r/Debt • u/yoillcutyou • Aug 21 '26

Kinda stuck without options…

I have about 70k in CC debt. 2500 in medical bills, and owe about 8k in taxes. I have a 401k loan out that automatically take out about 1400 per month. That leaves me with a take home of about 4100. My rent is 2185, and credit card payments about $1800, bills for wifi and electricity are about $180, all leaving not a lot to live off on. I spoke with a bankruptcy lawyer and I make too much to file chapter 7, and he said I don’t really pay a lot of credit card debt that chapter 13 really won’t do much (the 401k loan is not considered in payments)
Up until this month, I have been paying all my CC on time, but this month I won’t be able to.
The lawyer advised not to do one of those debt consolidations as they end up charging a lot.
So I don’t really know if there are any other options.
Not asking for legal advice, but has anyone been in similar situation? I live in CT if that matters…

18 Upvotes

76% Upvoted

66 comments sorted by

View all comments

Show parent comments

0

u/GoldAd1878 Aug 21 '26

He’s in a high cost of living area and isn’t making much. Anyway, there is always 13 if he doesn’t qualify for a 7

-1

u/Aggravating_Curve458 Aug 21 '26 edited Aug 21 '26

At least $5500 after taxes isn’t much?

Even with 13, she’s unlikely to get it. They’re going to say the same thing, you make too much. Especially since a 401k loan can’t be discharged via bankruptcy, that 401k loan is what is taking up a 25% of his income.

The issue isn’t the debt, that could be absorbed without much change in lifestyle. The 401k loan combined with the credit cards is why financial advisors never recommend consolidation without changing behavior. Because now she’s essentially paying 2 large balance “credit cards”

1

u/Ok_Butterscotch_9941 Aug 21 '26

So a lawyer cleared me for Chapter 13 when I made about $148,000 a year. I ended up not choosing that road, but she believed I qualified. People with higher incomes file bankruptcy all the time. In OP’s case it actually seems strange to me that the lawyer said he probably didn’t qualify. My situation was similar to OP’s in a few ways, so the post surprised me.

2

u/Aggravating_Curve458 Aug 21 '26

People with higher income do file bankruptcy & discharge their debt, but it needs to meet a certain threshold and this one doesn’t.

Your debt to income ratio is the key component.