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I owe $25,000 and I’m Completely Overwhelmed by Debt. Is There Any Hope For Me?



Question: According to my latest credit report, I’m $25,000 in debt. So, now I’m feeling completely overwhelmed. 

I’d been making regular payments on my car loan (which I am upside down on) for years. Never missing a payment until just a few months ago. I changed jobs and locations, and the new job barely paid the rent. So, I fell behind on my credit card payments as well as the car payment.

For years, I have missed payments on various accounts, and my credit score is now down to the 500s. I cannot seem to make enough money to keep up with my everyday bills, much less the additional expenses. I live alone and have tapped out my family and friends with loans. 

Now, having said that, my next admission is so scary, I am paralyzed with fear to even tell anyone. Oh God, here it goes: I owe back taxes, of which I have not filed in at least five years. Why? Because I know I will owe and cannot afford to pay. I know, I know, it is a stupid reason. I also do not want to go to jail because I just don’t look good in orange. Little humor there. 

I want to clear up my debt. As of this month, I have a state job, as well as a part time job. Thought about bankruptcy, not sure it is the answer for me. Where do I start?  I can’t lose my car to the repo-man. 

— Jessella in New York

Howard Dvorkin answers…

I usually don’t publish letters this long, simply because they’re so daunting (and emotionally draining) for readers to get through. I’m making an exception because Jessella’s story is important, as is her exasperated tone.

Sadly, Jessella’s story is typical. You might see yourself facing some of these same types of stubborn debts. So let’s break down Jessella’s situation, and perhaps help others who feel overwhelmed by debt problems that seem insurmountable…

Back taxes

Because you fear back taxes above all your other debts — as well you should — I asked my friend Don Markland to reassure you. Markland is the chief revenue officer for Tax Defense Network, which helps more than 10,000 customers a year to solve their tax debt problems with the IRS.

“You don’t go to jail for taxes unless you evade or refuse to pay,” Markland says. “So Jessella should be fine.”

Of course, you still need to pay your taxes. I recommend you read Back Taxes: End Your Challenges with Unpaid Tax Debt. You have options, ranging from installment agreements to something called “offer in compromise.” You may even be able to qualify for Currently Not Collectible if your budget is truly overwhelmed by debt, just like you’re feeling. This will stop any IRS collection actions until your financial situation improves.

Who can help: While you can tackle these options yourself, firms like Markham’s are experts at finding the best option quickly and painlessly.

Credit Card Debt

Fortunately, you can’t go to jail for not paying your credit cards, but it’s still a costly problem. With interest rates hovering at an average of 15 percent and penalties and fees getting tacked on monthly, you fall further behind literally every day. Read What Happens If I Stop Paying My Credit Cards? if you don’t believe me.

Here, too, you have options. One of the most powerful is a debt management program. it can reduce your credit card payments by up to 30 to 50 percent and get rid of penalties and late fees.

Who can help: You can’t sign up for a DMP, as it’s called, by yourself. You need to consult a credit counseling agency first.

Do you owe a lot to the IRS and fear you won’t get caught up? Take a look at our solutions.

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This word scares many people, as well it should. It’s a big step, but it exists for a reason. While it comes with some hurdles, it’s a legitimate way to get back on your feet. However, it won’t solve all your problems. Your credit score will take a big hit. Then there’s this…

“Bankruptcy won’t help her for the taxes, because she’s never filed,” Markland says. “So she needs to be fully informed about that.”

He adds: “If the reason she can’t pay taxes is her other bills, bankruptcy may be the answer to clear up her other bills, then she can work on her tax issues.”

Who can help: Before thinking about bankruptcy, you need pre-bankruptcy credit counseling. From there, an expert will determine the best path for you.

So what now?

You’ll notice I listed the experts who can help you, but not how to reach each of them. Thankfully, you can do all that in one phone call to We match you with reputable experts like Markland, who can help you. Call for a free debt analysis.

Whether you need to file for personal bankruptcy or commercial bankruptcy for your business, can help you get the fresh start you need.

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