The Debt Ceiling and Me: Economic Stabilization Act of 2008

With the debt ceiling likely to be lifted to $11,315,000,000,000 to make room for the $700 billion bailout of the banking and financial markets, it is doubly painful to note that my wife and I will be declaring personal bankruptcy in the near future because some of the same financial giants who were glad to provide credit to us at 30% interest still managed to lose money by making even riskier loans on home mortgages.

To back up a yard, my wife and I are very much responsible for mismanaging our finances, twenty two years of marriage and many immature decisions we made along the way don’t excuse us—although, in defense of us, for the last year we have worked through a debt management plan to pay back what we owe in a reasonable manner—which involved creditors making financial concessions to us that lowered the interest we pay back to between 6 and 9%. I was earning $65,300 a year and my wife was contributing between $12,000 and $15,000 through her art work and childcare. Over half my take home pay was going toward repaying the over $70,000 we had accrued in debt, not counting our home mortgage.

However, in May, I was laid off from my work and was unemployed until mid-September when I accepted a job at $39,000. I used part of our money to payoff some of our debt and now have about $61,000 to settle. Like a country song, our dog needed an operation, our old van died, and we paid cash for two used cars (because I was interviewing for jobs out of town and looked like we would need two cars, if I was commuting).

When I contacted my creditors during my period of unemployment, one of them offered to enroll us in a “hardship” program which would have cost us more than we were paying through our DMP and, when I said it was likely to create a bankruptcy situation, we were told that it didn’t matter to them because they are insured against such things. It puzzled me that they thought so little of their customers that they were willing to hang them out to dry, rather than work with them to get the amount that was due to them.

I was raised to be responsible for my debts—and to the best of my ability; I have tried to repay them. However, when faced with the possibility of also losing our home, if we continue on the path we are on, what choice did my wife and I have?

Some will look at our situation and feel that we are whining—we got ourselves into the situation, why are we complaining? I can only answer that we feel that we are caught between a rock and a hard place. We cannot afford the DMP given our income drop and we haven’t any other options that are reasonable other than bankruptcy. We don’t live extravagantly, we don’t own items that can reasonably payoff our debts—if we did, we’d have sold them to repay our debts (we are selling our second car because my new job is on a bus line and will likely use that to pay an attorney to process the bankruptcy). We have gone through our life savings—the only other resources we have are our retirement funds and we would be penalized tremendously from accessing them and then what? My wife and I are 50 and 53 respectively—15 and 12 years away from “traditional” retirement. There is no reasonable way we can save what people need to save to survive retirement in this day and age.

Again, what would you do, if you were my wife and I?

Frame this against a whole industry that is asking you to bail them out.