Jill Says, “I’m a Stay At Home Mom. We Are Starting To Sink.”

Jill wrote me through the GetOutofDebt.org site and asked for help. You can write me also and ask for help.

“We are in a load of debt. My husband makes $90,000 a year, I am a stay at home mom. We own our home, but there is not much equity so we can’t refinance. We owe $50,000 in credit card debt and we can barely make the minimum payments. We don’t know what to do. We feel like we are starting to sink. I know we did this to ourselves by living beyond our means, we want to fix it, but don’t know where the money will come from. We have not been late with the mortgage, but the credit card bills go sometimes 30 late, then we try to catch up, but is getting harder. Our credit rating has dropped significantly also.

Do you have any suggestions for us, should we look at debt settlement? My husband says bankruptcy is out of the question. What should we do? Help! Thanks!”

Hi Jill,

I know these are painful and stressful times. When life feels beyond your control, it is as if every day is a chore just to make it through. Add on top of that, responsibility for little ones, and you’ve got a real pressure cooker there.

Everything you’ve shared makes me worried for you. It’s one thing to get your financial life back to a break even point when you recognized that you’ve been living beyond your means but any lifestyle change to bring you back to a break even is not sufficient to really help.

In order to dig yourself out of this hole you’ll have to go further and do more. You’ll have to reduce your expenses so far back that you can easily have extra money each month to start paying down the debt. And once you get to that point, you’ll have to sustain that lifestyle for the next five to seven years.

I don’t know how realistic that is for you and your family. For many, it’s just not. And think about this, if you do this for the next four years and then decide that it is too difficult to continue and do something like go bankrupt at that time, you will have wasted the last four years of your life.

I would say the primary reason a plan like this is not sustainable is that people want to put every available extra dollar towards debt repayment and not save at the same time. You’ll have to also put cash in the bank at the same time to build up an emergency savings fund so a large unexpected expense does not wind up back on the plastic again and put you five steps backwards.

You’ve said that bankruptcy is out of the question but your situation is a bit like being overweight and saying that changes in diet and exercise are out of the question. Just because it is something that you don’t want to face does not change the fact that bankruptcy may be the best and most logical solution at hand to eliminate your debt quickly, protect your house and let you start over right now.

Approaches like debt settlement or a debt management plan are stop gap measures at best. Neither will eliminate your debt quickly and debt settlement will further tarnish you credit as the debt settlement company accumulates your monthly payments over time to then offer your creditors in an offer to settle.

If you had cash in your hands right now you could offer your creditors $32,500 on the debt as payment in full, you might be able to get settlements. But debt settlements are not free, all the money forgiven in the settlement is taxable by the IRS just as if you had earned that money. So if you settle the debt and get a big debt reduction, don’t forget to set aside cash to pay the extra tax you will owe at the end of the year.

A debt management plan might be worth considering but it is an all or nothing approach for the most part as well. A credit counseling group that offers debt management plans (DMP) may be able to get your interest slightly reduced and maybe a little reduction in your monthly payment. But unless your life is not full of surprises over the next four to six years while you reduce your lifestyle and repay your debt, that approach is probably not going to be successful either. A truth is that most credit counseling repayment plans end in failure with people never full repaying their debt through them

Here is the honest truth about what you’ve told me.

  • It is unlikely that you will be able to reduce your lifestyle and sustain that for a long enough period to get fully out of debt.
  • A debt management plan has the same issues. A debt settlement plan is going to further trash your credit and unless you’ve got the cash on hand to settle your debts right now, I don’t think you’ll be happy with the process.
  • Finally, even though your husband says that bankruptcy is “out of the question” I still think that the two of you should find a local bankruptcy attorney and got talk to them. You don’t have to go with the intention of filing bankruptcy but to better educate yourself about what bankruptcy really means to you. It would be a shame to eliminate bankruptcy as one of your legal and reasonable options just for fear of how you might feel about it.

But no matter which path you decide to pursue, I’ve made a lot of links available to you through this answer and I’m here for you if you need me.


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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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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