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Ask Dave

Not Keeping the House

Bankruptcy won't solve anything for Michelle, but she and her husband will either need more income or less house.

QUESTION: Michelle and her husband have kids and make $2,600 a month. The problem is they have about $3,000 going out each month. Their house payment is $1,100 and their car payment is $380 a month. Should she declare bankruptcy?

ANSWER: Bankruptcy doesn’t solve anything. You can’t keep the house and the car if you file bankruptcy. You can’t make that house payment on your income … it’s almost half your income. Realistically, it’s almost impossible to do a budget when your house payment is that much.

You need to get your income to about $4,000 to have this house make sense, and if that doesn’t happen in the next few months, then I can’t recommend staying in that house. It’s not a blessing to you, and neither is the car. Sell the house and the car and get into something cheap, knowing that it’s only temporary. It’s a way to get back in control. Then get control of your career and double your income. Once that happens, you can have a nice house again.