I’m Not Willing to Go Bankrupt Because of the Disadvantages. – Lisa

“Dear Steve,

I was divorced last year and now have a $4000 apartment debt that we incured soley on me. I have a repo’d car $20,000 and an accident bills looming over my head($10,000). So I have about $35,000 in debt how do I A: pay it off, and B: Rebuild my credit? Bankruptcy is not something I am willing to do after finding out the disadvantages of it is 5 years doable? With my income per year being about what I owe? How do I start to rebuild my credit?

With my income per year being about what I owe? How do I start to rebuild my credit?


Dear Lisa,

I read your question and said to myself, “WTF has she heard about bankruptcy?”

It is quite possible that the negative things you’ve heard about bankruptcy have been used in an attempt to manipulate you into some other solution. The common things you hear are that bankruptcy ruins your credit for ten years, you can’t get a job and nobody will give you credit. All of those common statements I just shared are false, false, and false.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

You are in a situation where I doubt you have a lot of disposable income to use to pay for normal living expenses and then pay down this debt in a reasonable period of time.

If your goal to get good credit again is to get right back into debt, then go with a debt management plan approach. A debt management company will put together a repayment plan that should hopefully repay your debt over a five or six year period.

But the irony here is that bankruptcy is probably the fastest route to better credit. What!

Well once you go bankrupt you can close the door on those old debts. This will raise your credit score instantly, You can then focus on saving money and building an emergency fund to protect you in case of a financial emergency. Having a savings account is a desirable thing to show when applying for credit. Within a year you’ll be able to get credit again. In fact, you can apply for a secured credit card almost immediately and if you get one that starts to report to the credit bureaus that will go a long way to rebuild your credit after bankruptcy.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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