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Kayte Has Drained Her Savings And Can’t Pay The Bills Anymore


“Dear Steve,

My husband and I have roughly $75,000 in credit card debt. Due to the economy, we both have experienced a substantial decrease in our income (i.e., commission based pay). We have exhausted our savings trying to keep up with our mortgage payment, credit card payments, car payments and other cost. We are now at a point where we can not pay all of our bills.

Would a ‘debt management’, ‘credit counseling’ or a ‘debt settlement’ program be the best way to improve our financial situation?


Dear Kayte,

Thank you for trusting me enough to send me your question. I only wish you had found me before you spent your savings trying to stay current.

The problem, in situations like that, is that the savings keeps you afloat until it is gone, and then you are in double trouble.

Debt settlement would not be the best path since you don’t have any money to make large settlements right now to eliminate some of those debts. And a credit counseling or debt management program might help with reducing the interest rates on your credit card debts but it is not going to help reduce your mortgage or car payments.

If you can afford the mortgage, car payment and reasonable living expenses, without the credit cards, then eliminating your credit card debt through bankruptcy might be worth looking into. I’d suggest that you speak with a bankruptcy attorney and ask for a free bankruptcy review to discuss your situation.

If you still can’t afford to live within your income even after eliminating your credit card debt then more dramatic and major lifestyle changes will be in order. These may include selling your home and renting for less money or selling the car and buying a less expensive vehicle.

Generally the largest monthly expenses for families is the mortgage, health insurance, car payments, utilities, and food. It’s hard to find easy reductions in those items without making major changes in where you live, what you drive, etc.

One major expense that I always hate to see people drop is health insurance. There is no doubt that health insurance is ridiculously expensive. For many the monthly amount spent on health insurance and medications is more than a mortgage payment. But if you don’t carry medical insurance, just one simple accident can clean you out and take you to bankruptcy.

Please let me know what you decide to do.


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.

1 Comment

  • The Banks and financial institutions are the major cause of this economic crisis like Goldman Sachs,Bank America,Chase ,Wells Fargo,Citi Bank and the list goes on and on.Billions of taxpayer money has been spent to bail them out.Millions of people have lost their business,homes, Retirement savings and their jobs because of what they did.Where is the regulatory reform?Why are these Banks allowed to charge usurious interest rates and fees? I received a letter from Senator Jack Reed about his efforts to stop the abuse before we all go bankrupt.Seems to me a lawsuit is in order.

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