Question:
Dear Steve,
DEBT- Husband went from 280,000 to 100,000 income and we have an adult daughter that has drained our savings and retirement with substance abuse.
Behind on everything- Mortgage 11 months just worked out payment structure ok there- fed taxes 117,000 had installments until this year waiting on verdict. 180,000 in student debt and 80,000 in credit card debt and 35,000 in personal loans as well. An ex trying to sue me. Sent Summary judgement to civil court. I've been trying to work out payment and they will not accept my payment plan. Credit 478 now. Think of suicide often. NO ANSWERS- trying to hold on. I make 75,000/ Total income 175,000 before taxes. HELP
Kay
Answer:
Dear Kay,
I feel your pain and panic. And while the entire situation has reached a crescendo it's important to keep in mind this did not all happen overnight. And so as this wound up, you can unwind this over time as well.
The key here is to seek shelter in what quick options might be available to give you some breathing room. At this point you need to bring down the stress level and manage your potential depression to get back to some clear skies and room to think.
If you have not done it, you should absolutely meet with a local bankruptcy attorney or two to discuss your situation. Taxes owed for more than three years can be discharged in bankruptcy, you might want to give up your unaffordable house and close out that debt, and you can close the door on that old judgment as well. And let's not forget the unsecured debt would be discharged also.
Doing this would give you a tremendous fresh start and protection fro creditors under the law. It would also allow you to eliminate the unmanageable debt, tax free.
So here is a reality that people don't talk about too often, Those That File Bankruptcy Do Better Than Those That Don't. And that's according to an article from the Federal Reserve Bank.
Once you tackle this swiftly, then we can look at your student loan debt and if it is private or federal. If it's private debt then some of that may be eliminated in your bankruptcy. See These Private Student Loans Can Be Easily Discharged in Bankruptcy.
Now, all of that being tackled it's time to set your sites on adjusting your new life to fit inside of your new income. And probably the toughest task of all, to find a way to emotionally and financially deal with your daughter to stop the hemorrhaging.
Don't worry about your credit score, once you file bankruptcy it's easy to repair and you'll have a great credit score in the near future. Just see How to Easily Rebuild Your Credit and Have Good Credit Again.
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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.