How do I admit to being in debt?

[tulog]

Bankruptcy is not your last option; it is your best option. But given these facts, you need to do some pre-planning for at least six months prior to filing.

1. Stop paying the credit cards and any other unsecured debt.
2. Use extra monies instead to save assets up to the bankruptcy exception amounts.
3. a. Rent the house out on a month to month basis. Keep records of rental agreement and payment.
b. Live somewhere else inexpensive in the meantime.
4. After six months, file a Chapter 7 bankruptcy.
a. Means test does not apply if majority of debts ($285,000) are business debts - namely investment property.
b. Stop paying the mortgage.
c. Do not oppose the lender foreclosing the property during the bankruptcy. Lender can request a relief from stay.
5. Note the sale price of the property at the foreclosure sale.
6. Discharge the debts including the loan (and any deficiency amount to lender).
7. After discharge, on next tax returns, use a CPA and claim a real estate loss on sale of the business rental.
8. Use these monies in a safe investment to get a better financial basis moving forward.
9. Minimize monthly liabilities going forward. and improve the balance sheet.

[mgkimsal]

I do wish my husband would get on board. When I suggest turning off a/c or lights, canceling cable to lower utilities - he gets defensive!!! This in turn causes me to get defensive and we are off on a cycle where I feel I could clean this up better all on my own.

Wasn't sure what he was 'defensive' about at first; I'm guessing it's his job situation? There's some deeper emotional issues going on between you two, because turning off a light shouldn't cause that. Heck, even now that I *can* afford to run the A/C 24/7 if I wanted, I wouldn't dream of it. I shut off lights religiously and make sure the A/C is regulated to be comfortable, but not used as much as in years past.

Enter in family and friends and their pressure for visits and why can't you do this or that or "surely you can afford it". I explain my situation and that's when I feel pressured to charge. It just creates isolation because when you can't do things and all of your weekends and free time are spent at the library or browsing, it tempts me. But, if there is a way of somehow pulling myself out of this hole for a few years and sacrificing, I am willing to try. My problem is getting family to back off because honestly - it's as if they really do not believe me!

It might be snarky, but shoot back "surely you can afford to pay for me to do XYZ?" Cross state trip, days out at the movies/park/dinner, whatever. Of course, it's so cheap, so they can afford to pay for you as well, right?

The only thing you can do is keep repeating the same thing. No, you can also stop talking to them as much as you are - it's obviously creating tension and temptation to overspend, which you can't afford right now (or ever, really). Eventually, one day, they may understand, but until then, there's no need to keep torturing yourself. Find newer friends that are in to the frugal lifestyle. Join a frugal living club in your area (http://frugalliving.meetup.com) For many, overspending comes from keeping up with their peer group. Changing your peer group (or at least adding *new* peers) is often a good way to keep that in check.

Good luck to you.

[debtproz]

Top heavy

It appears that you are top heavy and are very close to the breaking point. The house and car is a priority every thing else is secondary. That's just my opinion and keep your head up because you are still in the game.

[Mesem]

I am really struggling with this. I work very hard, I completed advanced degree (BA and MA), but have heavy student debt, a house that is belly up, and a lot of CC debt. Husband lost his job, I've tried to cover us, and debt just continues to grow. We have not been married that long, so house and my credit cards, student loans are separate. As you can imagine, it's taken a toll on what started out as a promising marriage. Good news is, I have a good job, good credit score, but a few cards are just about maxed out - so I'm not sure if credit score matters any more, actually! It is a struggle and I am broke. This is why:
Salary: Net: $3500
House: Owe $285K - value:$145K (I don't qualify for loan mod - because, on paper - I can make my payments!)
Car: Owe $30K
CC Debt: $45K
S Loans: $80K

Total Expenses per month: Mort: $1272; CC: $900: Car:$400; Ins: $80; Food: $240; Gas: $200; Utilities: $300; Cell; $65

Husband tries, but doesn't make much. Keeps looking for a better job - not much luck; All bills are current, but I haven't got much left over! So friends, family can't understand when I can't go out for dinner, lunch, visiting them when they live far away. Colleagues bragging about expensive trips and asking when you are going? Keeping up appearances got me in this situation, but they think I'm joking when I say "I can't afford it"! They think I'm successful! I want to laugh! House needs repairs; new appliances, etc.. I just feel ashamed and embarrassed that I let myself get in this situation. I think I've been an idiot with money and I know it's my fault, poor choices. But what do you say to convince people - hey I just can't afford it when they insist you do something and just don't get it?

Feedback, anyone?

Yes, u r a fool, but it would be more foolish to count on others to dig you out by admitting to them that u r in debt. The first thing that needs fixing is not your debt or your job, but that thing that sits atop your shoulders. Fix that and the rest follows.

[Baby_nurse]

Yes, u r a fool, but it would be more foolish to count on others to dig you out by admitting to them that u r in debt. The first thing that needs fixing is not your debt or your job, but that thing that sits atop your shoulders. Fix that and the rest follows.

Where on earth are ou getting from her post that she's asking for others to bail her out? She's not, she has asked for help with getting others to acknowledge that she and her husband are not in the position to do some of the things they have in the past. To that end, a simple "sorry, but we are saving our money to (fill in the blank) is sufficient explanation for them.

[Mesem]

Where on earth are ou getting from her post that she's asking for others to bail her out? She's not, she has asked for help with getting others to acknowledge that she and her husband are not in the position to do some of the things they have in the past. To that end, a simple "sorry, but we are saving our money to (fill in the blank) is sufficient explanation for them.

And where on earth are you getting from her post that she is not asking for others to bail her out?

[soapgal04]

To " Mesem" - How wrong you are....

I appreciate all of the positive comments from the posters who actually took the time to "read" my post and give valuable insight. Like a lot of people in debt, I originally posted here looking for feedback on how I could let some of my friends and family know in a diplomatic way, "hey I can't do this or that" and get them to back off without going into a full blown discussion of my personal life at work, with relatives, etc. while I focus on getting out of debt. This would mean not spending money on extras - i.e., travel to visit family, dinners , expensive gifts, lunches out and so forth. I have no problem giving these things up and tightening up my budget. The problem is, when you're used to doing these things and you must suddenly explain why you can no longer do so, it's a little awkward. If you, Mesem, call that asking for people to "bail me out" then I must say - I am a little baffled. I do thank you for enlightening me because this is the first time I've heard of this new take on the meaning of the word "bailout"...

Friends and family are sometimes insistent; they don't always take "no" for an answer because they do not have the facts, and for that reason, the lack of a wise response has been a challenge for me. This site has given me some wonderful ideas.

Thanks again for writing - your comments do indeed give new meaning to a couple of things - most notably the word "fool".

[soapgal04]

To " Mesem" - How wrong you are....

I appreciate all of the positive comments from the posters who actually took the time to "read" my post and give valuable insight. Like a lot of people in debt, I originally posted here looking for feedback on how I could let some of my friends and family know in a diplomatic way, "hey I can't do this or that" and get them to back off without going into a full blown discussion of my personal life at work, with relatives, etc. while I focus on getting out of debt. This would mean not spending money on extras - i.e., travel to visit family, dinners , expensive gifts, lunches out and so forth. I have no problem giving these things up and tightening up my budget. The problem is, when you're used to doing these things and you must suddenly explain why you can no longer do so, it's a little awkward. If you, Mesem, call that asking for people to "bail me out" then I must say - I am a little baffled. I do thank you for enlightening me because this is the first time I've heard of this new take on the meaning of the word "bailout"...

Friends and family are sometimes insistent; they don't always take "no" for an answer because they do not have the facts, and for that reason, the lack of a wise response to them is indeed a challenge. This site has given me some wonderful ideas.

Thanks again for writing - your comments do indeed give new meaning to a couple of things - most notably the word "fool".

[shaggy]

Friends and family are sometimes insistent; they don't always take "no" for an answer because they do not have the facts, and for that reason, the lack of a wise response has been a challenge for me.

Hey soapgal, don't let the marginal posters get you down.

Your question morphed a bit as the thread progressed. I do hope you'll consider the book I recommended on the first page ("All Your Worth").

Regarding the bolded above, you just have to stand your ground. "I really can't spend money right now. I don't want to go into details and I hope you care about me enough to respect my decision at face value without pressuring me for specifics."

[dunnrobert700]

Just tell them. Your question means you feel like you're living a lie. Be blunt, be honest, be courageous and you'll be amazed at how liberating it is to relinquish maintaining illusions for others. You may also learn who your real friends are which is a good thing.

THEN you'll be free to take some critical steps such as...

Talk to a lawyer about your mortgage.

Depending on the state, you may be fully entitled to simply walk away from the house, turn the keys into the bank and move on, even without declaring bankruptcy.

This may or may not be the case in your specific situation, but could solve a big chunk of your problems in one fell swoop. Don't feel bad about it either. Both you and the bank knew the terms of the contract and the applicable laws (the bank probably knows them better than you do). If you abide by both, you haven't done anything wrong any and all BS about "honoring your debts" aside. Have doubts? Think about your counter-arty the bank and whether they would hesitate to do anything profitable to them within those bounds.

Next look at the car. Nobody "needs" a $30K car. If you can sell it and pay off the debt or even at a modest loss, do so and get a cheaper car you can buy cash.

[Baby_nurse]

And where on earth are you getting from her post that she is not asking for others to bail her out?

Ummm, maybe from actually reading what she wrote.

[emanon1501]

Don't say I cannot afford it to other people. Just say, its not in our budget or we did not budget for that.

[dojo]

OK, let me be the mean witch here: as long as DH doesn't make zilch in earnings (or he's earning too little to help cover the mess you're in), he's got nothing to comment. I mean come on! You're the main earner in the family, you seem to be the ONLY one who's actually worried about your finances and he has the audacity to get defensive? If he likes cable or whatever he's defensive about, let him PAY FOR IT. And also pitch in for food, car etc. You're not living alone, he's in the same boat as you are, he should start 'rowing'.

I bring in the most money since my husband's side of the business is still not earning that much. We're talking 5/1 ratio (I earn 4-5 times more than him). He STILL tries to get other smaller jobs (he's gone at an archeological site now for 1 month to be their photographer, even if he's actually a civil engineer) and PAYS for the electricity, internet (which I 'use' mostly, since I am a web designer), for the car gas (partially at least) and food. Whatever he earns he brings back at home and asks me what else he can contribute to.

Your main issue now is to get your husband on the same page with you. Discuss the matters openly and tell him something needs to be done. He can try finding smaller jobs (even if they're not too 'cool'). Mow the lawns, so house repairs ANYTHING he can do to earn some money, while still trying to get a better paying main job.

Stop using the credit cards. This is the main thing you can do now so that you don't get into even more trouble than you are now. Use cash or set up a bank account with zero overdraft. If you don't have the money, you can't pay.

Try to get some of the payments refinanced or recalculated. Maybe you can make some deals with the banks, so that you can make your debt load a bit easier. This doesn't mean you'll waste the difference, you'll start SAVING for an emergency account or try to pay off the debt that's the main concern (probably the credit card debt has the biggest interest ... or whatever is bringing your finances down more).

Do not try to impress anyone anymore. What if your colleagues are laughing when you say you can't afford something? Well, you can't actually. So, instead of trying to impress them, make sure you both are on the road to RECOVERY. We're also being looked at as some weirdos, even if we have no debt and are doing better than many of our friends. Sure, we don't waste money on luxuries they can't live without (dining out, expensive clothing etc.), but we do have a stable financial situation and this is more important to us than being 'uncool'.

You CAN GET OUT of this situation, but you need to have a VERY strong team (you and your husband), keep track of your expenses, try to ditch any of the expenses that don't make sense now and see whatever you can deal with the banks. If your friends/family cannot support you in trying to recover from this issue, mind your own business. At the end of the day YOU TWO matter and you two have to deal with the mess. It's not your family who'll have to pay all this money, it's not your friends, it's just the 2 of you.

We're all keeping our fingers crossed and I'm sure that you can succeed and will. Just focus on your needs and try to get your husband into the same 'mindframe'.