Good afternoon my fellow haters of debt! I hope you are having a great week filled with debt free dreams and paid off creditors. Last week, on my increasingly popular, Debt Free News From A Debt Free Reader series, I received a comment that I wanted to respond to outside of the comment box.
I feel that this issue is one that many are faced with and wanted to share my thoughts on the matter with all of you.
Arlin wrote:
“OK. So I am now at the point where it looks like [my] only option out is Chapter 13. My income is too high for Chapter 7, and a Debt Management Plan doesn’t help at all – I have been to the counselor. Am I a creep for wanting to do this? I am 52, I have a credit score of 730, and have NEVER been late on payments or missed payments. Through a series of events with my kids I have racked up tons of legal bills and other expenses trying to get them turned around. They are now turned around, and I can no longer keep up with payments. Thoughts?”
Arlin, first off, let me say that I do not think you are a creep for having these thoughts. I think that people who knowingly run up debt with no intention of paying it, and file bankruptcy are creeps. This does not seem to describe you sir.
I think you have done what most have done, and lost hope. Bankruptcy seems easy enough, but hardly ever does it solve the problem.
The following is based only on what I know of your situation, so my opinion and assumptions are very general.
With that said, I do believe you have better, more helpful options available to you. For starters, I do not know what state you are in, but if you do not qualify to file chapter 7, I’m assuming that you have a pretty good income. That’s GREAT news! Secondly, you are still young enough and have plenty of time to get things turned around. It may sound old but 52 is not the end of the road by any means. Furthermore, your credit score says that you have been very responsible borrowing and paying back money in the past. So far so good.!
I do not judge anyone who has filed bankruptcy, but I do have an opinion about how wrong it is. I feel it is wrong not to pay someone the money that you agreed to pay them. So essentially, if you were to file bankruptcy, it would not have been you that helped your children, but instead the lenders who loaned you the money to help them. My opinion is that you should pay them back, by sucking up the hard part, and fixing this mess all by yourself. You made the mess, someone else shouldn’t have to clean it up. (I say this with the utmost respect and kindness.)
The Question: Are You Bankrupt?
Again, I do not know how much money you actually owe, but I am willing to guess that you’re not bankrupt at all. I believe that bankruptcy is a LAST resort, which I do not think you have made it too as of now. From the sound of your comment, you have just recently become delinquent. Is that correct? If it is, then you have other steps to work through before declaring yourself bankrupt.
Just because you have been unable to pay your debt payments does not mean you are bankrupt, it just means you have some work to do. Bankruptcy is something someone is FORCED into declaring. For instance, someone may be forced into declaring bankruptcy if a former judgment was being executed on. In this case, there really is no choice, because then the money will be taken out of their pay even if they cannot afford for it to. “Execution” of a judgment is a process that usually takes some time to reach.
Here are some of the questions you may want to ask yourself to find out if you have reached the point of bankruptcy.
- Are you on a budget?
- Have you tried communicating with the creditors about setting up a lower monthly payment plan?
- Have you tried using the Pro-Rata Method?
- Do you have any judgments against you?
- Is anyone trying to execute on those judgments?
- Have you attempted to do a Total Money Makeover?
- Have you tried using the Debt Snowball Method to rid yourself of this debt?
- Have you cut unnecessary monthly expenses to give yourself more disposable income?
- Have you tried to find ways to increase your income?
If you have not tried using the above listed avenues, you are by no means bankrupt. According to your comment it just sounds like you have simply given up. Is that a fair assessment?
I challenge you to reach a little further, and dig a little deeper for other solutions, because I do not think you are bankrupt at all. I also do not recommend giving up. You said you have been to a counselor, as well as a debt settlement specialist. Let me just say this; you are your best debt settlement specialist. Debt management companies are in it to make money. You are your best source of making it through this mess you are in, and it will cost you nothing extra.
- You have the ability to negotiate your own settlement.
- You have the ability to pay down your own debt.
- It doesn’t cost you a dime in fees.
- There are more benefits in doing it yourself, than having someone do it for you.
All you have to do is not give up on yourself or your ability to get this problem resolved. I believe in you Arlin, and I know you can do this without filing bankruptcy! It might be tough, and it will take some sacrifice, but you will feel so much better having avoided bankruptcy. I hope this has been helpful, and more than anything—I want to wish you luck and courage in dealing with your current state of affairs. I would love it if you kept me updated as you work through this.
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