Published September 27, 2011
Dear Bankruptcy Adviser,
I am 60 years old and own a condo with a balance that is probably equal to what the property is worth. I had been out of work for almost a year and am now working at a job that earns less than minimum wage. My question is: I have more than $60,000 in credit card debt mostly due to trying to exist. At this point in my life, I don't see ever being able to pay this off. Should I consider bankruptcy?
Your age and income should make for a very smooth bankruptcy filing. And because you have no equity in the condo, it is protected as long as you make the mortgage payment. Sometimes the biggest hurdle is the emotional one. You likely have had years of perfect credit payments, and you bought a house, made those payments and had a well-paying job.
But you might not have saved much for the future, and the loss of the higher-paying job meant credit cards were used to fill in the monthly expense gap. As a result, the credit cards became your "savings" and were used to supplement limited income. This is more common than you know.
I would suggest you take the following steps.
Contact at least two bankruptcy attorneys in your area. You should receive a free consultation, and each attorney should be able to tell you in less than 30 minutes whether you qualify and what type of bankruptcy you can file. After that meeting, you have a powerful tool at your disposal: You will know whether bankruptcy is an option.
You may want more accurate information on the value of your house before seeing an attorney. I don't think an appraisal would be necessary, but you could look at different online sites that give property value estimates of comparable homes in your area.
Contact a local credit counseling agency. Maybe you could afford one monthly payment to pay all your creditors. This option will be difficult because of the amount of debt and your limited income, but I believe it's worth the call because you can benefit from understanding what options exist.
Be careful with this option. If you decide to try it, you must make sure you are paying all creditors with the one credit counseling payment. I don't think you can afford to pay some creditors inside the counseling program and others directly.
Call the creditors directly. If you do qualify for bankruptcy, you have a great negotiating tool. You can request that the creditor work with you to reduce your monthly payment. Some creditors may work with you and some may not. All your creditors must work with you before you start paying even one creditor. Reaching an agreement with a few creditors, but not all, would make debt repayment impossible.
The more informed the decision, the easier it is to live with the results.