I’ve got some pretty nasty debts that I’ve been wanting to take care of, and I’m not sure the best way to go about this.

My credit score is awful, and that’s due to mainly medical bills, and an unpaid college tuition bill of not quite $1,000 from 2010 that will be paid after I get my next tax return. Since it’s been open so long, I’m going to try to settle for a good bit less. TransUnion and EquiFax scores are a shade below 450, and Experian is a little above 500.

I’ve thought about filing chapter 13 bankruptcy, but that could be a mjaor headache and pretty expensive. My household income, before taxes, is probably in the $40k range, and that’s for three of us. We generally clear about $2200 a month after taxes, and here’s what that goes towards:

  • $400/mth mortgage
  • $200/mth escrow (prop taxes/homeowner’s insurance)
  • $160/mth car insurance
  • $200/mth gas
  • $250-$300/mth utilities (down from Winter when we had heat running, utilities were an absolutely unaffordable $1100/mth)
  • $300/mth groceries
  • $150-$200/mth on my daughter (diapers/underwear, clothing, shoes, etc. constantly because of how quick she grows)
  • $120/mth misc expenses - toilet paper, paper towels, cleaning supplies, pet food
  • $60/mth cell phone
  • $102/mth health insurance
  • Total $1942-$2042/mth

That leaves very little for any emergency issues that pop up (and in my life, that seems to happen a lot), like home repairs, car repairs, health expenses that insurance won’t cover, and so on. We just can’t seem to get out from under the debt. My blue Durango is for sale, but that’s not selling. Other stuff we’re trying to sell isn’t selling. Our credit (mine and my fiancee’s) are too poor for any kind of loan, nor do we have anyone financially well-enough off that can co-sign any sort of loan to pay off some debts. At tax time, I’m going to try to pay off some debts, but that’s only going to go so far, because there are still lots of home repairs that need to be done, and it just seems to be endless. For sure I’ll be paying off my tuition bill so I can go back to college, and some other debts, but it’s not going to fix everything.

Has anyone else been in this situation and escaped?