#FinancialAdvice #DebtManagement #BankruptcyVsDebtRepayment
Debt Situation
Feeling overwhelmed by debt is a common experience for many individuals, especially during tough economic times like the COVID-19 pandemic. It can be challenging to navigate through financial difficulties, but seeking advice and guidance is a great first step towards finding a solution.
Understanding the Numbers
Before making any decisions regarding your financial situation, it’s crucial to have a clear understanding of your debts and expenses. In your case, with $60k in debt and a $42k yearly income, it’s important to address the root causes of your financial struggles.
Exploring Options
You mentioned two potential paths forward: declaring bankruptcy or chipping away at your debt slowly. Each option has its pros and cons, and it’s essential to weigh them carefully before making a decision.
Option 1: Declare Bankruptcy
Bankruptcy can provide a fresh start by eliminating certain debts and giving you the opportunity to rebuild your financial life. However, it can also have long-lasting effects on your credit score and future financial opportunities.
Option 2: Debt Repayment
Choosing to chip away at your debt slowly may take time, but it can also help you avoid the negative consequences of bankruptcy. Increasing your income and carefully managing your expenses can help you make progress towards financial stability.
Seeking Professional Help
Navigating the complexities of debt management and financial planning can be challenging on your own. Consider seeking advice from a financial advisor or credit counseling service to explore all your options and make an informed decision.
Making a Plan
Regardless of the path you choose, creating a concrete plan for managing your debts and expenses is essential. Set realistic goals, prioritize your payments, and stay committed to your financial recovery journey.
In conclusion, feeling embarrassed and overwhelmed by debt is a common experience, but it’s important to remember that there are always solutions available. By seeking advice, exploring your options, and creating a solid plan, you can take steps towards a brighter financial future. Remember, you are not alone in this journey, and there is help available to guide you through this challenging time.
Can you pick up a second job, either part-time or gig work?
Honestly, you are a perfect audiance for what Dave Ramsey preaches. If you haven’t looked closely at his strategy for debt before, give it a look and check out some of his free content on YouTube, etc. Focus on paying off debt in his snowball approach, and follow a strict budget. His content can also just generally help with the motivational aspect of getting out of where you are: [https://www.ramseysolutions.com/dave-ramsey-7-baby-steps](https://www.ramseysolutions.com/dave-ramsey-7-baby-steps)
Avoid bankruptcy given the implications that come along with that, and focus on sticking to a budget, paying off debt, and increasing your income. You can absolutely get out of your current situation without bankruptcy, but it comes with a tough lifestyle short-term so that you can enjoy life long-term
Bankruptcy is a short-term solution that has long-term implications (and not fun ones). Just to name one example, you won’t have to worry about what potential landlords think about your car, because they will be too busy laughing about that bankruptcy on your credit report.
The 2350/mo expenses, does it include *everything*? Living expenses (rent, food, etc), wants (let’s be real here, nobody posting is a robot and can (or should) completely give up everything enjoyable in life, they should reduce wants as much as possible of course and enjoy what they have, but if a $5/month subscription to x gives them hundreds of hours of enjoyment then so be it), and all debt payments including the defaulted ones?
I think you could Dave Ramsey your way out of this. I had a similar situation going on and I got out of debt following his principles . It’s designed for people in your situation. Once you get out of debt and have a 6 month emergency fund, then you can get into higher level investing and finance strategy
PS I also used a service called Greenpath Financial Wellness when I was in crushing out of control debt and struggling to get a handle in it. It was so helpful. They call your creditors and do the negotiating for you and get you on a single payment debt management plan.
You’re in one hell of a hole and realistically will take about 3 years to recover from, especially with no support system. No magical advice other than to buckle up and get it done.
Be kind to yourself along the way, but do not splurge your hard earned money on temporary satisfaction.
Can you move into a LCOL area? Somewhere away from the city? Because it sounds like you live in a HCOL area but don’t make enough to cover the expenses.
If you want to stay, you might need another job. You mentioned Uber. If you can trade in your car, see what you can get for it. If you can get a older Toyota or Honda, those can last forever and give you a lot of mileage and are pretty good on maintenance. Maybe take a friend who knows cars with you. There are certain dealers that specialize in financing for people who do rideshares and some who also work with people with bad credit.
Somehow, you gotta tip the income/expense ratio more in your favor.
Don’t worry too much about it with the depression and stuff. You took a risk, and it didn’t pay off. You had the guts to take a risk in the first place and try something to advance yourself so kudos to you for that. Some people have said it here, but Dave Ramsey really works.
The judgement creditor that won the lawsuit on you will likely negotiate a payment plan with you like the credit card companies did at this point, they want something for it. Probably legal fees they will throw on top which stinks but that’s how these things go. Do what you can to make progress on chipping the debt away and for living in a high cost of living area consider moving to a lower cost area and/or seeking a higher paying job actively. Good luck!
If you don’t mind me asking why did the tech boot camp now work out? I’ve looked at doing one myself. That said I agree with others. Hang in there…it won’t be easy but you can definitely overcome this. And who knows what opportunities may spring up