debt

You're never too old to get out of debt

Steve BucciQuestionDear Debt Adviser,
I turn 60 this year and I'm single. I owe the IRS $75,000 and $8,000 in state taxes. I also have a student loan of $40,000. I have a degree in business management. I make about $30,000 annually, but have no savings and no retirement. I liquidated my 401(k) when I was unemployed -- a big mistake. I need advice on how to turn this situation around. Also, please share my story of what not to do. This has been a very stressful and shameful experience for me.
-- Diane

AnswerDear Diane,
I feel for you and I can tell that you feel even worse. But don't be ashamed. We all make mistakes. Beating yourself up over things that can't be changed won't help. It's easy to say in hindsight that using your 401(k) funds while you were unemployed was a mistake. But at the time, you did what you thought was best.

And besides, the game isn't over yet. Yes, you are 60. So what? My brother changed jobs at 60 and stepped into a great position in a new industry. You can, too.

Don't give up on the prospect of getting a higher-paying job. I don't know what kind of work you used to do, but with a positive outlook, some networking and maybe some career coaching, I'd like to think you can find a higher-paying job. Networking with friends, family and church members is a great way to find opportunities that aren't advertised, which most jobs aren't.

Unfortunately, taxes and student loans are the two kinds of debt most difficult to get relief from. It's not impossible, but it's difficult. You do have some options, however. Here are some suggestions.

Your student loan options include working in a field that will grant you loan forgiveness, such as certain teaching positions or nursing. You may also qualify to have your student loans discharged in bankruptcy. You must prove "undue hardship" in order to have your loans discharged. Combining your age, salary and other debts, I believe you have a chance of convincing the court that you qualify.

I recommend you contact a bankruptcy attorney and get some professional advice. You can search for a pro bono, or free, attorney at the American Bankruptcy Institute's website, or you might try the Legal Aid office in your area.

With the IRS, one option is asking for "Uncollectible Status" on what you owe. This will stay collections, in the hope that your situation will improve. Also, check out how to make an "Offer in Compromise," detailed in IRS Form 656-B.

Dealing with the IRS is always a delicate business. I suggest you get professional opinions about these options from qualified advisers. Beware of debt settlement firms, though, as they have terrible track records and typically charge large fees.

You have come through a very difficult time in your life, and have a job in place. Things are finally taking a positive turn in your life. Don't give up on yourself now.

Get weekly advice on slashing debt and debt consolidation tips! Subscribe to Credit Card News.

Ask the adviser

To ask a question of the Debt Adviser, go to the "Ask the Experts" page and select "Debt" as the topic. Read more Debt Adviser columns and more stories about debt management.
 

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

News alert Create a news alert for "debt management"

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
CREDIT CARD WEEKLY NEWSLETTER

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.

Debt Adviser

Charged-off debt still on me?

Dear Debt Adviser, If a debt is charged off, am I responsible for paying off that debt? -- Jenny Dear Jenny, Yes, oui, ja, da, si and dui. In any language, including good ol' American legalese, you must pay. But don't... Read more

advertisement
Partner Center
advertisement

Connect with us