Get Out of Debt Guy

Am I Wrong to Think Bankruptcy Should Be Our Last Resort. - Sarah

Posted March 25, 2013

Reader Question

Dear Steve,

$35,000 credit card debt spread across 7 cards with APRs ranging from 4% to 17%, $750 month mortgage payment, $800 month cc payment, $60,000 student loans on low-income repayment with $0 payment. Adjusted gross income $24,000, monthly take-home fluctuates between $2000 and $4000, but usually on the lower range. My husband is self-employed.

My husband and I are expecting our first baby and we are living paycheck to paycheck and often in the red. Our income is barely sufficient to cover our expenses and we can't make progress on our debt, and yet we do not qualify for government assistance, we aren't quite in need of debt relief agencies as far as I can tell, and bankruptcy is only a last resort.

We are using YNAB (budget program) and tracking our spending carefully. I am applying for jobs with higher earnings but there are no guarantees. What else could/should we be doing? We also now need an extra $1000 a month for child care and insurance when baby arrives. We are very stressed by this situation and we don't see a way out. Any advice is appreciated!




Dear Sarah,

Bankruptcy should not be your last resort, it should be your first resort.

You need to take rapid action here to make changes that will provide a safe home for your baby to come to. That might mean reordering your priorities.

Filing bankruptcy will clear away almost enough with that one move to meet you new child care obligations.

You should also check to determine what benefits you might be eligible for to help make ends meet.

I suggest you read Change Your Mindset and then talk to a bankruptcy attorney as soon as possible.

Please post your responses and follow-up messages to me on this in the comments section below.

Steve Rhode

WRAL Get Out of Debt Guy

If you have a question you'd like to ask about getting out of debt fast, click here.


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  • steverhode Mar 27, 2013

    I understand the baby question. If the child was a surprise, what's the option? Do we then suggest that people have a financial needed abortion? See, it's a no win situation.

    I think with the child on the way we just need to plan for the current reality.

  • jedichick Mar 27, 2013

    Why are they having a baby they can't afford??

  • steverhode Mar 26, 2013

    How does the bankruptcy of someone else increase your expenses and your debt. Please be specific.

  • common tater Mar 26, 2013

    So the advice is go bankrupt and go on the dole. In other words, burden others, who are paying their own way, with your debt and expenses. What ever happened to being responsible and paying your own debts? It's this kind of advice that's gotten our country...and the world...into the mess we're in.

  • steverhode Mar 25, 2013

    Many more can discharge their student loans in bankruptcy but never try. See

    That being said, there are some very narrow criteria that those who get their student loans discharged must meet.

    Typically the way people accumulate the bankruptcy fee is by stopping the unsecured credit card payments. I think if you look around you'll find other bankruptcy attorneys that charge less.

  • cushioncritter Mar 25, 2013

    At my bankruptcy filing I got a standard handout that indicated that the bankruptcy trustee can in fact discharge student loans if your situation is dire enough. The only problem with trying to file Chapter 7 when things are really bad is that you need to pay about $2000 in attorney/court fees.

About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.