How Do I Go About Settling My Debts if I Can’t Qualify for Bankruptcy? – Joe

“Dear Steve,

Because of financial hardship I have not been paying our large balance credit cards for over 12 months. There are 5 credit cards totaling about $140k in balances. This was all caused by a reduction in pay over the last 3 years of about $100k per year. We also recently short sold our home and now are renting my mothers home. It has helped with the day to day living but I still am not able to pay the credit cards. The creditors call everyday and I really don’t know what to tell them because I just cannot afford to pay the minimum required of each. I tried bankruptcy but because of our total income (about $150k per year) we do not qualify. I really don’t know what do. We have reduced expenses at home but still not enough to cover credit card bills.

My biggest concern right now is that my creditors attempt to garnish me or my wife’s wages. A couple of them have offered cash payouts. Some as low as 35%. Even though I don’t have the money I was thinking of borrowing from a family member to be able to do this. My question is if I do this how can I be assured that they will not come after me later on for the balance due? Would I need to hire a lawyer to review each agreement or are the pretty straight forward? Thank you in advance for any advice you may have. BTW the debt calculator you have is a great tool.


Dear Joe,

Thanks for contacting me and I appreciate the kind words about the get out of debt calculator. It is a neat tool.

I’m unconvinced that bankruptcy is out of the question for you just based on your income. Even a chapter 13 bankruptcy, where you would make a monthly payment based on your available income, is available to you.

See also  My Fiance Left Me With His Bills. I Am Struggling to Get By. - Angela

Someone might have said your income precluded you from looking at a chapter 7 bankruptcy but there are many ways to deal with such income. I would urge you to click here to find a local bankruptcy attorney and get a second opinion.

At the very least I would really hope that you’d get a second opinion before you decide to do anything. I’d much rather see you take a few more days to research your options thoroughly than make any decision based on assumptions.

Is it possible to settle your debts as described? It is, BUT, it is not without risk. Let’s say you borrow the funds to settle some and others don’t and decide to sue you. This leaves you in a tough spot of maybe having a garnishment and trying to repay a relative. Failing to make family payments leads to some very tough issues.

I would suggest that you get some help with exploring settling these debts and understand all of the risks and cons associated.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

Two of the lowest cost outfits I’m aware of that have expensive experience in coaching people through the process are Consumer Recovery Network and Debt Relief a la Carte.

With at least coaching you’d be in a much better position to settle the debts and know what to ask for to try and protect yourself.

I’d suggest that you give those folks a call and discuss your situation with them. For an independent review of your situation, I always recommend that people contact Damon Day. He’s a skilled and talented debt coach that offers personal consultations.

The only way to absolutely avoid a lawsuit or wage garnishment if you fall behind would be to negotiate lump sum settlements with all the creditors at once and fund them promptly or to utilize the protections afforded to you under the bankruptcy law from creditors.

Here is some homework for you, go and get a second opinion about bankruptcy from a local bankruptcy attorney and talk to the settlement companies I mentioned. Then come back and post an update about what you’ve learned in the comments below. We can take it from there.

See also  Do I Qualify for Bankruptcy? - Oscar

Please post your responses and follow-up messages to me on this in the comments section below.

Damon Day - Pro Debt Coach

Follow Me
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.
Steve Rhode
Follow Me