“Dear Steve,
Married; living in Texas; age 67 & 66; owe credit cards about $60,000+; Social Security income = about $1500/month; part-time jobs = about $1200/month; own our home (house built in 1908 by great great-grandfather); current on all payments. (Debt is some medical and restoration expense of house to start a B&B that failed.) Main expenses besides utilities and groceries are a car payment (220 on about 9000 bal.), house insurance and and taxes (about $1300/year each.)
My wife and I, rural Texas residents, are 66 & 67; we owe about $60,000 in credit card debt. We work part-time and have social security income and are current on all our payments.
Our house is paid off; we’ve traded down to one, 2005 hybrid car and tried to eliminate unnecessary spending.
Making minimum payments, at times a stretch, will take in some cases 20 years or more to payoff and, if our part-time jobs go away (which they will eventually, we know), we will be in real trouble.
(Every time we pay down a balance, our credit limits have been reduced, so it looks like we are using more of our credit than we first were doing. BofA and Chase do this as a matter of course it seems.)
We have followed your site for some time; think the advice you give has been exemplary. But when it comes to our own situation it is so scary.
Debt settlement seems like a mine-field. Even that would fail if we lose our part-time jobs. Do you think bankruptcy is a viable approach for our situation? There is a lot of fear and I see it in many of the people who write you; but you do us all a great service with positive information. Thank you for considering our situation.
George”
Dear George,
First off I wish I could be there to give you both a big hug in person. You sound like wonderful people in a bad situation.
I’d like to calm your fear and let you know there is a way to deal with this and create a safer financial future.
Let’s consider the facts. The most alarming is the concern I have over your age. While 67 isn’t necessarily old, logically your best income earning days are behind you now. And based on the fact you say you are working part time jobs that may not last, it seems reasonable for me to assume your income prospects are somewhat restricted.
Luckily you live in Texas. According to Nolo.com, your home is most likely protected in bankruptcy.
The Texas Homestead Exemption
Texas offers an unlimited homestead exemption for a residence on 10 acres or less in a city, town or village or 100 acres or less in the country (this doubles to 200 for families). If you sell your house, the proceeds are exempt for 6 months after the sale under this exemption. (Tex. Prop. Code Ann. 41.001, 41.002 and 41.003. See also the Texas Constitution, Article 16, Sections 50 and 51.) (For more information about the Texas homestead exemption, see The Texas Homestead Exemption.)
I would suggest that you click here to find a local bankruptcy attorney and talk to them about your specific situation.
If bankruptcy is right for you then you’d be able to discharge your debt and live within your income moving forward. If you had any money leftover each month, then you could begin to save it to build up your emergency fund or stash more away in savings for those future years you may not be able to work, even part time.
The amount of debt you have seems very difficult to pay off on a limited income and there is some tremendous doubt if you could even do it within your lifetime.
I’m not suggesting bankruptcy is the only option but it certainly appears to be a logical one based on your debt, age, and income.
If you told me you had a tremendous amount of cash saved and could use that for thinking about settling this debt, that might be a different story. If that cash was in retirement funds like an IRA or 401(k) then you’d be crazy to touch it.
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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