I’m on a Debt Management Plan But Still Struggling. – John

“Dear Steve,

I am well educated, have a good job & make decent money.

About 5 years ago we purchased a house, which in 1 year rose in market value from $109K to $249K, we figured we were sitting on a gold mine, so we borrowed against it to pay off my wife’s legal bills in getting sole custody of her daughter. In the span of 3 years, we had a series of expensive home repairs (=>$42K), medical emergencies (=>$26K), etc. which we all paid by credit cards, putting us in substantial unsecured debt, but as our house value rose, we figured it was ok as we planned to sell the house & pay off all that debt easily. In 2010, our house flooded (we had no flood insurance), our daughter had a dental emergency, we lost $22K in a bad investment, got divorced, house value plummeted & I was forced to short sell after I couldn’t pay the mort ($1,600/month) on my own, & we had a Interest Only Balloon Mort & no one would refi me. This all left me with approx $40K of unsecured (Credit cards), & $15K of secured (HE LOC) debt.

Looking over the background info, I have sold almost everything I owned of value, I traded in my truck for a small car (less monthly payment, less fuel costs, less insurance), I moved into a small apt (less monthly cost), I entered into a debt consolidation plan through ACCC which shut down all my credit cards, negotiated a lower APR & automatically pays them all w/one monthly payment, etc.

I’ve tried everything from bringing my lunch to finding the cheapest fuel, stopped all my old expensive vices (smoking.drinking, going out to dinner, etc) but no matter what I do, every month Im barely squeaking by ahead of my next paycheck, and if anything out of the ordinary happens (e.g.: car repair, co-pay for med appt, buying a gift, etc) I have to borrow money from friends & family, which is now growing as I can never seem to pay them back. I make approx $3500/month, & paying all my bills (nothing outside of necessities, leaves me w/a pprox $72/month left over)

I’m out of (what I call) “Wiggle Room” & outside of winning the lottery, or telling a creditor I cant & wont pay them, Im stuck.

I need advice on what my options are.

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Some of my family/friends are saying I should consider bankruptcy, but Im hoping there may be other solutions, if not, what are the repercussions? What could happen if I tell my HELOC creditor that I wont be paying them versus telling all my creditors that I won’t?

It seems like there’s help out there, but its usually targeting either debt consolidation, or bankruptcy and not much in-between.

I sincerely appreciate this site and the help you give to the millions of people suffering through this debt enslavement and I hope to hear from you back regarding advice in my situation soon. Thanks again!


Dear John,

Let me be honest with you, it looks like the path you are on is a dead-end road. If ACCC put you on a DMP knowing that you were unable to save money each month and hanging on by your finger tips, well then shame on them.

You exhibit the classic signs of bankruptcy aversion because of assumptions and fears, not facts. If we were standing in a room together, talking, I could make a very convincing argument that bankruptcy is the most logical, safest, and most responsible path to follow in this situation. Wether you’d hear me or not is a different matter. You can lead a horse to water…

Stop thinking about what bankruptcy “might” do to you and start thinking about what is the safest and fastest path out of this damn (I wanted to say fucking, but I was being discrete) mess.

Seriously John, you’ve got to pull your head out of the hole for a just one day and take a good honest look around about what your options are.

Your friends and family obviously love you and care about you, but their enabling you with borrowed money is stupid.

They aren’t actually helping you, just pushing you further down a dark tunnel of never ending brown bag lunches, basic cable channels, and not being able to save to protect yourself. It’s a bit like lending drugs to a drug addict that isn’t ready for the intervention.

Based on your description of your current life you live in a small apartment, eat small lunches, have small fun, and become more and more indebted to family and friends. It’s time for you to pull on a different set of pants, face the issue, take decisive action, and start rebuilding a new financial life based on what you’ve learned from this experience.

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Dude, snap out of it or I will personally come and kick your ass.

I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.

Then use the free How to Get Out of Debt Calculator to review your options.

Once you’ve identified a company you want to work with, then follow my step-by-step guide on how to check out a debt relief company.

I was feeling like it was tough love time. Please forgive me for speaking directly if it offended you.

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.

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Damon Day - Pro Debt Coach

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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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4 thoughts on “I’m on a Debt Management Plan But Still Struggling. – John”

  1. Hello John,

    It does indeed sound like you are going
    through a rough time, and I can definitely relate to that.

    I have no intention of trying to
    undermine Steve’s advice here, as it certainly may be the correct
    course of action for you. I cannot deny his passion and eagerness to
    help people resolve their debt issues and go on to live happier, more
    meaningful lives free from the shackles and weight of debt.

    However, in my opinion, there are a few
    questions that I think were missed here that really need to be asked,
    thought about, and answered before you go forward.

    What is your current estimated
    time to completion for your debt management program?

    The reason I ask is this: Let’s not
    mince words here, while you are indeed going through a rough time,
    bankruptcy is no walk through the park either. If you were to say
    that the time left to completion in your DMP was “months,” then
    the question I would ask you to ponder which one would be more
    stressful and/or have the more negative effect on your overall
    quality of life for not just the immediate future, but the next few
    years: The road through bankruptcy and everything it entails, or the
    time remaining on your DMP?

    Do you have the capacity to take
    on additional work to provide yourself additional income?

    Maybe this is not feasible, maybe it
    is. Maybe you’re already working 80 hours a week, I certainly do not
    have all the information about your situation. In my opinion,
    bankruptcy is an option of last resort. One should do everything in
    their power to pay off their debt before taking the bankruptcy
    option. If taking an additional job to earn additional income to
    improve your financial situation is feasible (looking at time
    availability, other commitments, health), then that’s an option that
    should be explored.

    As Jared said, you have put up a good
    fight. No one can say that you haven’t already given extraordinary
    effort in trying to push through this on your own.

    I’m not saying bankruptcy isn’t the
    right answer. I’m just saying you should make absolutely sure its
    the right answer.

  2. Steve, is absolutely right. John, from what you have described, chapter 7 bankruptcy is by far your best option. 

    You put up a great fight, so hold your head up high and seek the protection that you so desperately need.  

  3. Steve, 
    Thanks for your prompt reply! 
    I sincerely appreciate your advice and will be eagerly reading over all this tonight and weigh my options, but in reading what you wrote here (not having looked into the links you provided yet) it looks like you are also recommending bankruptcy, which (correct me if I’m wrong) is totaling ALL my debt, & getting rid of all of it, and what Im asking instead is what if I cherry pick through & instead picked out the most egregious ones (the ones that shot my APR through the roof as soon as I short sold my house), instead of all of them? That would cancel more than half my unsecured debt, be a lot more manageable &  wouldn’t necessitate a FULL bankruptcy… regarding this “surgical” rather than chainsaw approach, what do you think of this instead? Pros? Cons?

    • Bankruptcy requires you to be all in. Actually not doing that would be silly. If you are going to get a legal fresh start you should take full advantage of it.

      Don’t forget, if you have a compelling reason to want to repay some creditors after bankruptcy there is nothing that prevents you from doing that.


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