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Question for the Money Doctors

Question submitted on Feb 8, 2011.

Question

I am recently unemployed and am considering filing for bankruptcy. I currently owe 15,000 and have two mortgages for the home I live in and an investment fourplex that pays itself. I feel overwhelmed with the calls my only source of income is $1,100 I receive for childsupport for my three kids and recently rented a bedroom for $425 in my home. what do you suggest I do?

Answer

Thank you for the question.  This is going to be tough because I don’t know your entire situation.  I assume the $15,000 is debt on a credit card or something similar.  If so, this debt is unsecured, so they typically can’t come after your house or other assets.   Buying the necessities you need for you and your children would of course be the best use of your income.  If you have any equity in either your home or your investment property, then you may be able to sell one or both of them.  Another option would be to sell your house and move into one of the units of the four-plex. 

What you do may depend on what you expect for future employment and if you have any additional assets.  If you think this is a short-term unemployment, then you may be able to “weather the storm” until your income picks up again.  If you think this may be a long-term deal, then you may have to take more drastic action.    

Filing bankruptcy could help you with the $15,000 debt, but it probably won’t help make the day-to-day expenses.  Somehow you are going to have to create some income or get help from your family, friends, community, government, etc.  I’m not an attorney, so please contact a competent attorney in your area if you seriously contemplate bankruptcy.  I hope this helps.          

Thank you, 


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