Q: I have a problem that I am quite embarrassed about and, because of that, I don't want to ask anyone's advice or tell any of my friends what is going on in my life.
Here I am, 43, with a pretty good job – not fantastic but it's OK. I've worked for the same company for five years. I've been working one job or another since I've been 16, so it's not like I am lazy or anything. I bought a house 10 years ago which I've fixed up. I have a few toys like a small water skiing boat, a snow mobile and a small travel trailer. I love to snowboard, water-ski and travel. I don't travel as much as I would like to but usually take a couple trips a year.
My life has been very good up until the economic crash. I have huge credit card debt. I am maxed out on most of my cards and usually I just pay the minimum on each one – and sometimes I can't make even the minimum. I am still paying on my student loans but right now I have them deferred because I cannot afford to make payments anymore.
I took out a second mortgage five years ago to pay for some of my toys, do a little traveling and upgrade my house. I redid my kitchen and put in a hot tub on my new patio. Even though I have upgraded my house, I can't sell it because, in today's market, it wouldn't bring how much I owe on it. The realtor called it being "upside down" on my mortgage.
I guess I was living the "American Dream." Then the bottom fell out of the housing market so I don't have the house to fall back on as an income source.
I don't know where to turn. I don't think I can get a better job right now, and I can't afford all my payments. I get calls from collection agencies. I don't know what to tell them so I just don't answer the phone anymore. I don't want to open my mail, so it just sits on the counter for days before I get up the courage to open it up – if I open it at all.
I can't sleep, and I am anxious all the time. I am thinking about taking out bankruptcy and am looking for a lawyer to handle it for me but really don't want to lose everything and have to start all over. Do you have any suggestions as to how I can get out of this mess that I've made for myself without losing everything?
Over My Head
A: There are a couple of things to do before you make any decisions:
Make an appointment and meet with a not-for-profit credit counselor, preferably one that is affiliated with the National Foundation for Credit Counseling, to look at your options. Credit counselors can give you advice on managing your money and debt, help with a budget and offer financial educational materials. If you are severely in debt, you may be eligible to enroll in a "Debt Management Plan." (Also, there are websites that can help you look at ways to get out of debt and budget your money.)
Next, make an appointment and meet with a bankruptcy attorney so you can understand the different types of bankruptcy and how it would affect you and your credit.
You might want to discuss what is going on with friends whom you trust. It's important that you have the backing of friends as this is a stressful situation and one that will involve changing your lifestyle in order to get out of debt. Good luck; you're not alone.
Find Jody on Facebook!
Living the American Dream, financially, has gotten many of us in trouble with financial commitments. If you find yourself in this situation, there are websites that can help. Go to Facebook/Dear Jody Valley to find a few of them.
