My Debt is Overwhelming and I’ve Had Some Very Dark Thoughts Lately. – Lee

“Dear Steve,

I am a single male, 46, with no children or other dependents, living in the San Diego California area. I was laid off and have been unemployed since Jan 2010. I have a monthly mortgage of almost $3000 that has gone unpaid since May 2010. The mortgage total owed is $400,000.

I have been on unemployment. I have about $6000 in the bank. My only debt aside from this mortgage is about $5000 in credit card debt, on which I am making minimal payments to keep current. All my other bills are still on autopay and are current.

My house officially went into default about 1 month ago (Sep 14). My mortgage lender has offered the option of doing a short sale. Apparently all I need to do is pick a realtor for this purpose and the rest is done between the realtor and the lender. I have been putting this off because I am under crushing stress and have lost all ability to make decisions, and have no idea where I am going to live etc.

My other choice (aside from just letting foreclosure happen) is to pay up the current deficit (probably around $17,000 by now) and then stay current. I have a job interview this week, so I may possibly be employed again soon. I also have a possibility (not certain) that I can cash out a life insurance policy with an equity of about $20,000 which could be used for the deficit.

Finally the question: Would I be better off doing the short sale, and getting this house and its huge expenses out of my life, or would I be better off if I could become current on my mortgage and then face continuing the steep monthly payment and upkeep expenses? I just don’t know how damaging the short sale is going to be as a black spot on my credit which may affect employment offers, being accepted as a tenant, and getting loans in the future. I also have a ton of “stuff” here (4 cars, and a houseful of everything) that I can’t even begin to imagine how to sell.

Please help me – I have had some very dark thoughts lately, and have no one in my life currently who I can lean on (and thus no where to go etc). Like I said, I have lost my ability to make decisions and can’t think clearly about what I must do and how. I really don’t have any need of this house nor do I enjoy it anymore, however the idea of finding somewhere else to live is a huge scary black hole – I have no one I could stay with or etc.

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In summary, my main question is whether to choose the short sale or try to become current and continue the mortgage. Also if you know of how I can go about selling off my possessions in the most economical way (are there people who can help with this?), that would also be enormously helpful.

Any help you can give would be unspeakably appreciated. Thank you for this, and for the help you have provided others.


Dear Lee,

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

This is definitely a crossroads for you and one I’m going to help you through. You are not alone, even if it might feel like it at the moment. You mentioned some dark thoughts and I suspect you’ve contemplated killing yourself to end the pain. You would not be the first person to have those thoughts. And while they feel real and viable, they are not the path you are going to follow. If you do decide to harm yourself or do something “dark” I will fly out to San Diego and personally kick your ass.

This might be a perfect time for you to eliminate clutter of all types in your life. There is a tremendous amount of freedom when you simplify things.

I’m going to give you a step-by-step plan here on what I suggest you do.

  1. If you have health insurance I want you to schedule an appointment with your doctor ASAP and go in and talk about your depression. Depression leaves you feeling dark, hopeless, and unable to execute a plan. If your doctor feels talk therapy will be helpful, that’s great, but there are some really good medications available as well that will help remove the curtain of depression you are smothered under at the moment.
  2. If your mortgage is upside down, meaning you owe more than the home is worth, you could try the short sale route but if you wanted to start a new life as quickly as possible I’d consider handing the house back to the bank and going bankrupt to discharge your remaining liability. The advantage of bankruptcy is that it closes the door quickly and under the law.
  3. If you are looking for a nice San Diego bankruptcy attorney then consider contacting Carl Starrett.
  4. Right now you don’t own your stuff, it owns you. This sounds like a conversation I had recently with Adam Baker. You can watch it here. With all the stuff you have hanging around this might be the time to sell everything you can and downsize your life to eliminate all the demands on your right now.
  5. If you start selling everything you own right now then you can use that money to live on if you are unemployed.
  6. If you want there are eBay or Craiglist selling assistants that could come in and help you sell all the stuff for a percentage. You would not have to deal with it and it would be sold.
  7. If the sale of the “stuff” resulted in significant money you might want to put that money in a protected retirement account and file bankruptcy at a time coordinated with your bankruptcy attorney. This might protect those funds and allow you to save them for the future.
  8. After this is all completed you’d have less stuff to own you, you could rent a great place to live and your life would be significantly simpler and manageable.
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The plan I’ve designed for you will allow you to be able to find outside people that can help with each of the tasks so it would not be so overwhelming to you, so it would not get done.

At the end of this you will have received treatment for your depression, eliminated the physical baggage that is bringing you down, simplified your life to give you hope and options, and put this part of your life behind you.

Please update me on your progress by

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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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