Dear Liz: You dropped the ball badly in your response to the man who was in debt after an ill-advised career change. Why didn’t you mention the “B” (bankruptcy) word? Like the gentleman in your article, my wife and I found ourselves overloaded with debt. We took on too much debt in starting our own small business in 2005. Things went very well for a couple of years and then we, like the rest of America, got caught up in the Great Recession. We went through consumer credit counseling and the counselor advised us that bankruptcy was an option we should consider. We filed in November 2010 and it was finalized in January 2011. We were able to keep our business. We also kept our house and our vehicles, which have loans outstanding, by “reaffirming” those debts. Bankruptcy is not a crime. It is the last resort, and it is unpleasant but it is an option. And here’s the kicker for us: Two months after the finalization of our bankruptcy, both my wife and I started receiving credit card offers in the mail (again). Don’t worry, history will not repeat itself in our case.
Answer: Bankruptcy is frequently mentioned in this column as a possible solution for overwhelming debt. Having a lot of debt isn’t the same as being overwhelmed by it, however. What matters is whether you’re able to make sufficient progress on paying down that debt.
The gentleman in question might discover that getting rid of a too-expensive house frees up money to pay down the family’s debt. Otherwise, it would be smart to talk to both a legitimate credit counselor (the National Foundation for Credit Counseling, at http://www.nfcc.org, has referrals) and an experienced bankruptcy attorney (referrals from the National Assn. of Consumer Bankruptcy Attorneys are at http://www.nacba.orghttp://www.nacba.org).