Lost My Job, Upside Down in Mortgage, and Our Expenses Far Exceed Our Income. – Doug


“Dear Steve,

I have lost my job, We have a huge overhead and with the current economy, we have tried, but unable to sell our house for loan value. Upside down with bills 4 to 5 times what is coming in. Applying for jobs but nothing yet and have depleted savings and 401 ks leaving early withdrawl penalties I can’t pay. Do I have any options to save my family?

Is bankrupcy my only option? I feel overwhelmed and fight the urge to consider cashing in on life insurance the bad way to take care of my family.


Dear Doug,

Your situation is like this, you are crossing a financial desert and you are halfway across it. But you’ve managed to drain and use every bit of water you had, and even the water from the 401(k) as well. What are the chances of you making it the other half of the way across the desert?

The answer, not good. Draining assets without an endgame in sight just postpones the inevitable difficult choices that need to be made. If you had reached out for help earlier before you drained the 401(K) my answer would have been the same, bankruptcy. The difference is that back then if you had gone bankrupt you would have been able to keep the 401(k) funds and not owed a big IRS debt because of the early withdrawal.

I don’t say any of that to make you feel bad, but to help someone else that might be facing the same situation as you.

I predict that once you face the situation with bankruptcy that you outlook on life and your chances of a better future will improve. They usually do.

Look for a local bankruptcy attorney and go in and have a free chat. Ask all the questions you can think of and then go home and decide if bankruptcy sounds like a reasonable solution for you based on your situation.

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My concern is that even with bankruptcy that your basic living expenses may exceed your family income. In that case, a job, any job, will be critical. You might even have to take some crappy temp jobs just to earn some money. That’s what I did when I was in that situation. It sucked but sometimes you do what you’ve got 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.

2 thoughts on “Lost My Job, Upside Down in Mortgage, and Our Expenses Far Exceed Our Income. – Doug”

  1. I lost my job 3 days ago, and with this economy I’m not sure how easy it will be to get a job with similar pay. I was making 80% of the family income, we have a Heloc that leaves us slightly upside down in our mortgage with some moderate credit card debt. I have severance that will last 2.5 months, but after that the only thing left will be a 401k that has lost 60% of it’s value and is now less than 100k. Any suggestion would be helpful.

    • Ron,

      With only 2.5 months of severance I think you need to set a line in the sand, say in four weeks or no more than one more payment to your obligations, to evaluate your situation. If you have not been able to replace your income by that time we are going to have to start making a drastic Plan B. No need to worry yet. Focus on employment and/or income.

      Come back here and give me an update.



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