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Home > Ask The Get Out of Debt Experts > I’m Two Weeks Away From Unemployment. Is Bankruptcy Something Worth Looking At? – Mel

I’m Two Weeks Away From Unemployment. Is Bankruptcy Something Worth Looking At? – Mel

“Dear Steve,

Two years ago I lost a job of 9 years to a change in command. I was doing well there making $96k a year. I found short term job for 4 months but they had to down-size to stay in business. After that I was off for 1 year. My wife and I, stupidly, used credit cards to take up the slack while I found another job. Another job fell in my lap and I was making $150k for th last year. For reasons of us not being focused we did not pay down the debt. Now I am 2 weeks away from unemployment, I have $74k in CC debt,and $69k in a second mortgage on my house. My wife has over $100k in a retirement and I would love to keep that where it is if at all possible. The CC rates are killing us.

Is bankruptcy the answer or is there a debt consolidation firm that could help us re-negotiate the rates and make them more manageable? Any advice would be appreciated.


Dear Mel,

So let’s say you contacted a credit counseling group to help lower your interest rates. While your interest rates will be lowered, your monthly minimum payment will remain about the same. So that’s great but it does not address the underlying problem of cash flow on unemployment.

Making or entering into payment arrangements on unemployment is not wise. Unemployment benefits do end and unless your debt has been extinguished before the benefits end then you will still be left in a jam if you have not found a job that pays the same or more. Besides, unemployment benefits are so low that making payments and keeping yourself sheltered and fed are often not possible at the same time.

As long as you leave the money in the retirement account it will be protected from creditors and grow until you need it in your old age. I’d rather you leave it and file bankruptcy then drain it and have to eat dog food later to get by.

Bankruptcy also offers you a possible benefit of reducing or eliminating the second mortgage on your house. My advice is you should talk to a local bankruptcy attorney.

You can click here to find a local bankruptcy attorney and if you’d like a second opinion about your situation or a personal consultation by another debt coach, please feel free to contact Damon Day.

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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