really have any other expenses in terms of entertainment – usually just watch TV at home or go to friend’s homes.

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I’m eager to get out of debt as quickly as possible. Is there something I’m missing here, and some other way I can chip away at these bills faster? I’ve tried selling items on Craig’s list, and have tried garage sales but not much success there.

Any advice you can offer would be most appreciated Steve, but only if it’s really and truly free advice.

Thank you very much, and I appreciate your time,


Dear Mona,

Well here’s an obvious statement, you have more debt than you can handle. So what are we going to do about it?

I totally get the argument that it’s your debt and you feel a moral obligation to repay it. But the problem with that argument is if you are going to honor that position absolutely then you just need to keep paying the debt you’ve got according to the terms you agreed to. It’s not like you can say you want to artificially reduce your terms and that honors your original promise.

So let’s look at some alternatives then. The approach your friend is using sounds like it fits in the category of debt settlement. All of the problems your friend has faced and will face are typical with that approach when someone makes years of payments into a fund to try and settle their debt. You might want to take some time to read my article, The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy.

If you could afford the dollar amount of your monthly payments but needed an interest rate reduction then a credit counseling approach might be a good idea. In this approach your creditors, through the help of a credit counseling group, would probably reduce your interest rates so you could get totally out of debt in about five years or so.

But it does not sound like you can keep up with the minimum payment amounts you are currently paying. In fact it sounds like you are limping from paycheck-to-paycheck and unable to save any cash aside in an emergency fund so any unexpected expenses wind up on credit. Does that sound about right?

And when you mentioned to me you’ve been selling stuff to help get by, that’s a big alarm to me. You see, once the stuff that will sell is sold, what then? It’s a downward spiral.

So, we are left with the symptom, a lot of debt. How you got into that amount of debt is the real issue that needs to be addressed. One possibility is that you’ve been under earning for a while and slowly used credit to fill the income gap and make ends meet.

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Whatever the reason the time has come that you need to reverse the path you are on. In order to do that you either need to increase your income, reduce your expenses, or we need to alter the debt in some other way.

It sounds like you’ve done all you can with the income and expenses so we are left with altering the debt. The way to do that is with the B word, bankruptcy. Why bankruptcy? Because bankruptcy is the ONLY way you can either discharge the debt or modify the debt to fit your situation in such a way that you are protected from your creditors and they must agree to the plan.

Even if you own a house you can still seek protection under bankruptcy and keep your house. In order to research your situation I would suggest you click here to find a local bankruptcy attorney and go talk to them. It generally costs nothing to consult with a bankruptcy attorney and by the end of that process you will have an understanding about what bankruptcy means for you.

You may have a visceral reaction right about now that bankruptcy is not the “moral” path you want to follow. But before you start judging the process you need to answer the following question. Do you have a greater responsibility to fix the past and make all of your agreed payments or fix the future so you are financially safer and can get by?

There is also nothing that prevents you from seeking bankruptcy protection and latter repaying your creditors the debt the court legally discharged if you what to full honor your moral commitment to repay all of your debt.

The purpose of bankruptcy is not to have a party and walk away from your debt. It is to adjust your debt so you can safely live moving forward and to do it in such a way that is fair, reasonable and legally binding on your creditors.

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.


  • Dear Steve,

    Thank you very much for your comprehensive advice for my situation. I really appreciate your taking the time to write and help me see this from all angles. I actually did have a free consultation with a local nonprofit credit counseling service and they told me that they wouldn’t be able to negotiate a better interest rate then what I had already done with some of my cards. The service fee they would charge for managing the payments for me, in the end, would have made my monthly payout greater than what I’m doing on my own, so they even advised me to keep doing what I’m doing. But I will look into this bankruptcy alternative. I am not thrilled with the idea – I am worried about the impact it will have on my future credit. I have worked with a few people who filed bankruptcy and many years later, they are still trying to repair their credit.

    Thanks again,

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