“Dear Steve,

52 years old, Male, independant recruiter(start-up DBA), living with girlfriend/partner and 9 year old daughter in home owned by her.

$21K unsecured debt. Car loan(upside down due to rollover from lease) with 43 months remaining at $358 per month.

Monthly expenses ~$3K(but could reduce to $2.6K) including $750 month minimum payments on credit cards. Have been carrying this debt for give or take $5K for 5+ years. Income during that time averaged $35K-$60K. Have exhausted savings with only $10K remaining and I am taking a part-time jobs that will earn ~$500/wk.

Have no other imcome projected in short term and any long term income is unpredictable but I am hopeful. Any lump sum potential can wipe out debt…..but like I said, don’t know when. No assets and minimal 401K (less than $5K). I want to pay this off but feel I will fall into default very soon and I don’t know if I can, although to this date all credit cards are current.

Worried, partner upset although she makes a great pay enough to support the household. The feeling is that I came into this relationship in this debt condidtion and I need to get myself out of it. Very stressed. Working my desk during the day and other employment at night and week-ends will start within 2 weeks. Under current scenario, money will run out in July and I am not elegible for unemployment.

What do I do?

Bill”

The Answer

Dear Bill,

I can see how your girlfriend/partner might be stressed, feed up, and worried. I’m sure she feels like she’s carrying the weight of both of you and is sick of seeing you as a financial anchor.

Living through money troubles is like two people looking at the same painting and walking away with two different perceptions. In your situation you are working as hard as you can to make the situation better. You are stressed, worried, frantic, probably a bit depressed, nervous, scared, and afraid. And at the same time the partner/spouse that is not involved is pissed off, feed up, angry, etc. All of these feelings and emotions, none of which are positive, all radiate from the central issue, not enough money coming in to meet your obligations.

You and I can hope that things change and I’m a big fan of visualization and seeing the change in our head and then waiting for the perception to become a reality. But who knows how long that will take.

Here is what we know for an absolute fact. At some point in the past you entered into legal agreements to repay funds in exchange for services or things. Those agreements were not based on the condition of the economy, your health or the continuation of life as we know it. No, those financial contracts are absolute agreements that extend our hope that the future will be as good as today so we can meet our promises and commitments. The problem is that the future is now and it sucks financially for you.

You really have two choices here. You could work with a debt management company to develop a debt management plan to repay your creditors. The downside is that those plans are not based on what you can afford, but what creditors demand or want when working with a credit counseling group.

The second option is the only legal power you have, bankruptcy. With bankruptcy you could step up, take responsibility for your debt, reduce the pressure you are under right now, get a fresh start and start looking forward instead of running backwards trying to repair the past.

Bill, I think before you do anything you should click here for debt management information and click here for a free bankruptcy consultation. Investigate both logical options and then come back and give me an update and we’ll take it from there.

But you are going to have to alter your current path because we both know that the route you are on will hit a brick all soon without some sort of intervention. You owe it to your daughter also to make the hard choices and take action to change your course.