We Are Living on Overdraft But Want to Avoid Bankruptcy. – Ann

“Dear Steve,

We have about 35k in credit card bills. There’s 4 cards, one is the biggest, and it’s the overdraft card for our checking account and it’s steadily growing. We’re living beyond our means i guess. Trying to find ways to save money but medical bills and gas costs are killing us these days..We’re able to pay our bills, but like i said, we’re getting overdrafts onto the largest card all the time to where it’s growing, so technically we’re not able to pay them. So every overdraft charges us 35 dollars, and we get multiple ones every month. Two car payments, one is very economical, one not but my husband and i go separate directions to work so we can’t really carpool

Would a credit counseling work for us or do you feel we’re in over our head to where things just need to be cut down somehow, possibly check with the cc companies? (percentage rates for cc aren’t too bad)..Refinancing the house won’t work as housing prices dropped so appraisal would not be where it needs to be. My husband seems totally against the bankruptcy idea, and i’m not thrilled about the idea either..Thanks

Ann”

Dear Ann,

Generally credit counseling is a good approach when you are able to afford the monthly minimum payments on your credit cards.

What concerns me is that while you may have been making the minimum payments until now you are in fact running negative each month and using borrowed money to make ends meet. If you enrolled in a credit counseling program the cards would be closed and then how would you make ends meet? I think you’d probably be quickly sunk.

I certainly understand the hesitancy about bankruptcy but let’s evaluate what is the most logical solution for you and not which is the least palatable, emotionally.

Please use the free How to Get Out of Debt Calculator to review your options. Then come back and post an update in the comments and let me know what you think makes sense and is reasonable.

We can then talk about the pros and cons of that approach.

Steve Rhode Debt Coach and Author

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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