Ask The Money Coach

Q:I Am a Single Mother of 3 Kids and Have a Debt Total of More than $30,000. I Don’t Have Any Savings or Investments, and Nothing Saved for Retirement or College Education. I am Facing Garnishment of My Wages Due to One of the Debt I Currently Have. Would Bankruptcy Be the Best Option for Me at This Time to Give Me a Fresh Start?

A: You certainly sound like a candidate for bankruptcy. I assume that $30,000 in debt is credit card debt, and not student loan debt. If it’s college debt, you can’t wipe that out in bankruptcy court, so there’s no point in filing bankruptcy to deal with student loans. Since you have no savings or investments and you’ve been unable to pay your debts, I know that your bills must be exceesive relative to your income. Having three kids to raise by yourself can take a financial toll too. Given all of your circumstances, it’s not unreasonable to explore the option of filing Chapter 7, which would wipe out those debts and keep your wages intact, free from garnishment.

Since a bankruptcy filing will remain on your credit report for 10 years, I would advise you to first make sure that you’ve tried everything else within reason before you seek bankruptcy. For example, have you tried to negotiate with your creditors? Have you considered credit counseling or attempted to enroll in a debt management plan? Also, when you look at the $30,000 in bills that you owe, is it realistic that you can pay those debts off on your own in about five years or so? If you’ve tried everything else and it hasn’t worked, and if you don’t think it’s feasible to pay off your debts in five years, then bankruptcy likely makes sense. Just get some expert help if you do file for bankruptcy protection. Go to a free legal aid clinic in your area or consult a qualified bankruptcy lawyer in your state for the specific bankruptcy laws where you live.

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