“Dear Steve,
Up until about 6 months ago life was good and there wasn’t any problems, my how life can change in a heartbeat.
My wife and I had alway more than adequate income for our expenses but a seperation has left me with more debt than I can handle in just a blink of an eye.
Right now I am looking at $41,000 in 6 credit card accounts. Add to that 2 new vehicles (7 months old) and 2 motorcycle payments and mortgage, not to mention just the basics of home living, I am about as broke as they come.
Bad decisions have lead to this, but I can’t go back on what should have happened, I have to deal with what I have. I have gone through savings to make ends meet, but that is going to change very soon. I will say that I am not behind on any payments on any of my debt as of now. I had recently attempted to refinance my home and cash out which would have cleared all my credit card debt (as I would have qualified with enough equity) but my credit score (2 new vehic les) and debt to income ratio, that wasnt going to happen.
I have put all my debt on paper.. balances, interest rates, minimum payments etc. and what I need to reduce in income per month is about the $850 a month on the minimums I am paying on the credit cards. For that reason, I don’t feel a debt management plan would work for me because it wouldnt significantly reduce my overall monthly expenses.
I am quite a bit upside down on vehicles so selling isnt an option because of what I would have to come up with to settle the debt. If I give the vehicles back, I am in the same boat winding up oweing several thousand. Given my current situation I dont feel bankruptcy would be best either considering the recent purchases would be looked at that I am abusing the system, which is far from the truth but on paper it wouldnt look great.
Right now my monthly expenses of mortgage, vehicles and credit cards is $3500. My current monthly income is $4100. When you add in utilites, gas, food, etc, its easy to see how overextended I am. I really have no plan other than I created this problem and now I need to fix it.
The sad part is from what I have read, nobody really wants to work with you if you havent been late or show signs of trouble. I have considered writing letters to all my creditors, mortgage company and even where the vehices are financed and give them the documentation to back up my claim that I need help and see if that would help. I know the word “bankruptcy” would make auto lenders cringe but don’t know whether to even mention that even if thats not an option.
I don’t want to just walk away from my problems but I need help. My wife even though seperated, cannot assist any in any of the debt. She does have a job but can’t meet her own obligations, so this all falls on me. I sincerely hope this is a minor setback and things will get better in the future, but in this economy, I can’t guarantee anything.
Do I try debt management knowing any amount going to credit card debt at the present time isn’t going to help ? Do I contact all my creditors myself, give them my financial situation and ask them for help or do I look at bankruptcy as a last option. As I stated, I feel pretty sure it would be looked at as I made these purchases to just turn around and file bankruptcy and thats just not the case but I understand where they would be coming from.
Gary”
Dear Gary,
As a fellow motorcycle rider (Goldwing) I feel your pain. This is a classic example of a lot of things. First and foremost it typifies the problem that credit agreements are absolute but life isn’t.
I hear your bargaining and hoping things could be different, but they just are not. Draining your assets to make minimum payments is not the answer. That’s just going to leave you still in debt and cash poor.
I grant you that my view of this situation is influenced. But it’s influenced by years of watching people go through similar issues and hit the same wall.
At this point I think it is clear that your past obligations don’t fit inside your current income. When you had two incomes you were able to make ends meet. Now you have two households trying to make it on one and separate incomes.
Even if you could afford a debt management plan I would be very worried it would leave you unable to save to replenish some of the money you’ve drained and used already.
Right now I need to get you taking action to address the past debt and action to protect yourself moving forward.
I want make sure that you move forward with confidence. The only way for you to make sure you are following the best path for you is to not make assumptions about solutions like bankruptcy.
If you went down the credit counseling path you would make payments for the next five years or so. It sounds like you’ll be limping along and not able to save. So essentially you’ll be trying to repair your financial past while ignoring your financial future.
The more logical path would be for you to click here to find a local bankruptcy attorney. Go talk to the attorney about your specific situation and get the real facts about bankruptcy.
It sounds like you are going to make a permanent break in your relationship with your wife so making a break with your past financial life at the same time will give you the opportunity for a fresh start and a second chance with your money. Don’t worry, it’s actually ridiculously easy to rebuild credit after bankruptcy.
You can either limp along for the next five years and hope a debt management plan works for you or you can pursue bankruptcy now, probably discharge your debt in a few months, and start over with a fighting chance of doing better. You’ll be able to save money to protect yourself and if you learn something from this current situation it has not been wasted.
There is a solution here. I will help you get through this. Your future life will be better and you are not a loser or reject.
I don’t know about you, but for me, riding my motorcycle makes me very happy. Maybe you can do me a favor, put all of this aside and take a big ride soon. I wish I was there riding with you.
Please post your responses and follow-up messages to me on this in the comments section below.
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.
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