I Want to Get Out of Debt Without Ruining Our Credit. – Melissa

“Dear Steve,

With the economy in such turmoil, my husband who is self-employed has had close to no work for 6 months. I went back to work and that is helping, but our finanaces are a mess. We are living paycheck to paycheck and are barely able to make our monthly payments. We had already had credit card debt and now we have had to use our credit cards numerous times to make it. We now have over $25,000.00 in credit card debt and feel helpless.

How can we try to get rid of this debt without sacraficing our credit? Although we have high limits on our credit cards our credit scores are still in good standing. Where do we start and how so we get ourselves out of this horrible mess?


Dear Melissa,

The only reason your credit scores are good now is because you’ve been borrowing from the credit cards to make ends meet or make the payments. In reality your credit score isn’t so good now, the credit bureaus just haven’t caught on yet.

Trying to get out of this mess without impacting your credit is simple, pay your bills off in full. But if you could have done that, you would have.

Right now you are in a deep and dark hole that is continuing to get deeper and darker each day. Saying you don’t want to do anything that might sacrifice your credit is like saying you want out of the hole without the use of a rope.

Making decisions about what you are going to do to resolve this based on your emotional attachment to “good credit” is understandable, but emotional. Logically it is much better for you to take a big credit hit and solve the problem quickly and then rebuild from it than it is to let the situation linger for years, unresolved, for fear of how it might hurt your credit score.

See also  Living From Paycheck to Paycheck. - Angelene

In a situation where there is no immediate expectation that lost income will be replaced, the most logical solution is to neutralize the unserviceable debt. The only way to legally do that in America that gives you consumer protections from collections and lawsuits is with bankruptcy.

Here is what I would humbly suggest that you do. Find a local bankruptcy attorney, make an appointment for a free bankruptcy consultation and just go in and talk to them. Learn as much as you can about bankruptcy from them and then go home, think about it, and then decide if bankruptcy is for you. Don’t exclude bankruptcy as the appropriate solution for your situation solely based on how you think you’ll feel.

Living paycheck-to-paycheck is a volatile recipe for disaster. All it will take is one unexpected expense on maxed out credit cards to sink you.


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.

2 thoughts on “I Want to Get Out of Debt Without Ruining Our Credit. – Melissa”

  1. This is by far the worst advice i have ever heard. Why file bankruptcy and hurt financial institutions even more? I understand the need all around to eliminate credit card debt but what about settling? what about debt management services? What about cashing out a 401k to eliminate the debt? Filing bankruptcy makes it almost impossible to find employment again if you lose your job. It will also hurt your credit to the point that you will not be able to obtain financing for anything for the next 7 to 10 years. Please do not follow the advice you were given if you value what you have worked so hard for.

    • Mario,

      I’ve addressed the dangers with cashing out the 401K, debt settlement, and debt management, many times before when used at the wrong time. In this situation, launching into debt repayment program, without any expectation of being able to make the payment, would be foolish and not wise. The goal here is to find a solution that resolves the problem, not postpone it.

      I found your statement about bankruptcy limiting employment and restricting access to credit to concern me the most. There are relatively few examples of a recent bankruptcy leading to the denial of a job, except for in certain fiduciary fields. Even an attorney can be bankrupt but still practice law. In fact, i would argue that when it comes to things like a security clearance, a person maxed out and in deep debt is at a higher risk of being compromised than someone that eliminated that risk.

      Many people are surprised to learn that access to credit for recent bankrupts is almost easier. They will start to receive offers for credit the day after their discharge. And while the initial interest rates may be higher than average, by using and rebuilding their credit, they will come down.



Leave a Comment