Needing an outsider's advice

6 posts / 0 new
Last post
Joined: 02/26/04
Posts: 2
Needing an outsider's advice


My husband and I have about $25,000 worth of credit card debt, and currently owe my mother $6,000. We regularly pay our credits (always over the minimum), but find ourselves not really getting out of debt. Last year we took out a home equity loan as our credit cards were racked up then, no sooner had we done that when one of our vehicles had broke down and we needed a new roof, and my husband's work went on strike. We lived off the credit cards in hopes that his work would turn around quickly and we could pay them didn't happen. So now we are in double the debt we were before last summer. Basically it was a mix of bad choices, dependency on credit cards, and general life stuff that happens now and then without us having an emergency fund to full back on. We have three children and I am on maternity leave right now. Having that cut in income has not helped at all, but we are scraping by (minimally so...still no emergency fund/savings).
We recently sat down to discuss my going back to work. However, after working out the daycare costs and my income, we'd basically be working to stay away from our kids and paying for someone else to raise them. So whilst we need the second income, whats the point of just going back to work to pay the daycare only (and not having any money left over)???
We've batted the idea of me taking another year off or two until the kids are older and taking in another child or two to make up the much needed income. That aside, we really need an extra $1000 to really start making a headway on our debts. BUT HERE'S THE MAIN PROBLEM:

Both of us do not agree on how to manage our debt. I am willing to cut back on our already tight budget and willing to work whatever I have to to get us out of debt slowly but without it affecting our credit rating (as bankruptcy or consumer debt proposal would do). My husband, does not see any light at the end of the tunnel and sees our situation as getting worse as opposed to better and believes we should just declare bankruptcy and start with a clean slate. Bankruptcy, for me, should be our very last option as far as I am concerned. I honestly believe that if we work it right and commit to everything we should be credit card free and not owing my mother anything in 3-4 yrs.

All we are doing right now is arguing back and forth and we are left with not making a decision at all (which is so frustrating). Iam beginning to think that we may as well go bankrupt now if our finances are putting that much strain on our relationship.

I know that finanical issues (in terms of bankruptcy and debt consumer proposal) are different in the US than Canada..but does anyone have some advice on what to avoid. I feel like we really rushed into the home equity loan and weren't properly thinking about it...I don't want to do that again. My husband thinks we should just speak with a counsellor about it and see what they suggest...but I can't help but wonder if they will just push us into something.

I'm incredibly depressed by the situation. If it was just about the credit cards I'd be fine...but I owe student loan's money which I was hoping to put into our mortgage when it comes time for renewal (Spring of 2011)...I can't do that if we have declared bankruptcy. I'm just not sure thats the best route.


Joined: 03/16/15
Posts: 53852

Wow, that all sounds incredibly stressful. The hardest part for me would be the lack of agreement on how to proceed, it just won't work if you and your husband are pulling in opposite directions.


My main thought would be that you should talk to a debt counselor -- a good one won't try to push into declaring bankruptcy but would at least know the ins and outs of your options. Something to consider are the rules around student loans and bankruptcy, as you can't declare bankruptcy on student loans unless it has been (I think) 10 years since graduation. Do you qualify for interest relief on the loans? I suspect if you are on mat leave that you do qualify, and it is worth looking into.

All the best, this can't be easy.

Joined: 03/16/15
Posts: 53852

I can't say it enough - Total Money Makeover by Dave Ramsey. Get it from the library. It DEFINITELY gives you a light at the end of the tunnel.

Joined: 03/16/15
Posts: 53852

I personally don't know if it is a good option but a good friend of mine was in a similar situation and he didn't want to file bankruptcy but was BARELY making it and just didn't see getting ahead on his own. He went through a credit counseling service.

You can talk to them for free and see if it is something worth it for you or not.

For him, they were able to lower his interest rates and do other things to where he pays about the same per month he did before but he will be complteley out of debt in 4 years.
It does show up on his credit report that he is using a counseling service during the time he is using them. And hiscredit score I am sure will go down BUT nothing like a bankruptcy.

If you can do it on your own then I would say that is by far the best option but sometimes that just isn't possible, esp. when you and your spouse don't agree.

Like I said, I have never personally delt with any of these companies so i'm not recommending it but it might be an option to at least look in to.

Joined: 03/16/15
Posts: 53852

I'm so sorry - money problems SUCK, I know, we're going through some money issues as well. When we were married almost 10 years ago we racked up a ton of debt, mostly in trying to get our apartment decorated and all the stuff that newlyweds need. We ended up going through a debt consolidation program. In hindsight, I wish we would have filed bankruptcy. We ended up struggling financially for a long time afterwards trying to keep up with the large payments. We did finally pay it off but I think we would be in a better financial situation now if we had filed. And check on how they each affect your credit because I was told that a debt consolidation notation shows almost just as bad on your credit as a bankruptcy... Due to some bad decisions we've made recently and having a new baby, we're facing some financial struggles now and we're trying to decide if bankruptcy now is the right decision. Sometimes when you're so far in the hole you don't see how you're ever going to get out and get ahead.

Good luck!!

cindyJan08's picture
Joined: 07/23/07
Posts: 8

This thread was started a long time ago and last reply was a long time ago too but I just recently joined this board so am jsut seeing it now. I can totally relate to your situation. My DH and I were in such a mess that goes back about 5 years and stems mostly from us both being laid off a few times and DH being out of work a lot. We racked up tons of credit card & store card debt and basically just stopped paying those bills b/c we couldn't afford to and pay everything else. we moved out of our great condo and into a small 2 br apt to save money...I hated it! DH started a good job back in Nov. and so things were getting better and I had set up payment plans with most of the creditors. But, paying $1200/mo in debt payments on top of everything else was still really hard. We never had enough money for everything let alone any extra to have fun with, buy clothes, etc.

When I found out I was pg a few months ago, we realized we had to do something and do it fast. I ended up cashing out an old 401k I had never rolled over. We got about $20K (all taxes were with held upfront) and paid off everything! Let me tell you, it is such a relief! I paid all my regular bills this month - on time and with out worry of what was left over! Our credit scores will start to go back up and hopefully, we will be able to buy a house a few months after the baby is born.

It was a tough decision b/c that is supposed to be retirement money, but we are young and can rebuild that. Eliminating our debt means we can actually put more into our 401k's now and save money each month for emergencies, house fund, etc. I do highly recommed this option if you have a 401K with a decent amount in it. It is your money, you don't have to pay it back and if you take the taxes out up front, there really is no penalty. It may put us into a higher tax bracket but I would rather pay a few hundred more in April than not have any money at all!

Now I can go buy a house and be broke again, but at least I will have my own house!!

best of luck to you, I hope the situation has gotten better since April!