Overwhelmed by debt and can’t file bankruptcy… what can I do?

I’m stuck in a terrible financial situation, and I don’t know where to start fixing it. I’ve made some bad decisions, and now it’s all catching up with me. The stress is constant, and I feel like I’m drowning. I’m making $2,500 every two weeks, but it’s barely enough to cover the bills. Most of the time, my account is overdrawn before my next paycheck hits. Here’s my breakdown:

  • Rent: $2,700 (I regret this every day. We moved to an expensive area hoping my husband would find a better-paying job, but he didn’t.)
  • Daycare: $1,200 (the cheapest we could find here)
  • Car payment: $650/month ($20k left on the loan, high-interest rate, and underwater)
  • Car insurance: $281/month
  • IRS payment plan: $250/month (I owe $8,000)
  • Credit cards: $5,500 total across three cards, all maxed out
  • Hospital payment plan: $250/month (from a NICU stay for my child)
  • Tribal loan: $171 bi-weekly
  • Personal loan: $5,000 with insane interest
  • Internet: $65 (required for WFH)
  • Utilities: $600 last month (normally around $300)
  • Other: $120 for phones, $50 for streaming, and $75 for diapers

I’ve already cut out all unnecessary spending—no eating out, no shopping, no extras. But the bills just keep piling up. My husband is bringing in about $2,500 a month as a 1099 contractor, but that’s not enough to make a real dent.

I feel like bankruptcy might be my only option, but I don’t think I qualify for Chapter 7 based on my income. I’ve looked at debt consolidation, credit counseling, and other options, but I’m completely overwhelmed. Where do I even begin to turn this around?

Your household income might still be low enough to qualify for bankruptcy. Get a free consultation with a local attorney. You might even qualify for Chapter 7 if your husband takes a break from working for a bit. It’s worth checking out.

@Sawyer
The income listed is $2,500 bi-weekly, so $5,000 a month total.

Merritt said:
@Sawyer
The income listed is $2,500 bi-weekly, so $5,000 a month total.

Thanks for clarifying. With $5K a month, that’s about $60K a year gross. Definitely talk to an attorney—they’ll help you figure out the means test and whether you qualify.

@Sawyer
Isn’t that gross income? Take-home is probably less, especially with taxes and benefits.

@Sawyer
I think the means test asks for pre-tax income. My salary is $101K a year, and my husband’s is added on top of that. When I tried the online calculator, it said we didn’t qualify.

Sloane said:
@Sawyer
I think the means test asks for pre-tax income. My salary is $101K a year, and my husband’s is added on top of that. When I tried the online calculator, it said we didn’t qualify.

It’s still worth speaking to a bankruptcy lawyer. The means test is complicated, and an expert can help you navigate it. Sometimes, they can exclude certain income or expenses to help you qualify.

Sloane said:
@Sawyer
I think the means test asks for pre-tax income. My salary is $101K a year, and my husband’s is added on top of that. When I tried the online calculator, it said we didn’t qualify.

If Chapter 7 isn’t an option, Chapter 13 might still help. It consolidates your debts into one manageable payment plan for a set number of years.

First, don’t beat yourself up. Debt isn’t about morality; it’s just a tool, and you’re trying to fix things now, which is what matters. I recommend tracking every dollar that comes in and out. Sometimes seeing it all laid out makes it less scary and helps you spot areas to cut back.

You’re taking responsibility, and that’s a great first step. Sit down with your husband and combine all the income, expenses, and debt into one list. Treat it as a household problem instead of separate issues, and then work together on a plan to tackle it.

Talk to a bankruptcy attorney and explore your options. Even if Chapter 7 isn’t possible, Chapter 13 can still provide relief. It’s hard now, but this won’t last forever.

Toby said:
Talk to a bankruptcy attorney and explore your options. Even if Chapter 7 isn’t possible, Chapter 13 can still provide relief. It’s hard now, but this won’t last forever.

Thanks for the suggestion. I’ll definitely set up a consultation.

You either need to increase your income or look into bankruptcy. Cutting streaming services and small expenses won’t fix this on its own. You need a big change to get out of this hole.

What’s your husband contributing financially? If he’s a 1099 contractor, is he setting aside enough for taxes? Also, streaming services might feel small, but cutting them can add up when you’re this stretched.

@Sam
He makes about $2,500 a month, but he has his own debts—a car loan and credit cards. I’ll definitely cancel streaming. You’re right, every little bit helps.

Sloane said:
@Sam
He makes about $2,500 a month, but he has his own debts—a car loan and credit cards. I’ll definitely cancel streaming. You’re right, every little bit helps.

If he’s not setting aside enough for taxes as a 1099 contractor, that’s going to create more problems later. Make sure he’s on top of that.

Have you considered a cheaper place to live? I know breaking a lease is expensive, but in the long run, moving could save you more.

Val said:
Have you considered a cheaper place to live? I know breaking a lease is expensive, but in the long run, moving could save you more.

Breaking the lease would cost us two months’ rent—$5,400. I’m looking into subletting or finding someone to take over, but the management company isn’t making it easy.

Talk to the hospital and see if they have any additional financial aid programs. You might also look into selling plasma or cutting other non-essentials. Every bit counts when you’re this tight on money.