My husband is in denial of our huge debt. He keeps saying if we can just hold on a little longer something will come up. My husband does not even want to go to a bankruptcy attorney for a consultation.
He thinks that declaring bankruptcy is the wrong thing to do because he has heard that it stays with you the rest of your life, despite what everybody tells you. He thinks that we will never be able to buy a house, car, get a loan, etc if we declare bankruptcy.
My feeling is that our credit is really bad now and we have so much unsecured debt ($86,000). If we don't get it taken care of now, it will be there like a ball and chain the rest of our lives because of the high interest rates.
I think bankruptcy might actually end up helping our credit rating because now we are getting letters from our credit card companies lowering our credit limits. I just got one from Discover Card on Thursday saying "after a review of your account, we are lowering your credit limit from $2000 to $500.00 due to information we received from credit reporting agencies." I had never missed a payment on the account. I also got a letter from Bank of America, lowering my credit limit on one of my cards for that same reason. My husband got a letter a couple of months ago revoking his charging privileges on his Chase Mastercard even though he still has to pay the balance off. That was done after an account review, This means that we are in deep trouble and need to get out, and the only way I see is bankruptcy.
Two of my friends are urging us to enroll in a credit counseling agency because two of their friends tried it and it helped them, but we already had a consultation a couple of years ago with one credit counseling agency and was told to curb our gas spending to $5.00 per month, get rid of our pets, etc. She said at the end of the month we would have only $25.00 in spending money. What happens if one of us got sick and had to go to the doctor or there was an emergency? Where would we get the money? Also, I've heard about the huge fees these agencies charge.
Given the amount of debt we have and the fact that it's more than both our salaries combined per month, I think the only option is bankruptcy. How do I convince my husband that we should just go for a free consultation with an attorney to see what options are out there?
Ugh - what a terrible situation to be dealing with.
First off, recognize and respect your husbands fears/concerns. Filing BK will effect your credit for a good 7+ years. In that time - DO you plan on needing/buying a new car? A new house?
If the answer to those questions is yes then you two need to sit and talk those things out.
If the answer is no - then what do you have to lose (IMO.) We just cancelled a credit card that we paid off that had a balance of $20,000 on it. People tried to talk us out of it and we knew it would ding our credit. We have good credit BUT we knew we were not making any major purchases for years. We have cars that are 3 years old and have a home we are happy in. We have time for our credit to get better so we didn't mind cancelling the large balance card.
Does that make sense?
IMO - if the consulation is FREE then your husband is a foolish to not want to go and HEAR what they are saying. No commitment. Just listening.
He needs to see your monthly income on paper and see your c/c bills on paper. Perhaps then he'll see that the two don't add up. Some people "learn" differently.
We won't need a new house, but my husband probably will need a new or used car in the next 7 years. He's driving a 1990 Corolla with132,000 miles on it. I don't think it will last another 7 years! I have a 2008 Civic, so no problem there. We can't just rely on 1 car because we both need cars for work. I know someone who is in bankruptcy and still was able to get a car, just had to pay a higher interest rate.
I already showed him on paper and all he said was wow and how'd it get so bad and I told him that I kept on telling him it was bad. He's blaming me, but I make about 75% more than he does and for the area that we live in we are way under the income level for a 2-income couple. Most people who live where we do who have 2 incomes with no kids make $100,000+ combined (we live in the suburbs of New York City) and those with kids make $150,000+). Homes cost $600,000-$1,000,000 in a lot of areas. One of the women I ride the train with who is single and has a co-op makes $80,000 and the other who is married makes $95,000. One of my friends who is a school teacher and is tenured makes $105.000! We only make about $3000.00 combined per month, which is 36000 per year!
Everyone tells us to move out of the area because we live in one of the most expensive areas of the country, but due to my job, we can't. It is very specialized and I can't just go anywhere. I've been with my company for 25 years and used to get good raises, but no more since the economy is bad and since I'm at the top of the pay scale for what I do. Unfortunately no room from advancement either. I've looked for other jobs in the past, and had even been offered two, but I would have had to take a pay cut, which at the time, I was not willing to do. Now I am starting to regret it because maybe if I went to the other company I would have moved up and would have been making more money now.
Luckily, we are renting our in-laws old house and they are charging us rent that is way below market value. They offered us the house when they moved and thought it would be cheaper for us than the apartment we were renting. However, we have to take care of the oil bill which is high in the winter time, and the electric/gas bill is more expensive because it is a house. We also are supposed to fix or replace anything that breaks as part of our agreement, and that's part of why we are in debt. The washing machine, dryer and wall oven all had to be replaced because all broke almost at the same time (more than 20 years old) and repairmen said they weren't worth fixing. We also need to replace the kitchen floor, and do a couple of other repairs, but don't have the money. My in-laws keep on bugging us as to when that will get done.
Since my husband hasn't been working full time, we have fallen behind on the rent due to our financial situation and my in-laws blame me. They really don't know how bad things are and it is more my husband's fault than mine since he can't seem to find a good paying job (I would never tell him that though because he feels bad enough). My father-in-law was out of work in the 80's and he said they managed fine with one income. Things are much different now than they were twenty years ago. Everything is much more expensive and salaries have not kept up with inflation. All they keep on saying is cut back and rework your budget, but we have, and there is nothing else we can cut out!
Ok, I would say listen to your husband and NOT your friends in your case.
Bankruptcy does not mean your debt goes away. It just means the court gets your paychecks first, then you get what is left to live on. The court pays your outstanding debts for the next SEVEN years. You do not get to say goodbye to your debts and clear your name tomorrow.
Credit counseling companies all charge a fee to help you. If you can't pay the credit cards, how will you pay for a credit counseling company?
ALL banks and credit agencies are getting credit limits cut - my credit rating improved by over 50 points and 3 cards cut limits. The banks are doing this to cut their outstanding liability.
I would get the Total Money Makeover by Dave Ramsey or find a series of Financial Peace University in your area. That program can give you steps to handle this yourselves.
I had over $80k in credit card and student loan debt myself and paid off $17k just this year alone. Yes, I work a second job to help, I have a spending plan, but we still had steak last night.
First write down all debts, interst rate, date due and amount due. Then list your income and make a monthly spending plan. Ask your DH to help you. Dont' be angry, you both got in this and need to work hard to get out of it together.
You are not alone, we are hear to help you. I have a spreadsheet that many here have used to get themselves on track.
I don't doubt that its hard to live off the income you have with all the massive debt load you are carrying. BUUUUUUUUT, you gotta make life changes if you want your life to be debt free. Can you relocate your home and commute further? I don't doubt that is NOT an ideal situation but if it saves you a lot of $$ monthly - might it be a consideration?
If not, what about a second job? Or a seasonal job? Or cutting down on household things like cable? Cell phone packages? At this point to pay your minimums you need money. Can you sell something on ebay?
It's hard when you see those around you making a certain figure or living a certain way but IMO that's how some people got into financial messes. They tried to keep up with the Jones'. I live in a townhome. It's got plenty of space for our family of 4 and we are happy here. People have suggested I move to a single family home since the housing market is cheap here but I wouldn't think of it. I have NO desire to add more expenses to our lifestyle when we can afford the one we have. Sorry, started rambling there.
Anyway, as you know - something needs to change. You and DH need to figure out what. It's not gonna be easy.
