I am 60 years old, divorced for 7 years, with two kids. I have not gotten child support from my ex and he has not helped with the boys financially or physically. Though the government has finally caught up with him and I am now receiving 1,000 a month back support.
I make 35,000 a year, pay for health insurance, car insurance, etc. I have recently undergone a double mastectomy for breast cancer and another surgery for a staph infection in the wound.
I have a form of muscle disease from that surgery (stress they say) which incapacitates me where I can hardly walk/move etc.
My older son, 20, works part-time and goes to college full-time. He pays for his car insurance through me.
The younger one, 18, has been a handful since he was 11. We have been to about 25 therapists/counselors/psychiatrists, most of which I had to pay out of pocket.
I sent him to an outdoor program for troubled teens for a month and then rehab for two months for drug abuse. He is not working because he is depressed, though not doing the prescription drugs, so rehab did work. They both live with me.
I had tapped into my 401K for both rehabs and am paying back two loans through work for that.
I also have medical bills which I pay through work. Health insurance is paid out of my check.
I bring home about 850.00 every two weeks. I have accrued about 30,000 in credit card debt. I bought my home (condo) for 143,000 with 20% down and it is now worth 60,000. I remortgaged but it is approximately the same amount every month – they just added in my taxes and insurance (about 850.00) a month.
I can’t afford to move and if I did, rent is just as high as what I am paying now. I don’t want to sell my home – I would have nowhere to go.
My question, Steve, is should I go through credit counseling and try to pay off these credit cards or should I just go through bankruptcy? Your assessment would be deeply appreciated and thank you in advance for your help.
You’ve certainly hand a tough string of issues to deal with any overcome. I can’t imagine the strength it took or takes to do that.
There are a couple of issues that are most important in what you shared that give me as a third-party a clear indication of what makes the most logical sense for you. But let me ask you one question first.
Do you have a greater responsibility to fix the past of fix the future? Stop and think about that before you read on.
Just based on what you’ve told me there are some issues in your life that bring a great deal of uncertainty to your future. For example, will the weakness and difficulty moving get worse? Will your younger son need more help, support and attention?
Life it tough enough with uncertainties but you have some clear issues that could really impact your future.
If your weakness got worse and you were unable to keep working and had to quit. Those 401(k) loans could come due and you’d either have to pay them off or take a big tax hit over them.
And then there’s the fact you appear to not be able to save money right now and build up your emergency fund.
As I look at your situation I can see any logical reason why spending the next five years trying to fix the past makes you safer in the future. Besides, how long is this child support going to last and what happens when that stops?
At this point we need to fit your life in your income and stop using credit cards to make ends meet. Hopefully by addressing the debt and getting a legal second chance and fresh start with bankruptcy you can do better moving forward and save money!
A chapter 7 bankruptcy would allow you to eliminate your unsecured debt in about 90 days. And once you do that you can get straight to rebuilding your credit to get back in financial shape quickly.
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If you said to me you wanted to try and use credit counseling to pay off this debt I would understand because that would be an emotional decision, not a logical one.
Debt is just math wrapped in emotion and I think based on the numbers you shared it makes no logical sense to try to lower the standard of your life to the point where you could make a credit counseling payment and be able to save money at the same time.
With all the other stress you’ve got going on in your life right now how would that help you to get better and heal for the future? It wouldn’t.
Do both of us a favor and read Everything You Always Wanted and Needed to Know About Bankruptcy and let’s start healing your financial life.
Does that sound like a reasonable approach?
You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.
Please post your responses and follow-up messages to me on this in the comments section below.
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