I was divorced in 2007. Part of our settlement was that I take all the marital credit card debt. This totals about $20,000. I agreed to this because my retierment was untouched. Shortly afterwards I was transfered to another part of the country and my salary reduced 20%.
I have a mortgage that is current and my credit cards are current but I’m getting close to falling behind. My savings have been exausted and the card companies have all increased the rates to nearly 30%. I was told by them they could do this anytime and they did so because of their business decision. I don’t know what to do. There is some equity in my home but I don’t really want to turn unsecured debt into secured, putting my home at risk. I own my car and have a steady income as I work for the US Government.
What can I do? Should I try to settle the debt by myself with the card companies? Should I consider Chapter 7. Should I try to negotiate with the card companies on payment plans? I do anticipate an increase in salary in a year or so. I’m 51 years old and have a 17 year old. Please help, I need to get some sleep!
I think the issue really comes down to what can you afford. I suspect that with the reduction in income that nearly any payment plan is going to be unmanageable. And based on what you said about the now nearly empty savings account, I suspect that your monthly obligations have exceeded your monthly income.
If that is the case then the best solution is to speak to a bankruptcy attorney. But here is an interesting little twist, if any of these credit cards are joint credit cards, once you go bankrupt on them they will go after your ex-wife for payment.
Just because you agreed to take over the payment of these debts, it doe not change the legally binding responsibility the applicants for these cards have.
But this is a situation that happens all the time and it is no wonder that divorce is often followed by bankruptcy.
You can always contact your creditors and talk to them about a reduced payment plan, and they might offer you some reduction in interest for six months, but at the end of that time they will most likely raise your interest rate back up and that’s not going to carry you for a year. It will just be six months latter and you’ll just be back in this situation.
But don’t be surprised when you call that they don’t offer anything. As long as you are current on your bills they won’t want to offer much, if anything. But the moment you fall behind they will put you in collections and the pressure will increase.
Let’s say that you do go the bankruptcy route. Once you find a local bankruptcy attorney, decide to go bankrupt and put your plan into action, you will begin to sleep better.
Your sleep and work performance are being impacted by this stress and depression you are under. Take care of the debt and that begins to improve.
Your other options for addressing this are less attractive. You could relocate back to a part of the country where you’d make more money or see if you could drain a big chunk of cash from your retirement account to pay these off.
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.
P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.