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Is Bankruptcy a Moral Thing for Me to Do?

“Dear Steve,

To make a long story short, two things contributed to my heavy debt-load: 1) a couple of years ago, I was expecting a large commission on a piece of business I sold that was awarded to the company I worked for…and that particular commission would have wiped-out my debt (at that time)…plus some. However, due to no fault of my own, the deal went sideways, thus the company refused to pay me even though I secured the business.

Then, to make matters worse, the company hit finacial straights (not really a surprise) and I was laid-off…for almost a year. So there you have it. My family and I survived a couple of years on credit card debt…and I’d really like a way out. Please offer your expert professional advice, if you can.

Unfortunately, I have approximately $90k of credit card debt. Fortunately, however, I’ve been able to secure a decent job and have been able to stay up with the minimum payments. But, unfortunately, I cannot see any way to pay off this heavy debt anytime soon…or maybe even in my lifetime! Yes, the credit card companies (banks) have me just where they want me.

What is the best way to go about relieving myself and my family from all this debt? Is it negotiable? Is bankruptcy a wise alternative? Let me know what you think…thanks, Steve.

Rick”

Dear Rick,

First off, thank you so much for reaching out to me for help. You’re right, the banks have you right where they want you. Consumers that have the capacity to pay but not much more than the minimum payment create the most profit potential for the creditor. At the rate you are going you’ll pay for years and make little progress.

Rick's Right in the Sweet Spot

The Moral Slippery Slope

Usually about this time when I’m standing and talking to a bunch of people is all about what is or is not moral. One point raised will be that since you took the credit then you have a moral obligation to repay it. I get that but at the same time if you negotiated a reduced debt settlement and the creditor agreed to it and accepted it, is that immoral? They’ve agreed to modify the amount the expect back and so have entered into a new promise with you and you’ve now met that promise.

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And then we stir in the issue of caring and protecting your family. Do you have a greater moral responsibility to repay your debt above all else or to make sure you and your family is protected moving forward? Is that a greater moral responsibility?

The bottom line is there is no right answer to any of these situations and questions and it’s not like we are playing an after dinner board game here, we are playing with your life.

The one factor that the moral game players overlook is that all of the factors they put into the mix are all in the past and that makes those arguments academic. What’s more important, right now as you read this, is what is the most moral thing for you to do from this day forward.

So What Now?

The issue you face is not one of do this or do that but what approach best fits your life moving forward. It’s a lot like baking a cake. We need the right ingredients in the bowl so we can create the best bater for the type of cake we are trying to bake.

So what are the important ingredients. Well we need to know:

  • Is your stress level too high, sustainable, or we need to lower it.
  • What is the future look like for you being able to sustain your current income.
  • Are you just getting by but not able to save money to protect yourself from financial emergencies.
  • How is the family or those around you coping with the situation.
  • Is your current situation impacting your life in negative ways?
  • Is it more important for you to please your creditors or do what is best for you and your family moving forward?
  • Is this a time to mend the past or fix the future?

So then we stir all those bits into the bater and together they make the best cake possible.

Let’s do this, why don’t you take a stab at answering those questions for me in the comments below and then let’s come up with a strategy that best fits you. Doe that sound like a good plan?

Sincerly,
Steve

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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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.

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