I’ve Been Working Since I Was 15 and Made All the Right Financial Moves But Now I’m in Big Trouble. – Marcia


“Dear Steve,

I have been working since the age of 15. Every decision I made as a young adult and onward was based on increasing my solvency.

I grew up working class. My parents were an example of how not to wind up. I have a master’s degree and have been working successfully in the tech industry since 1984. I never really liked my job but it paid well and I was able to save money and live well.

Near the height of the real estate boom I purchased a house along with my then partner. The house is not worth what we paid for it today…not to mention the additional monies sunk in by way of a 15,000 dollar home equity loan to upgrade the more than 100 year old house, the seven thousand dollar fence, the thousands in landscaping, etc etc.

An ugly divorce left me holding the bag, so to speak, when the shared home equity loan was left for me to pay alone…I was the one with the excellent credit score and the higher paycheck; I rarely carried a balance on my credit cards and had a nice cushion in my 401k and savings.

Spin forward a year and my savings are gone, the home equity loan was rolled into a zero interest for one year credit debt along with other cards that accrued. I owe over $14,000 to Bank of America, my 401k lost more than half of its value, I have already liquidated my roth ira, I have been late with payments for mortgage and credit cards for the first time in my life.

I had an accident one year ago that caused me to go out on long term disability from my job…I was laid off from that job over four months ago..the disability affects my ability to track my income/debt/payments with the same exactitude as I could before the accident.

If I had studied what I loved or followed a passion rather than working so hard for financial security only to find that I am winding up in the same scary space I have fought to avoid my whole adult life.

I do not want to go into bankruptcy or default or lose my home. I have already lost my excellent credit rating which pains me in and of itself. I took pride in my ability to pay my way through the world. I am now so under water and so in debt I don’t know what to do or where to turn. Bank of America revoked my 0% interest rate due to a one day late payment. I think they have reinstated it but my balance seems to go up not down even though I do not charge anything on the card and have set up auto payments through my bank account for the minimum amount due each month.


I do not have the means to pay this debt off in what is now 6 mos. of the zero percent for one year offer. I am drowning in financial obligations that I cannot meet. One fall, one recession, one life so drastically changed in one year. I am a 54 year old woman.

My credit card debt with Bank of America combined with my mortgage, medical bills, and monthly bills far exceeds my income since an accident caused me to apply for long term disability on my former employer’s (I was laid off in Feb 09) insurance policy. My credit rating has gone from excellent to trash over the past year. Can I get any kind of extension on payments without penalty to the cc company or have any part of my mortgage reduced, even if only the interest rate without paying to refinance? A long grammatically incorrect question for you. thanks.


Dear Marcia,

To be brutally honest, your situation is a classic example of ‘shit happens.’ Bad stuff happens to good people every day, people that don’t deserve the downside of financial problems, people that never did anything wrong. It is not fair and you certainly don’t deserve this mess but it now is what it is.

So let’s move forward.

You mentioned that you think you got the 0% Bank of America loan reinstated but you also said that the balance is going up. That does not add up if you are still making payments on it. Either they are charging you interest or fees, but it can’t be at 0% only with the balance increasing.

If I prioritized your debts I would move the house to the front of the line. But keep in mind that your desire to keep the house does not mean that you can necessarily afford it. For some in similar situations, hanging on to the house is like holding tight to a heavy anchor headed hundreds of feet below water. As much as you don’t want it to pull you under, it just does.

Step 1: In my humble opinion I think the best course of action is for you to contact your mortgage holder and see if they will modify your mortgage at all. It never hurts to ask but don’t be surprised if they say they won’t.

If they will modify it, get that done as fast as possible and then move to step 2. If they won’t modify it go straight to step 2.

Step 2: Without any expectation of getting back to work and replacing lost income I think your best best to reorganize the debt is going to be under the protection of bankruptcy. The reason I suggested a loan mod first, if possible, is to get the mortgage payment lowered before going into a bankruptcy to address the rest of the debts. I would implore you to contact a local bankruptcy attorney right now, call and make an appointment for a free bankruptcy consultation, and go discuss this strategy with them. If you don’t know of a local bankruptcy attorney, click on one of the links to locate one.


Now, because of your pride and deep emotional attachment to your past history of excellent credit, by the time you get down to reading this sentence you are probably hyperventilating and starting to freak out. You’re probably saying to yourself that I don’t have a clue what I’m talking about and there is no way in this world that you would ever consider bankruptcy.

I understand all those emotional responses to the situation. I went through them and so have millions of others. Bankruptcy is not something undertaken by losers, rejects and assholes. It just happens to be the only legally binding debt intervention in America. If there were other approaches that would give you some rights or protections from your creditors in a situation like this, I’d tell you about them.

Do me a huge favor, don’t make a decision to not go talk to the bankruptcy attorney for an emotional reason. Go and talk to them, ask all your questions, and then go home. Don’t make any decision about bankruptcy on the day of your visit. Go home, think about, let what you learned percolate in your head for a few days, and then decide what you want to do.

But no matter what path you choose to follow here, either the downward spiral to protect credit you can’t afford to protect, or bankruptcy, I want you to come back and give me an update about what you decide to do.


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.

Steve Rhode

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