I’m Moving Back With My Stepmother. Should I File Bankruptcy or Go With Credit Counseling? – Maya

“Dear Steve,

I currently bring home $2500.00 per month and I have been fully employed in outside sales for the last year. I have credit card debt of $45,000.00. I am trying to bring in more income and cut my rent costs by moving in with my stepmother if she agrees. Barring a new position or job, I’m afraid that I’m mired in debt and I don’t spend extras on clothes, etc. My monthly $2500.00 is fully budgeted out to cover all basic expenses. I am always looking for new work, but the situation’s bleak, and I was unemployed for 2 years, which is when the majority of this debt was incurred.

Can you advise me if I should seek the assistance of credit counseling for debt consolidation or should I file Bankruptcy Chapter 13? Also, do you have referrals for a bankruptcy attorney or credit counseling service that I could use that are honest that I can use depending upon your advice? Thank you in advance for your assistance and I’m so happy to have found your website!


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Dear Maya,

The only variable is if the savings in rent allows you to easily meet your monthly credit card debt payments. If it does then simply repaying your debt as quickly as possible by focusing on the highest interest rate first make the most sense if you don’t want to seek any outside intervention.

As long as you can afford the monthly minimum payments, and you can still save about $100 a month without touching it, except for an emergency, then a credit counseling approach might make some sense. In the credit counseling debt management plan your interest rates will be reduced so you’ll make more progress on paying off your debt faster. The downside is your credit cards will be closed. You can click here for credit counseling information.

If the move still just keeps you treading water and you are barely paying your cards and you can’t save money at the same time, then a bankruptcy might make more logical sense. If you filed bankruptcy, most people qualify for a Chapter 7 bankruptcy and their debt is fully wiped away within a couple of months. You could then make the most of your time back with your stepmother and focus on rebuilding your credit. You can click here to find a local bankruptcy attorney.

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Let’s do this, talk to both the credit counseling and bankruptcy attorney, then come back and post an update for me in the comments section below about what you learned.

Together we can get you through this.

Damon Day - Pro Debt Coach

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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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