I Am 52 And Not Worked in Five Years. Creditors Are Chasing Me. – Lora


“Dear Steve,

I am 52 and have not worked since 2004. Our company was dissolved. I have $14,900 in debt to one credit card CHASE. I am in debt collections now. I have 3 other credit cards that are current. The CHASE card is 6 mos past due as I can NOT afford to pay $390 a month! We live on my husband’s SS. He makes $1,000 a month. We are in below the poverty level!!

My husband owns his home. He has had the home since 1975. It is fully paid. It is assessed at $50,000. We have no savings. I used my 401 K to pay on these cards but now I do not have any more money saved.

If we go with a debt settlement company, then we would have to pay the IRS on the forgiven amount…we just do not have the money!!!

Client Services, the collection agency, says that we have only two options…one to coe up with $7,500 and they will forgive the rest.

Or two…they will set up a re-payment plan where we pay them $267 a month for 6 months and then they will reduce it to $100 a month until the whole $14,900 is paid off . This is called “Interest-free hardship Repayment Plan”.

We can not afford this either..especially only having $1,000 a month to live on!

I contacted a BK lawyer and he said that under Chptr 7, they would sell off the house and we would get $15,000 and thet rest would be split between the lawyer and the creditors, plus the black mark of BK would haunt me for many many years!

Seeing the above background, is there anyway that we can get out of debt, especially since we make soooo little??? Would the creditors garnish our checking account?? Would they put a lien on the house??? The house belongs to my husband only…..Can you advise me what to do please?? I am soo stressed by all of this!

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Thank you!


Dear Lora,

Are these credit cards in your name alone?

You did not mention what the bankruptcy lawyer said about a Chapter 13 bankruptcy. A Chapter 13 bankruptcy is a payment plan that will let you pay what you might be able to afford based on your income and circumstances. At the end of the payment period any remaining debt is wiped out. It is like a legal debt settlement plan without any tax liability or creditor harassment.

If these debts are in your name alone and the house in in your husbands name, unless you lived in a community property state I don’t see how the house could be sold.

Using the 401k to make card payments is ill advised. Those funds would have been protected from creditors if you had gone bankrupt earlier.

I sense there is more to this story. What did the lawyer say about a Chapter 13 bankruptcy?

If you were unhappy with the first bankruptcy lawyer, go get a second opinion and talk to another bankruptcy lawyer.

I know you are stressed, but if you can help me out with some answers, post them in the comments section below, I can help you get to the bottom of this.

Please update me on your progress by

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.

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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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