I Graduated From Law School But Barely Getting By. – Michael


“Dear Steve,

I ran up about $30,000 in credit card debt in college, law school, and in nearly eight months of unemployment following law school. I recently managed to find and started a good job at about half the salary that I expected I’d be making. Between my student loan payments, and the minimum payments on my credit cards, and utilities, I have about $200 a month to live on for food, entertainment, etc.

My lease is up in December, and I plan on moving to a less expensive place to save another $400 a month or so, but my budget is stretched very thin and I can’t seem to do more than just pay the monthly minimum. I am current on all my payments except for one (where I worked out a deal with American Express to pay the entire bill back in 10 months, and they will not charge me any interest or penalty at all as long as I don’t miss a payment.)

I have put all my credit cards in a drawer, and am going cash-only for the immediate future.

Am I a good candidate for debt settlement? If I didn’t have all this credit card debt, I would have enough salary to live comfortably. The way things are now, the same day my biweekly paycheck is deposited, all but $100 goes out the door. I’m not saving a dime, and I’m not enjoying life to its fullest.


Dear Michael,

Nobody is a “good” candidate for debt settlement. The process is full of more holes and creates more problems than it solves. If you want to trash your credit, potentially have a big tax bill, and go into collections, go with debt settlement.

Your situation is one of basic components. Your income is insufficient to pay for the lifestyle you have, no matter how meager it is. This is due to the burden of previously financed activities that you are dragging forward with you from your college days and beyond.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.
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In the end it really isn’t the size of the debt that is important, it is the impact in your life of that debt. As you report, that impact is significant.

If life has become unsustainable and you need a financial break you are better served and protected by law by pursuing bankruptcy. Under bankruptcy your debts will be reduced or eliminated, you will know a specific end date when you will be able to start over and there is no potential tax liability to you for the forgiven debt. To learn more about bankruptcy and your situation, please go talk to a local bankruptcy attorney and ask all the questions you can think of.

I think that what you will find is that be embracing the situation and taking control to put a solution in place, even if it is bankruptcy, that you will be able to find new vigor and enthusiasm for life and move forward in a more positive way.

Your credit can be rebuilt following bankruptcy but wasted years of ineffective debt repayment through debt settlement can never be recovered again.

Please update me on your progress by

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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