Can I Get Debt Forgiveness if I Owe $50K From Bailing Out Family?

Dear Penny,

I am a soon-to-be divorcee after 20 years of marriage and five years of separation. I’ll have no alimony or spousal support after the split.

What is the best way to eliminate my debt, ie, debt forgiveness? My income is on the poor level, I may add.

Throughout the years, I lent over $50,000 to family without repayment, and suing isn’t in the cards at the moment. I have about the same amount in debt. It’s all my own fault, as I shouldn’t have been so naive and generous, but I wasn’t expecting to be single again as a mature adult woman.

Also, debt consolidation is not affordable, as I researched this process and the interest is too high.


Dear K.,

When you don’t have much hope of paying off debt, bankruptcy is often the best route. I think that may be the case here, given that you have $50,000 debt and not much income.

You could try credit counseling first with the goal of making your debt more manageable. (If you’d decide to pursue bankruptcy, a credit counseling course will also be required.)

A credit counselor won’t get your debt forgiven, but they may be able to help you by rolling all your debts into a single monthly payment. Or they might negotiate with your creditors to allow you to pay off your balances over a longer timeframe. The websites of the Financial Counseling Organization of America and the National Foundation for Credit Counseling (NFCC) are two good resources for finding a reputable credit counseling service.

But if you can’t afford your debt payments, bankruptcy is probably the most viable option. Chapter 7 bankruptcy, also referred to as liquidation bankruptcy, allows people with limited incomes to discharge much of their unsecured debt, like credit cards and personal loans. This isn’t a decision to enter into lightly, but it sounds like you’ve done your homework. The point of bankruptcy is to allow people a clean slate when their debt has become unmanageable.


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