Kim
“Dear Steve,
I’m paying credit debt on time not getting anywhere with minimum payments. Husband laid off from work 15 months. Not using cards just trying to pay off. Income is very limited.
How can I get ahead with paying off cards. Income is tight. Getting behind on other bills (house, gas, electric) husband laid off from job over 15 months, now has job that pays less than half of what he had before.
We’ve really cut back on everything and not getting ahead. Being frugal in hard times. Tired of stressing out all the time.
Thank you for your help.
Kim”
Dear Kim,
The issue here is that your income adjusted downwards but your expenses did not. This is a chronic problem with contracts to borrow money. Those contracts are absolute agreements and don’t make any allowances for things happening, like layoffs.
Being frugal only goes so far and if you can’t manage to get the income back up, and you’ve already trimmed expenses, then maybe the time has come to start thinking about bankruptcy.
Bankruptcy can be a scary experience but it is a legal tool you can use to discharge your debt so you can attempt to make whatever money you are both making manage to keep a roof over your heat, the heat on and food in the cupboards.
While you are just making the minimum payments I am worried that unless you can get some breathing room in your monthly budget that all it is going to take is one unexpected and unforeseen event to through your finances in complete disarray. You should be putting at least $50 to $100 a month into a savings account to protect you from these money emergencies.
Continuing to just make the minimum payments is admirable and honorable but at some point don’t you have to financially plan to protect you and your family from future emergencies by saving? It seems like the only way to do that is through bankruptcy. Please contact a local bankruptcy attorney and ask for a free appointment so you can go in and find out what bankruptcy would mean for you.
Don’t be ashamed, be responsible and do the right thing to protect your family moving forward.
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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Bankruptcy may be the best solution. If you are not behind, and have an income stream, you should talk to a bankruptcy attorney soon. Chapter 13, which aims to get secured creditors caught up, and pay unsecured creditors the best it can, evaluates your income and needed living expenses. Disposeable income is then used to pay creditors. You don’t necessarily lose your possessions. If you wait too long, and get severely delinquent, Chapter 13 may not work and you will need to go to Chapter 7.
Take a hard look at what you possess and what you need. Do you have an extra auto that can be sold (make sure you are not upside down on it), or a boat, or motorcycle? Do you have memberships you could do without? Do you eat out? Do you buy brand name groceries or use coupons?
Saving $50 to $100 per month is great advice. You need a cushion for when times are hard.
Jeff
Jeff Jacksons last blog post..Debt Consolidation Stories