My Debt Problems Keep Me Awake at Night. – Michael


“Dear Steve,

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!


Dear Michael,

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.

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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.


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P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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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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1 thought on “My Debt Problems Keep Me Awake at Night. – Michael”

  1. Hi Michael,

    Divorce sucks and it’s never easy to balance a 20% reduction in income. The good news is that a raise is on the horizon. The bad news, for the next year you will need to “squeeze two pounds of shit, into a one pound bag”. It may seem impossible, and I don’t know the total picture, but I have a couple suggestions that may help you to avoid going the bankruptcy route.

    There may be some cuts you can make to your budget. Do you pay for your 17 yr old’s cell phone, auto loan, gas, internet, allowance? Many parents do and they don’t realize how much it’s actually costing them. Of course a 17 yr old needs to be free to live and experience life, but it’s also very important that they learn to take responsibility and cover certain expenses on their own (especially in tight times like this).

    I figure with about 20k in debt at 30% you must have minimum payments in the area of $600/month. You may want to look into a temporary part time job until you get the raise. A small job a night or two a week or on saturdays could easily put 100-150/week into your pocket. That is your entire credit card payment, and who knows you may find a small gig you like and don’t mind doing it. My advice on this is to always start a job search in the Yellow Pages, with businesses that interest you, and approach them whether they are hiring or not. This is a great way to land a job that you love.

    Another idea to look into is a debt consolidation loan. You have a steady job and it sounds like your credit hasn’t taken much of a hit. It won’t reduce the amount you owe, but it certainly may reduce your interest rates, giving you a fighting chance. There are a few spots on this site I’ve noticed a link for reputable consolidation loans, look around, you’ll find it.

    I think if you plan to find a way to stay current, you should start as soon as you can, trying to get the interest rates down, so you’re not stuck paying minimums for years and getting nowhere. In addition to getting the rates down you would also want to focus on paying extra towards principal, whenever you can afford to, especially when you get the raise.

    If you can’t make any cuts to the budget, increase your income, or lower your minimums to an affordable level, then I think you would be best advised to speak with a bankrupcty attorney, and look into your options there.

    Good Luck!


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