My Mental Health Issues Are Keeping Me in Debt and I Can’t Find My Way Out. – Greg

“Dear Steve,

Hi. A little background info: I have a 4 yr degree, a Masters degree and K-6 Teaching certification, all of which I have little to no work experience in.

I have been diagnosed with a few mental illnesses that hinder my quality of work and has contributed me to leaving stable, good paying jobs.

I qualify to apply for SSDI but financially speaking, it makes no sense long-term. I am now on unemployment, however. I am in debt (mortgage, student loans, one credit card, home equity line of credit, loan, heating/air loan, car loan, medical bills, checking account went into collections, I may owe on a teaching fellows loan if I don’t teach K-6 for 3 yrs.) in the tune of almost $200,000.

My monthly bills are ~$3,000 per month (included in that figure is child support). I currently make only $1,650 a month with unemployment. Needless to say, all my savings are now gone and I am about to be in a financial mess. In the next month or two, I can see that I am going to have to stop paying certain bills altogether.

I have a lot of education but I find it very difficult to function on my jobs when I had them (both times I left voluntarily; I felt like I was at my wits end and was going to have a breakdown or die). I do a bit of independent contracting that nets less than $50 a month on average. I am even to the point where I am going to rent out my house so that I can rent out a cheap room somewhere to lower my bills. My credit score is about 678 or so as of now (no delinquent accounts or late payments yet).

What do I do? I sometimes just want to stop paying the unsecured debts…I simply can’t afford to pay them (I am looking for a work, but I am afraid that I will end up leaving after a period of time, like I always do–running from myself). Should I only pay the essentials and just let my credit suffer if I can’t pay the other accounts?

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Dear Greg,

Yours is a classic example of how the underlying issues lead to problem debt and the debt is just the symptom. It’s a chain of issues that create a situation where you are unable to earn sufficient money to repay the debt you took on when the plan was to teach.

My advice is based on my observations of many others over the years that have struggled through similar situations. So please take it in that context.

If I look in my crystal ball I see that the chances of your getting the mental health issues under control rapidly is probably not likely. It’s going to be a longer term goal to do that but one that should be pursued.

At this point, in an effort to not overwhelm yourself and give you a chance to recover, you may want to consider selling the house or handing it back to the bank if you owe more than it’s worth. I’d also suggest you click here to find a local bankruptcy attorney and talk to the about what bankruptcy would mean for you. It’s a free consultation.

A bankruptcy won’t discharge the student loans. But if those are government backed loans you may qualify for a payment plan based on your income. See the Income Based Repayment Plan, or IBR.

I’d like to see you simplify your life and financial life down to the point where it is manageable and without pressure. This approach will almost do that. Reducing the focal points of pressure will give you a greater chance of healing quicker.

You might even be eligible to discharge your student loans due to disability but that’s a longer term solution.

Let me know what you think of this simplify and tackle approach. Once you build a solid foundation with your mental health issues and increasing income then we can focus on returning you back to buying a house again and more.

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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.
Damon Day - Pro Debt Coach

Steve Rhode

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