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My Partner Just Filed for Bankruptcy to Discharge His Debt. – Norman

“Dear Steve,

I read most of the questions posed to you by others and most apply to me. I have a 38K unsecured debt plus personal loans (one of which is my sister’s credit card10k). My partner just filed for bankruptcy to discharge his debt but keep our mortgages (to keep the home) and car (its in both our names). However, I am still behind paying my debt in at least 5-6 credit card companies. The fees and late payments are piling up. I already filed bankruptcy 10yrs ago (no home at the time). Living in California, I don’t foresee us getting equity in the property(value is less than the amount owed).

I have thought about debt management plan but it seems to me that as you mentioned, it really is still paying the same amount only organized to pay one party to distribute your payments. Why are debtors not negotiating with individuals rather than debt management co. (are their collussion or kickbacks possibly). Should I try to negotiate? I actually have one card that withdraws money automatically so no monthly late fees and zero interest, why doesn’t other companies follow suit and skip the middleman?

So is a debt management plan good if you might lose your job in the future (not guaranteed) and unable to keep up? My partner is on a disability and fixed income so his income barely increases (only SSI). Are there companies that can negotiate to pay on your debt lower than what is due on a payment plan?

Sorry for all the questions.

Thank you.


Dear Norman,

You’ve made some excellent observations about creditors action in a debt management plan or a credit counseling program. Creditors are actually a bit tied from reducing the payment more because they don’t want the loan to have to be mandatorily charged off once it gets 180 days past due. This is actually a requirement of the Office of the Comptroller of the currency. It’s just one of those black holes created by well intentioned legislation and the creditor not wanting to show a bad loan on the books.

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There is nothing preventing you from negotiating directly with your credit card companies, if they want to. Try it, all they can say is get lost.

A debt management plan works best for people that feel they can make the minimum payment for the next five years and pay their debt off in total. If the payments are interrupted then the plan will fail.

The only way to eliminate the debt for certain over the shortest period of time would be a Chapter 7 bankruptcy. If you qualify for a Chapter 7 the debt will be discharged in a few months. It is also cheaper than a debt management plan over the life of the plan. For example, a Chapter 7 bankruptcy will cost about $1,500 but a debt management plan over 60 months at $50 a month will cost about $3,000.

I would suggest that you strongly consider bankruptcy. You can click here to find a local bankruptcy attorney. Bankruptcy will discharge the debt you can’t manage anymore, will allow you to focus some energy on the card for your sister, and he you and your partner get by in what sounds like a difficult situation.

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 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.


  • I would not do a thing that wasn’t coordinated with the bankruptcy attorney. An asset transfer prior to bankruptcy can be a big red flag. My advice would be if you liked the guy and think he’s the one you’d go with, pay the $250 and make sure you get all your questions answered.

    I think bankruptcy is the right move for you but I don’t want you making a move towards it until you’ve had all your questions answered by an attorney and you are 100% certain the benefits of bankruptcy fit your situation.

    Thanks for the update.


  • Hi Steve,

    Update, I consulted with our bankruptcy atty and he did advice that the best route is bankruptcy to get out of debt. Of course, I asked so many questions, he cut me off by saying he would have to start charging the consulting fee($250 towards the bankruptcy fee). No problem on that. I have a question he partially answered. My name is in a house in Nevada along with my siblings that my parents bought for them to live in. My dad passed away and my mom lives there. The house is fully paid and my oldest brother who lives in Nevada helps pay for the R.E. taxes for my mom who is only on SSI. Should I have my name removed from the title before I file for bankruptcy? Previously thought of getting a home equity loan on the property but my siblings and I are spread around the country and the paperwork to do such a transaction (and my siblings don’t want to do it anyway) makes it prohibitive. Should I start working on getting my name out of the title.

    Thank you.


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