I Am Drowning in Debt And See No Light at the End of the Tunnel. – Tammy

“Dear Steve,

I am drowning in debt and see no light at the end of the tunnel. It is causing me daily stress and anxiety, as I am worried about my future, worried about losing my good credit when I am no longer able to make my payments, worried about my kids. I am a single mother of 3, divorced almost 6 years.

I take full responsibility and have no one to blame but myself for my situation. When I first was divorced I was in good shape, most of my debt I paid off, I had my mortgage, utilities, and 1 or 2 credit cards with acceptable balances.

Over the years as prices rose, I found myself supplementing my income with my credit, didn’t have enough money to school shop charge, didn’t have enough money for my $700.00 oil bill to have heat and hot water charge the entire winter, etc.

I know there is also some silly spending, and I would account that to average about $10,000 (could be a little less, could be a little more) God only knows why, but when my van was paid off and having a few problems, I was divorced wanted to get out the “mommy mobile” mode, and bought a used Jeep. My car loan is not my main concern though, it is the $35,000+ in credit card debt that I have.

I am just beside myself and do not know what to do. I own my home, but my ex-husband owns it with me, or I would probably see if I could refinance and tack on an extra 50,000 to pay off my debt. We owe about $108,000 on the home and it is worth maybe $250,000 (hard to say in this market). Two years ago they had it worth over 300,000 but that was inflated I’m sure.

Is there a way to pay off this debt?. I don’t want to ruin my credit by negotiating with my companies, I’ve heard that lowers your FICO score, and I want to have good credit when my kids are grown, so I can move on. If there is a way to pay this off, what is the best (if you want to call it that) way to go about it?..I would like to have some sort of plan, one that shows me that this debt will be paid off in “X” amount of years. Right now I don’t see it ever being paid off. Can I get back on my feet, or am I doomed? Thank-you for your time.


Dear Tammy,

It is always nice to see someone who has learned a lot of good financial lessons from a perfectly good failure. Most of the issues you already seem to have identified and addressed.

Since you have all that equity in the home, it probably makes sense for you to go speak to a bankruptcy attorney and get a free bankruptcy consultation. The bankruptcy attorney will help to educate you about all the reasons why the equity in your home will be at risk of the creditors getting it if you go bankrupt.

Next, contact some local mortgage brokers and see what refinancing deals are available now. Armed with those two bits of information you could then approach your ex-husband and explain to him why refinancing your house to pay off your debt might be a good idea.

I’m less worried about you taking a short-term hit to your credit score than not resolving this situation. Your credit score can be rebuilt. Continuing to struggle just to avoid a drop in your credit score is not wise. Address the problem and then we can move ahead to get you better credit.

If you can’t get the entire amount you owe out of the house refinancing then if you get at least 60% of your total debt out you could look at doing lump-sum debt settlement on your debts and knock it out for less than you owe.

Obviously the refinancing is going to significantly drain your share of the equity out of the house and potentially increase your monthly payment.


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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