Quick Answer: Someone earning over the Chapter 7 threshold can still qualify for bankruptcy since income alone doesn’t disqualify applicants. The expert recommends consulting bankruptcy attorneys rather than debt management plans, as the person has limited time at age 59 to rebuild retirement savings before becoming unable to work.
Question:
Dear Steve,
I was forced to give up my private practice several years ago and unable to find work until recently, partly due to medical reasons. I am now working but spent my entire IRA – early withdrawal, and racked up 50k in credit card debt.
Every weekday I read the enforcement actions, filings and fine print the outlets skip, and turn them into the one or two moves that actually improve your position — a rate worth moving for, a fee you can refuse, a deadline to beat before it costs you.
In the latest issue (Oct 6): When fear picks your debt plan
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My salary is way over the Ch. 7 threshold but I can’t survive and pay these bills. So far I am not behind on anything but it can’t go on. I don’t know whether I should do a Ch. 13 or “debt management,” which all over the place says is a scam. Please advise if you can. Many thanks.
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What should I do that would have the least damaging effect on my credit score and enable me to actually start saving money again. I am 59 and have NOTHING!
Bill
Answer:
Dear Bill,
The answer is clear, you first stop should be to speak to two or three local bankruptcy attorneys regarding your situation. It may even require you to readjust your life if you can squeeze into a Chapter 7. Income alone does not disqualify you from a Chapter 7. But you will need to discuss your situation with a bankruptcy attorney who is licensed in your state.
The pressing issue here is not your credit but the amount of time remaining until you can no longer work. Your primary focus needs to be to get back to saving and rebuilding your retirement funds ASAP. Time is not on your side and if you spend five years in a debt management plan then you are losing critical time.
Credit scores are stupid easy to rebuild. Just read this.
Before You Sign Anything: Run any debt relief contract through the free Contract Decoder to spot hidden fees and unfair terms. Check the company’s complaint history with the Scam-O-Meter.
Compare Your Real Options: Most debt relief companies won’t tell you about all your options — especially the ones they can’t profit from. Credit counseling has a 21-27% completion rate. Settlement resolves about 1% of enrolled debts fully. Bankruptcy has a 95% discharge rate — and protects your retirement. Take the Find Your Path quiz for a recommendation based on your actual numbers.
Bill, just answered your question.