Disabled, Maxed Out, and Want Good Credit. – Kathy

“Dear Steve,

Credit cards are maxed out and living expenses keep going up. I am current on all bills. I use to work 2 jobs and had plans to be debt free by Sept. 2011, became disabled a little over 2 yrs ago and now am on a fixed income. I don’t want to harm my credit any more than I already have. I will need to purchase an inexpensive car in the near future. My credit is very poor at this time. Any suggestions? I will very much appreciate any advice you have.



Dear Kathy,

Thank you so much for writing me and asking for help.

It sounds to me as if you’ve found yourself in a situation where you are forced to make ends meet using credit to bridge the gap. That has resulted in you being maxed out. It is what it is.

The bigger underlying issue here is it seems you have little disposable income to meet your regular obligations and then pay additional back to your creditors each month, especially with increasing living expenses.

To improve your credit you’d need to reduce the balances on your cards down to below 35% of the credit limit and pay your bills on time. If we want to bring your credit score up we need a good healthy report of recent credit account activity to do that.

And while you want to bring your score up and buy an inexpensive car, just based on what you shared, I’m not sure I really see that happening. It seems unlikely that with your medical condition, fixed income, and rising living expenses that you will be able to dig yourself out of the financial hole you are in with maxed out credit. Ultimately you will most likely have to consider bankruptcy to eliminate your unmanageable debt or limp along.

Do you have any assets to speak of like loads of cash in the bank or real estate equity? If you do then that creates a different solution. If you don’t, then one of the solutions here is going to sound odd, but it would be to do nothing and let collectors come after you. They would not be able to garnish your income but would probably sue you and win.

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2 thoughts on “Disabled, Maxed Out, and Want Good Credit. – Kathy”

  1. Steve- thanks for getting back to me.  The only asset I have and own outright is my mobile home in which I live. I also am making paymets on IRS bill, which should be paid off when filing 2011 taxes. Also owe back taxes for the state of Ohio whom I have not made arrangements with or contacted yet-I
    owe them a little over $2000.00 and will owe more when filing 2011 taxes, don’t have enough income to take extra out.
    So, should I just let all go and wait to file bankruptcy or just not file and let all go. If I let all go, I’d have enough to pay the taxes.
    I forgot,  I do have 2 laptops from Dell, whom I owe a little over $4000 (one does not work), would they confiscate them  do you think?
    Or should I just file for bankruptcy soon for all and can you file on taxes?
    Thanks so much- Always lots of quesions with usually nobody to answer- so thanks again, you are a very appreciated man.

    • Kathy,

      Nobody wants your old laptops so don’t worry about that.

      I’d just find a local bankruptcy attorney and coordinate the process of the order on filing. The bankruptcy attorney will tell you to stop making payments once you get going on the process.


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