Is Bankruptcy Our Only Way Out?
A reader writes:
My husband was a lawyer for 4 years before going to seminary and becoming a minister. Now with living on his severely reduced salary as a pastor the student loans seem like they will never be paid back. Is going bankrupt our only way out? (We still owe over $250k.)
Tawra: I know this must be difficult for you. This is a touchy subject for some but it’s a question I get a lot. No, going bankrupt is not the only way out.
Bankruptcy is intended to help people who end up financially strapped because of reasons beyond their control, like catastrophic medical expenses or the death of a spouse. Bankruptcy can be a good thing for emergencies, but I don’t think it is ethical to claim it for “poor planning”. I understand that it may feel like this situation is beyond your control, but it is actually the result of choices that your husband made. Even if he made those choices before marrying you, if you married him knowing about his debt, you accepted that responsibility with him.
I believe that when you take out loans, that you should not be able to claim bankruptcy on them. (In fact, you can’t get out of student loans through bankruptcy, so if they’re student loans, you have no alternative but to pay them.) You signed the note saying you would pay back the loan. The banks, credit card companies or other creditors are not responsible if you decide to change careers. If you claim bankruptcy for expenses you no longer choose to honor, it is really lying (because he promised to pay it back) and stealing (because if he stayed in law, he would have been able to repay it, rather than to make the credit card companies and their customers responsible for his decision to change his mind).
What can you do? That is a lot of money to owe and I can understand how overwhelming it must be, but it is your responsibility to pay it back. There are several options in your case:
Your husband could go back to being a lawyer, earning lawyer’s pay and and spending only a pastors expenses for several years, paying the balance to debt until it’s paid off. This is probably the fastest and easiest way to pay it off. If your husband is serious about preaching, he could practice law and preach part time until the debt is paid.
Your husband could work part time as a lawyer and part time as a pastor.
He could continue as a full time pastor and get a part time job on the side.
You could get a job. If your kids are small and still at home then you would need to get a job during your husband’s off hours so you don’t have to pay day care.
Do any on the side jobs you can. Can he mow lawns? Can you do ironing or child care?
It will take a long time to pay it off but you can do it. I do think that if your husband is a pastor then he needs to pay off the debt because he is the leader of a church and it is his responsibility to set a good example to his congregation. Ministers are not perfect, but God does require a higher standard from them. I believe that if God has called your husband into the ministry, God will make a way for you to pay off the debt without having to declare bankruptcy.
-Tawra
photo by: squeakymarmot
I like your suggestions.
You hit it right on the head. Although that kind of debt has to be overwhelming, all your solutions are both God-honoring and realistic.
It is so easy in this day and age to walk away.
get married have children can’t take the pressure walk away from the marriage.
get into debt blame every thing but yourself and walk away.
it is stealing. plain and simple.
is taking something that does not belong to you alone.
divorce is stealing from your children. even if you make child support payments you are stealing your time and experience from your children and your spouse. And what is it teaching them.
you declare bankruptcy you are stealing from the people who let you buy things on credit.
everyone loses when a big company goes bankrupt so it makes the headlines because everyone suffers from job loses and creditors because they are not being paid.
but little is said about one family going bankrupt because it only affects a few people. BUT those people count as well. What bills can’t they pay because you didn’t pay your own bills.
Do you want to go through life knowing you stole things that you are still using?
What example are you setting for people who look up to you?
It may be hard but there are ways to pay bills so you can look people in the eye and not have to look away out of shame.
I had to file bankruptcy in 2003. My learning experience was that I had no choice, I had medical expenses. This helped me to learn the value of staying out of debts. I know two couples who filed within the ten year mark. It’s like they live for so many years going into debt and they know they will file BK. Unbelievable. How irresponsible. I believe what “grandma” above says on all accounts too.
This is true Jackie. I think what has happened is like in many areas there are no consequences any more. When you use to file bankruptcy you lost everything even your heirlooms, pictures, everyday items, clothes everything. You pretty much had left what you had on your back. Now I think you get to keep certain items and people know how to work the system too. I’m not talking either about those of you who had now choice because of medical expenses or through no fault of your own. Just those who charge and get into debt just because.
Student loans are usually not bankruptable so bankrupcy wil not help in the case anyways.
Agree with you on these suggestions!!!
When the going gets tough, so many don’t want to deal with it…seems easier to just walk away instead working through and pushing forward to a solution. Which may very well be stick it out and pay off your debt even if it takes years.
With all due respect, I think this is very poor advice written by someone who has not faced this situation. I was in this same situation and tried very hard to pay off all of my debts. I took on several jobs and cut back my spending drastically. However, I have student loans which cannot be erased by a bankruptcy and credit cards that helped me get through school. My choice was to pay the student loans or the credit cards. I filed a bankruptcy to get rid of the credit cards and pay my student loans. This was only done after years of agonizing stress and hard work; it was not an easy way out. I also asked my church, friends, and family for help and NOBODY helped. This was disappointing, especially from my “Christian” friends and family.
I think that bankruptcy should be avoided if possible, but if you try everything, it can be a tremendous relief. Seek advice from someone who has actually gone through it, not from someone who speaks out of ignorance.
Jeremy what you don’t understand. I have been closer to bankruptcy then what you even mentioned so I do know what I am talking about. Please head your own advice and don’t comment until you have read all of our books and articles to know our whole story.
While going bankrupt is not a good thing, especially if it was due to bad money management, one option is Chapter 13, where you pay off debts without incurring more interest or late fees. We made some bad decisions, and when our interest rates went over 30%, could no longer make even minimum payments. We are paying back 100% of our debt over five years. Please note, we did first try to work with our creditors. We called, wrote, spoke with people at various levels in the corporations. But to no avail. We have learned our lesson, though, and now are living on a budget, saving a little each month, and we know we will be able to live without credit when the bankruptcy is over.
Thank you for posting this. We filed bankruptcy about 21 years ago. We had a handicapped child with sever health problems,which created ALOT of medical bills. It still comes up when we try to get credit. Bankruptcy shouldn’t be used as a quick fix. Since this man is a pastor, he and his family need to set an example for his church and others. We are living on one income, it just takes planning and sacrifice
Aren’t there programs that, if you serve in poverty areas, that some of your student loan debts are considered repaid? I have a cousin who is a teacher and because she taught for ten (I’m not sure of the number) years in a poor school, the balance of her student loans were forgiven. There could be similar programs for ministers.
Great advice, it can be hard when you find youself at the bottom of a big hole you have been digging for yourself, but the only way out is to start filling it back up a little at a time. If you really are at your wit’s end, like the author said, you can’t get rid of student loans through bankruptcy, but you could try talking to whomever your loan is through and see if they’ll accept a smaller ammount, or if they can reduce the payments. Often times companies would rather get some of the money than none, and they may be willing to accept a lesser ammount. I think that would work with student loans as well, I’m not completley sure.