Lisa Has Been Slowly Bleeding Financially And Needs Intervention

“Dear Steve,

We are about $20,000 in debt due to accrued credit card & medical. We have been doing a “slow bleed” for the past 41/2 yrs since my husband unexpectantly lost his job just 9 mo after we had built our house (which we dumped almost all of our savings into but in now way overbuilt our means) and 3 weeks after the birth of our 3rd child. Talk about bad timing!

He was out of work for approx 5 mo & when he did find a job it was $15K less than he was making. It took almost 2 years to get back to the pay he was fired at which means we had accummulated quite a bit of debt. Every year we get a nice tax return & pay pretty much everything off, however over the course of the year we’re back to the situation we’re in.

Part of the $20K is $8K of work related credit card from my husband’s work that wasn’t always reimbursed promptly & therefore racked up quite a bit of finances charges to the tune of $8K. We’ve tried going to the employer for reimbursement & although they see our “point” won’t do anything about it. (So a side question is – will this be something at least we can deduct on our taxes or do we have a legal case?)

We have been trying to sell our home for over 2 years. We’ve dropped the price over $30K & are now at the break even, possibly losing money, situation. It is our plan to buy a much less expensive home (about $80K less) so know eventually we’ll get out from under this mess, but the only way is to sell our home, which is bad timing right now. What should we do?

Should we sell our home at a loss, which will we be able to carry over somehow? Or should we stay a little longer but can not pay & continue to lose money each month?


Dear Lisa,

I’m so sorry that you’ve had to deal with all this bad luck. Let’s see what we can do to help work towards making this situation better.

I’m very concerned about your statement that each year you get a nice tax refund back and pay stuff off. It sounds to me like you are overwithholding throughout the year and letting the government use your money for free and then getting it all back as a refund. Why not adjust your withholding so that you’ll break even at tax time and use the money throughout the year when you most need it?’

If the company is not going to reimburse you for the work related expenses you’ve got two choices, one would be to go after the company legally or the other would be to consult with a tax advisor and see if those expenses could be deducted on your personal tax return as business related expenses.

If after properly adjusting your withholdings, so you get more money back in your check each month, you find that you are still unable to make ends meet then the decision has really been made for you. You’ll either have to dump the house, increase income or wait to lose the home in foreclosure.

You can always sell the home at a loss but you’ll have to make sure that you fully pay off the liens against the home, if any, to get a clear title to transfer to the new owner.

If the withholding adjustment is not enough, click here for debt management information and find out if enrolling that credit card is a debt management program would lower the interest rate at all while you sort all of this out.


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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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1 thought on “Lisa Has Been Slowly Bleeding Financially And Needs Intervention”

  1. if, in order to get out from underneath the home, you have to sell it at a loss, look to negotiate the deficiency. This is commonly referred to as a short-sale, in which case the mortgage bank “forgives” the difference owed after the sale. This can carry tax consequences as they may “credit” you with the difference as income on your taxes. There are ways to avoid this though if properly structured and understood.


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