My husband and I have credit card debt of $ 87,000 and medical bills of about $ 2,000. The credit card int. rates vary from 2.99 to 9.99%. We have 2 teenage children. We own a mobile home and a couple acres but don’t have much equity in it.
We both have fairly good jobs and have paid our bills on time up to this point. For years I did some part time work in addition to my regular job but 6 months ago I lost that income of about $400 month. Since then we have used the credit cards on quite a few occasions to pay utility bills, phones, dr bills, medicine or whatever on months that we couldn’t pay everything.
We just developed a budget and have cut about $150 month in expenses for things we really didnt need and are working on trying to cut more. We are also trying to sell some small personal belongings but that will only bring in about $2,000 at the most, assuming we can even sell them.
We wanted to put this money in savings. I am looking for addl work to replace the $400 mo I lost. Right now we are just able to pay our regular bills (house, cars, utilities, ins, groceries, gas, etc) and the minimum payment (or a little more) on credit cards. We are not able to put any money away for savings for things that come up so I dont know how we will pay those things other than using a credit card.
Two days ago I received a letter from Chase on one credit card saying the min pymt is going to 5% in August – this will make the pymt on that card go from $250 mo to $625 mo. We are considering selling my husbands truck to save us $300 month to pay this difference. However, we have 3 different cards with Chase so if they all go up we will be looking at owing an additional $850 month. If all our credit cards go to 5% minimums we will owe $2,500 mo in additional pymts on credit cards.
There is no possible way we could ever come up with a way to pay that. My husband is able to retire at end of this year and was planning on retiring then (assuming he is able to get another full time job). We were planning on using his lump sum distribution (about $40,000 after taxes) and the monthly checks (about $800 after tax) to pay off our cars and our mortgage to get to a point where we could breathe.
At this point however we really dont know what to do. If our card min payments all go to 5% I guess we will have no choice other than to file bankruptcy because there is no way we can make those payments. This is causing extreme stress on our lives. I dont even sleep anymore unless a take sleeping pills. I am constantly worried sick about what we are going to do.
I have a medical condition, Multiple Sclerosis (a big part of the credit card debt) and all this stress just aggravates that. We have got to come to some resolution and proceed with whatever we are going to do. We just dont know what the best solution for us is. We really dont want to file bankruptcy but if that is what we end up having to do I guess that is just the way it is and we will have to live with it. I would appreciate your opinion on where we go from here.
Should we just file bankruptcy or will anything else work for us?
Selling things to fund yet another month without it resolving the situation is not a solution. It helps you to avoid making the hard choices but it does not resolve the underlying problem.
With Chase Bank raising your monthly minimum payments to 5% of the outstanding balance it leaves you in a position where you can’t recover. You’ve been using credit to make ends meet and that strategy will fail.
Sadly, I think the best course of action is for you to immediately find a local bankruptcy attorney and go in and talk to them about bankruptcy for you in your situation.
If you go bankrupt now you can protect the retirement funds, can discharge the debt, can eliminate the underlying stress and that should begin to slowly improve your medical state.
Based on the likely prognosis for your situation, after meeting with the bankruptcy attorney you should probably stop making any additional payments on the credit cards and save that money to go bankrupt.
Unless you take the action of intervening in your situation with bankruptcy it won’t be long when you will be without anything to sell, not in good physical shape to work, won’t be able to afford to make ends meet, and in need of your full retirement funds to take care of yourselves.
While it might not feel like it at the moment, in the face of an almost certain disastrous outcome, bankruptcy is the logical and responsible action to take.