Q: After college my fiancé and I lived abroad and worked as much as possible. We started sinking into debt, and it took a while to get reestablished Stateside. Finally, we found a house, and though it wasn't expensive, my husband wasn't earning much. His salary has steadily increased to $120,000, but we are nearly $100,000 in debt in addition to our mortgage. The cost of living in our neighborhood is high, and my own contributions have been sporadic because I care for our two children and two ill relatives. We have a 401(k) and life insurance but no savings, and we often bounce checks at the end of the month. We have already borrowed against our house as much as we can. My husband gets frantic and doesn't want to spend at all, even for the kids. I feel bitter and shop anyway because it seems as if we'll always be broke no matter what. I'm afraid to open our bills. The panic is starting to affect our marriage. Is there any way to achieve financial equilibrium?
A: There's no reason you can't get by on your husband's salary. The problem is that you're sabotaging your family. I know that sounds harsh, but you need a serious financial wake-up call, and I'm sounding the alarm. Part of the reason you're doing this is that you're overwhelmed from taking care of everybody else. Subconsciously or not, you believe nobody is taking care of you. So you fill that hole by spending money, and then you feel terribly guilty. You deserve to treat yourself better than that.
Use your fear of opening those monthly statements as motivation to change. Whenever you're about to whip out your credit card for another unnecessary purchase, ask yourself: "Is this worth the horrible feeling I'm going to have when the bill arrives?" Keep a photo of your family next to the credit cards in your wallet; as you reach for one, think about whether the item is worth the possibility of losing their respect or, in the case of your husband, losing your spouse completely. That's where this is headed if you don't change. I know you have it in you to make the right choice.
Q: I filed for bankruptcy in 1998 after a divorce. I started to rebuild my credit, but then, because of an illness that had me in and out of the hospital, I went from earning $23 per hour to earning $9. As a result, my finances are in the dumps. Creditors are calling me at home and at work threatening to garnish my wages. I will soon start a $15-an-hour job, but I need some time to get control of my finances. I want to remove my name from the house I bought with my current husband and file for bankruptcy again. Please help me start over.
A: The first step in starting over is standing up for your rights with the debt collectors. As I explain in "Dealing With Debt Collectors," strict federal and state laws prevent debt collectors from harassing you. And they can garnish your wages only if they take the time to sue you in court and get a judge to issue an order. Right now they are winning at the game of making you panic. Don't let them. Stay calm, know your rights, and then focus on developing a strategy to get out of debt.
Bankruptcy may well be the answer, but first you and I need to have a talk. I am sympathetic to the fact that an illness threw a wrench into your financial life, but it worries me when someone angles for a repeat trip to bankruptcy court. So many people who get into trouble once fall into the same predicament again. Please promise me that you truly are committed to starting over and building a more solid financial life for yourself. That takes time, effort, and good money habits. Without all three, you will keep finding yourself living on the edge.
Because the last time you filed for bankruptcy was 14 years ago, you are technically allowed to do so again. The law states that if you previously received a discharge of debt in a Chapter 7 bankruptcy (in which the majority of your debts can be wiped out by a bankruptcy judge if you meet certain income tests), you can refile after eight years. You may file for Chapter 13 (in which you commit to a repayment plan for some debts) every two years. To learn more, go to the American Bankruptcy Institute's Consumer Bankruptcy Center.
However, I also want you to explore other options. Contact the National Foundation for Credit Counseling to talk with a counselor in your area who can help you devise the best strategy for dealing with your debt. Starting over begins with taking control. Don't panic...instead, prepare yourself by knowing your options.
Read More: How to get a mortgage postbankruptcy
Get Answers from Suze
A: There's no reason you can't get by on your husband's salary. The problem is that you're sabotaging your family. I know that sounds harsh, but you need a serious financial wake-up call, and I'm sounding the alarm. Part of the reason you're doing this is that you're overwhelmed from taking care of everybody else. Subconsciously or not, you believe nobody is taking care of you. So you fill that hole by spending money, and then you feel terribly guilty. You deserve to treat yourself better than that.
Use your fear of opening those monthly statements as motivation to change. Whenever you're about to whip out your credit card for another unnecessary purchase, ask yourself: "Is this worth the horrible feeling I'm going to have when the bill arrives?" Keep a photo of your family next to the credit cards in your wallet; as you reach for one, think about whether the item is worth the possibility of losing their respect or, in the case of your husband, losing your spouse completely. That's where this is headed if you don't change. I know you have it in you to make the right choice.
Bankruptcy
Q: I filed for bankruptcy in 1998 after a divorce. I started to rebuild my credit, but then, because of an illness that had me in and out of the hospital, I went from earning $23 per hour to earning $9. As a result, my finances are in the dumps. Creditors are calling me at home and at work threatening to garnish my wages. I will soon start a $15-an-hour job, but I need some time to get control of my finances. I want to remove my name from the house I bought with my current husband and file for bankruptcy again. Please help me start over.
A: The first step in starting over is standing up for your rights with the debt collectors. As I explain in "Dealing With Debt Collectors," strict federal and state laws prevent debt collectors from harassing you. And they can garnish your wages only if they take the time to sue you in court and get a judge to issue an order. Right now they are winning at the game of making you panic. Don't let them. Stay calm, know your rights, and then focus on developing a strategy to get out of debt.
Bankruptcy may well be the answer, but first you and I need to have a talk. I am sympathetic to the fact that an illness threw a wrench into your financial life, but it worries me when someone angles for a repeat trip to bankruptcy court. So many people who get into trouble once fall into the same predicament again. Please promise me that you truly are committed to starting over and building a more solid financial life for yourself. That takes time, effort, and good money habits. Without all three, you will keep finding yourself living on the edge.
Because the last time you filed for bankruptcy was 14 years ago, you are technically allowed to do so again. The law states that if you previously received a discharge of debt in a Chapter 7 bankruptcy (in which the majority of your debts can be wiped out by a bankruptcy judge if you meet certain income tests), you can refile after eight years. You may file for Chapter 13 (in which you commit to a repayment plan for some debts) every two years. To learn more, go to the American Bankruptcy Institute's Consumer Bankruptcy Center.
However, I also want you to explore other options. Contact the National Foundation for Credit Counseling to talk with a counselor in your area who can help you devise the best strategy for dealing with your debt. Starting over begins with taking control. Don't panic...instead, prepare yourself by knowing your options.
Read More: How to get a mortgage postbankruptcy
Get Answers from Suze
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