I kind of find it ironic that one of my greatest fears is drowning - literally. I've never been a strong swimmer, and when water rushes over my head, I lose all sense of place orientation and flat out panic.
So when you hear the phrase "drowning in debt," it's amazing how accurate that is. When the creditors call, you get the same completely disoriented feeling, the flailing and thrashing around, the inability to breathe...you realize that you're drowning in debt.
This was the feeling I had this past winter/early spring. By that time, I'd given up on even attempting to pay any credit cards. Up to this point, I'd felt a moral obligation to at least send them $20 a month. But that didn't even make the minimum payment, we were still get socked with late fees and over the limit fees and inceased interest rates....it was a sickening cycle.
NOT sending in the $20 a month was also sickening. Frankly, I felt I was in a no-win situation. At first, I'd answer the phone when the creditors called and we'd do a little dance where they'd offer some "reduced" payment, I'd say that I couldn't even make that, they'd say there was nothing they could do for me, and the following week, they'd call again to go through the same ritual. I got to the stereotypical point of not answering the phone (unless it rang after 9 p.m., because I knew they weren't allowed to call after 9).
During this time, my husband was job searching, aggressively, as is his habit. He is an excellent job candidate and doesn't like sitting back and collecting unemployment.
Finally at the very end of March, he was offered a job - less money, but eventually good benefits and, perhaps most importantly, in a field he thought he would enjoy. The other catch was that it was just part-time to start out.
By the time he started work in April and I tried to put together some kind of household budget based on his new income, it was time to face facts. We knew we needed to do something to get out from under the debt we'd incurred.
It seemed we were faced with two choices: 1) negotiating charge-offs with all the credit cards or 2) Chapter 7 bankruptcy.
The primary reason I was strongly considering the charge-off option was because at least then I'd feel like I was paying something (albeit a reduced price) for what I'd charged over the years. I started out trying this with a smaller card that we had. The total amount on the card was something like $767. Actually, the card issuer contacted us first about a settlement offer. They would consider it paid in full if we paid $483, which they wanted either as a lump sum or over three months (at $161/month). I took the three-month option, because, while $161 a month was a pinch, $483 all at once was out of reach.
Evaluating that experience led me to believe it wouldn't be so horrible going this route with all the creditors. But reality was, I couldn't do it with everyone at once. It would have to be a one at a time deal. And I don't think the last creditor in line would be so patient as we tried to pay off everyone else. Also, I don't think we'd get away that cheaply with any of the other creditors, as their balances were much higher.
We talked about borrowing a big lump sum of money from my mom to take care of charge-offs. This option left a really funny feeling in my stomach. I don't know why I was okay accepting her help in paying monthly car payments, but asking her to buy our way out of consumer debt? That felt like shirking responsiblity.
Also, in researching the charge-off option, we realized that any debt that was written off would be counted as income at tax time next year. And we probably wouldn't have the money to cover the taxes then, which would lead to more borrowing from the National Bank of Mom.
So we met with our lawyer at the end of May to discuss Chapter 7 bankruptcy. Why didn't that feel like shirking responsiblity? Because we are going to be punished for it. Big time. (Is this some form of latent Catholic guilt rearing its head?)
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