“Dear Steve,
I screwed up. I made investments and lost most of our retirement income. I am also out of work. I am working as a handyman but not making much money. I am however, interviewing for a better job.
My wife is hostile and can’t seem to get over that I messed up. I am making my payments (nothing is late) but won’t be able to hold on much longer. I have $59K left – $30k of that is an inheritance of hers which I will need to pay back.
I owe more on the house than it’s worth. I want out – I’m done – can’t reason with her – we fight all of the time. I have 5k debt to Amex, 35k debt to bank, 103k debt to credit union (17k=credit card, 12k=my car – the rest is 2nd mortgage on house partially used to make investments which I lost and the other for debt consolidation)
I am persuing legal routes to try to get my money back which is extremely slow and not guaranteed – (I am owed over $200k from 3 seperate people). I’m still living in the house (partially cause I can’t afford to go anywhere, although I am paying for the bills here with the last of the money from a job I was laid off of 3 weeks ago as a contractor – 1099 contractor) The burn rate for the house is ~$5k/month – she makes $1400/mo. We have about $6k cash left.
In order to “fix” this – I need some help with what route to take ? Should I claim bankruptcy ? Do I have to wreck my credit first and be behind in my payments before I’m “eligible” to file ? Should I default on the house payments and leave ? Should I pay her the $30k, pay down the rest that I can pay and then proceed to find a divorce lawyer ? I’m unsure what to do first and would like to minimize my financial exposure as much as possible. She can have everything except my tools.
Rufus”
Dear Rufus,
Well that sounds like a true “shit storm”.
This is one of those situations that is best looked at holistically rather than piecemeal. From a total life benefit point of view it is probably better to throw in the towel and get a fresh start, for a number of reasons.
The primary reason is that as long as the financial mess and relationship mess is in your face it will just make it difficult to be enthusiastic to face tomorrow and make it better. I’m thinking just practically and logically, you’ve got to find a path to get a glimpse of the light at the end of the tunnel so you have some hope for the future.
Realistically, the logical solution here is to go bankrupt, close the door on the old debt and stop the unsupported burn rate. We both agree it can’t be sustained so we need to end it as soon as possible.
Before you do anything drastic like just stop making payments and leave I think you really need to find a local bankruptcy attorney you like, make an appointment, and go in and have a strategy and timing session about how all the pieces need to unfold for you.
Part of this conversation will be about the 59K and how to best deal with it. Transfers of assets prior to bankruptcy can create some issues so working this out in conjunction with the bankruptcy attorney will be critical.
At the end of this you will probably be left divorced, bankrupt and with a clean and fresh start so you can pick yourself up and start over again.
I know it feels hopeless right now but the reality is that with the application of some professional legal assistance from a bankruptcy lawyer and a divorce attorney, there is tremendous hope for a new future for you.
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. Do you have a question you'd like to ask me for free? Go ahead and click here.
