OT – Dilemma: default now or later?

[freefalling]

I’m in need of advice. I look for candor and well reasoned arguments.

Let me tell you a bit about myself. I’m a corporate professional, with a BA in Economics and an MBA. I work for a Fortune 100 firm and have a very good salary and am currently expatriated in Russia. Contrary to many expat deals, mine has been a permanent relocation with a salary adjustment down to align to Russian standards. So far so good. Issue is, I have a huge fix cost burden: credit card debt ~$40K @ 7%, student loans ~100K @ 2.5%, no mortgages, and I’m the sole support for my mother ~ 15K per year (she makes about 100 USD per month on her pension…). At this point, I can barely make ends meet: support for my family (wife, kids) costs me ~60K per year; income ~ 85K per year. In fact, my cash flow is negative and I really have no reserves.

What I do have: some $7K in stocks from the company I work for which just lost about 25% of their value (so make that $5K), plus being in finance I cannot sell them whenever I feel like due to access to “privileged” information (like $5K would really make me a threat to shareholders…). A paid-for $9K car sitting with family in the US. A $1K IRA and maybe $10K in my 401K (I don’t even want to look at the extract to avoid realizing I lost at least 25% of my little savings). Other than that, very little cash on hand.

Until now, I never enjoyed living with debt, but I had done a good job about keeping the interest rates low and understood that it has been the only way to afford my way of living, which has not been exuberant, but I acknowledge, not as Spartan as maybe it should have been. There are plenty of rationalizations that could be done and this is not the place to do them nor to excuse myself. I had my reasons and I feel the burden of responsibility for my decisions. On the other hand, I have been extremely anal about my credit scores, always paying on time as agreed (current FICO 720).

At this point, I think I’m quickly running out of runway financially. So for the first time in my life, I’m seriously considering defaulting on my debt and securing myself financially as well as I can to endure the coming storm.

I don’t think of myself as a bad person or overtly imprudent. I don’t like the idea of resorting to let the burden wash away. I don’t want a free ride simply to escape unscathed. I’m not even sure what the consequences would be. But I am gradually backing out into a corner, and what matters to me at this point is not my personal well-being, but my family’s. So, at which point do you try to hold on to whatever is left? Yes, there’s a lot of patronizing that could come my way, and a lot of that would be deserved, but at the same time that would help me not a bit to solve my dilemma. I don’t expect the gift of your sympathy although I would consider myself very lucky if any comes my way. I’m just reaching out because I’m sure out there a lot of people are or were in similar dire straits (many in worse) and would probably have some words of wisdom, not as to how to lift the guilt, but as to how to best navigate the troubled waters without sinking. If it is your opinion that I don’t deserve salvation, that is only fair. At the same time, I cannot stop seeking relief – it is after all, the survival instinct kicking in.

So, if you feel like providing advice, please do so. If you are in any way offended by my request for help, I apologize. If all you have is negative remarks, feel free to make them, but know that you’d be wasting your time, since there is a good chance that you will never know me personally and you cannot hurt me any more than I already have hurt myself by swallowing my pride and exposing my current inability to manage a single family unit.

All I have to offer is my gratitude for your advice. Should I remain true to my obligations and hope for the best? Should I try to renegotiate? Should I just default? What would you do in my situation? Why? What would be the consequences of defaulting now vs defaulting when there simply is no more money available?

Thanks from the bottom of my heart.

[scaredyclassic]

how long will you be in russia?

[scaredyclassic]

how long will you be in russia?

[scaredyclassic]

how long will you be in russia?

[scaredyclassic]

how long will you be in russia?

[scaredyclassic]

how long will you be in russia?

[Dazed and Confused]

FreeFalling,
So I have no greater expertise or authority than anybody else in looking at your situation, but you sound like you are feeling a bit overwhelmed. I also had to care for an elderly parent and it was a big obligation.

The bottom line answer is that you will have to decide your own priorities, and you need an accurate understanding of the situation to make these choices. I foresee one question deciding much of how you can proceed. How well do you get along with your wife? Can you talk to each other and work together on a plan? If the answer is yes, your situation really is not so bad and there are workable, though somewhat painful, alternatives. If no, you have a problem and that needs to change.

Threshold issue: when you say default, I assume that you mean your credit card debt. This is really the only debt that you have which can be affected even by bankruptcy if you were to go there because student loans cannot be discharged in bankruptcy. Your situation is not unrecoverable because you basically seem to have 2x your income (pulling out the 15K obligation to support your mom, you have 70K income and 140K in debt assuming that you are not paying taxes as an expat).

First step will be to put together a workable austerity budget. This is where the cooperation becomes important. You and your wife need to get onto a budget that you can survive, hopefully without getting scary bleak and with a small margin for error, and you are headed for having to do this whether you ultimately default or not. Monthly negative cash flow is not sustainable, so these changes are coming regardless (the whole country is in the same boat after all). Figure out exactly how much you can live on and what you can cut out, and you may want to get the help of fresh eyes to do this (cable TV is viewed as essential by some, but many never have paid for TV, etc.) Simple math, but a hard answer to give up things we have grown accustomed to in some cases. You have no alternative, so sooner is better and more productive than later. Stay current on the credit card payments while you do your planning so they don’t trip into the penalty interest zones or you will lose a lot of room to maneuver, and don’t go without something like health insurance.

Next is challenge the assumptions and look for flexibility. Do you have any siblings who can contribute towards your mother’s support? Here is where hard decisions include having her move into one of her children’s houses and getting a sibling to contribute towards the costs. As a personal matter, I would do a lot of things before asking her to live on less than 16.2K per year if that is her only income as you say. Not a great time economically to have these conversations, but better than flying the situation into the ground without doing anything. Is your mother getting social security? You mentioned only a pension, but there may be other forms of public assistance available (prescription drug benefit decisions under Medicare are complicated but in some cases save money). Talk to a social worker in your mother’s county, they work with these issues regularly, and while you may need to call a few of them to get to a good one, some social workers are the best people around.

Continuing the search for flexibility, you may need to call the student loan originator and see what flexibility on repayment terms you have there. Most lenders are much easier to work with before you get too far behind, and I have heard that student loan terms can allow for periods of forbearance or even extension of payment terms to allow reduced or suspended monthly payments. You may be able to negotiate repayment terms with the credit card companies, but I would be very cautious about calling them for fear of tipping my hand; they don’t have all that great of a reputation for working with their clients unless forced to do so, and I would approach them after doing the bulk of the analysis and decision making.

Check if you can liquidate assets to pay other obligations, but I would not touch the retirement savings. Retirement savings are protected from creditors in bankruptcy, but more importantly, you are going to need them someday. The car in the states is a candidate, especially if it is just sitting. 9K is 9K, and it would pay down your credit card balances or provide a financial buffer in case of job loss. The 7K in company stock will be subject to claims from the credit card companies if it is not in a protected account (pension or IRA), so you need to consider that this is on the table for your budget planning, and by all means comply with your insider restrictions because messing with these rules is a headache you don’t need (the SEC action and job loss are unpleasant).

So when you have a sense of the actual numbers and the potential flexibility, then you talk to your wife and together you make the call on whether to pay the credit card debt or default. If you try to pay off the credit card, you will have to live very carefully, probably for several years, but probably not much different than a default really. If you default, you will need to talk to a bankruptcy attorney (depending on how aggressive this attorney is, they might be able to suggest some planning like living on the 7K in company stock and making more contributions to the 401(k) for a period before filing, but don’t do something like this without real advice because you will shoot yourself in the foot), and in addition to the mark on your credit record, bankruptcy can also be viewed negatively by present and future employers (there are some EEOC rules about a bankruptcy being a fresh start and hiring discrimination based on bankruptcy is prohibited, but like a lot of employment rules, it is hard to prove – you just don’t get the job you apply for and never know why). Default will probably lead to asset liquidation, and the credit card companies will get the value of the car and company stock, so one way to look at this is whether you want to declare bankruptcy over 24K which is all that would be discharged on the credit cards after they get the car and the 7K in company stock if it is not in a protected retirement account.

I also suggest that you talk to a credit counselor who may have good suggestions that you won’t find on an anonymous internet site. And I don’t think that a permanent relocation with a salary reduction to local levels is market for most expat deals, so get some advice before you agree to terms like that in the future (most of what I see are terms like tax equalization and relocation gross ups, but I don’t see that many).

Best or luck to you.

PW

[Dazed and Confused]

FreeFalling,
So I have no greater expertise or authority than anybody else in looking at your situation, but you sound like you are feeling a bit overwhelmed. I also had to care for an elderly parent and it was a big obligation.

The bottom line answer is that you will have to decide your own priorities, and you need an accurate understanding of the situation to make these choices. I foresee one question deciding much of how you can proceed. How well do you get along with your wife? Can you talk to each other and work together on a plan? If the answer is yes, your situation really is not so bad and there are workable, though somewhat painful, alternatives. If no, you have a problem and that needs to change.

Threshold issue: when you say default, I assume that you mean your credit card debt. This is really the only debt that you have which can be affected even by bankruptcy if you were to go there because student loans cannot be discharged in bankruptcy. Your situation is not unrecoverable because you basically seem to have 2x your income (pulling out the 15K obligation to support your mom, you have 70K income and 140K in debt assuming that you are not paying taxes as an expat).

First step will be to put together a workable austerity budget. This is where the cooperation becomes important. You and your wife need to get onto a budget that you can survive, hopefully without getting scary bleak and with a small margin for error, and you are headed for having to do this whether you ultimately default or not. Monthly negative cash flow is not sustainable, so these changes are coming regardless (the whole country is in the same boat after all). Figure out exactly how much you can live on and what you can cut out, and you may want to get the help of fresh eyes to do this (cable TV is viewed as essential by some, but many never have paid for TV, etc.) Simple math, but a hard answer to give up things we have grown accustomed to in some cases. You have no alternative, so sooner is better and more productive than later. Stay current on the credit card payments while you do your planning so they don’t trip into the penalty interest zones or you will lose a lot of room to maneuver, and don’t go without something like health insurance.

Next is challenge the assumptions and look for flexibility. Do you have any siblings who can contribute towards your mother’s support? Here is where hard decisions include having her move into one of her children’s houses and getting a sibling to contribute towards the costs. As a personal matter, I would do a lot of things before asking her to live on less than 16.2K per year if that is her only income as you say. Not a great time economically to have these conversations, but better than flying the situation into the ground without doing anything. Is your mother getting social security? You mentioned only a pension, but there may be other forms of public assistance available (prescription drug benefit decisions under Medicare are complicated but in some cases save money). Talk to a social worker in your mother’s county, they work with these issues regularly, and while you may need to call a few of them to get to a good one, some social workers are the best people around.

Continuing the search for flexibility, you may need to call the student loan originator and see what flexibility on repayment terms you have there. Most lenders are much easier to work with before you get too far behind, and I have heard that student loan terms can allow for periods of forbearance or even extension of payment terms to allow reduced or suspended monthly payments. You may be able to negotiate repayment terms with the credit card companies, but I would be very cautious about calling them for fear of tipping my hand; they don’t have all that great of a reputation for working with their clients unless forced to do so, and I would approach them after doing the bulk of the analysis and decision making.

Check if you can liquidate assets to pay other obligations, but I would not touch the retirement savings. Retirement savings are protected from creditors in bankruptcy, but more importantly, you are going to need them someday. The car in the states is a candidate, especially if it is just sitting. 9K is 9K, and it would pay down your credit card balances or provide a financial buffer in case of job loss. The 7K in company stock will be subject to claims from the credit card companies if it is not in a protected account (pension or IRA), so you need to consider that this is on the table for your budget planning, and by all means comply with your insider restrictions because messing with these rules is a headache you don’t need (the SEC action and job loss are unpleasant).

So when you have a sense of the actual numbers and the potential flexibility, then you talk to your wife and together you make the call on whether to pay the credit card debt or default. If you try to pay off the credit card, you will have to live very carefully, probably for several years, but probably not much different than a default really. If you default, you will need to talk to a bankruptcy attorney (depending on how aggressive this attorney is, they might be able to suggest some planning like living on the 7K in company stock and making more contributions to the 401(k) for a period before filing, but don’t do something like this without real advice because you will shoot yourself in the foot), and in addition to the mark on your credit record, bankruptcy can also be viewed negatively by present and future employers (there are some EEOC rules about a bankruptcy being a fresh start and hiring discrimination based on bankruptcy is prohibited, but like a lot of employment rules, it is hard to prove – you just don’t get the job you apply for and never know why). Default will probably lead to asset liquidation, and the credit card companies will get the value of the car and company stock, so one way to look at this is whether you want to declare bankruptcy over 24K which is all that would be discharged on the credit cards after they get the car and the 7K in company stock if it is not in a protected retirement account.

I also suggest that you talk to a credit counselor who may have good suggestions that you won’t find on an anonymous internet site. And I don’t think that a permanent relocation with a salary reduction to local levels is market for most expat deals, so get some advice before you agree to terms like that in the future (most of what I see are terms like tax equalization and relocation gross ups, but I don’t see that many).

Best or luck to you.

PW

[Dazed and Confused]

FreeFalling,
So I have no greater expertise or authority than anybody else in looking at your situation, but you sound like you are feeling a bit overwhelmed. I also had to care for an elderly parent and it was a big obligation.

The bottom line answer is that you will have to decide your own priorities, and you need an accurate understanding of the situation to make these choices. I foresee one question deciding much of how you can proceed. How well do you get along with your wife? Can you talk to each other and work together on a plan? If the answer is yes, your situation really is not so bad and there are workable, though somewhat painful, alternatives. If no, you have a problem and that needs to change.

Threshold issue: when you say default, I assume that you mean your credit card debt. This is really the only debt that you have which can be affected even by bankruptcy if you were to go there because student loans cannot be discharged in bankruptcy. Your situation is not unrecoverable because you basically seem to have 2x your income (pulling out the 15K obligation to support your mom, you have 70K income and 140K in debt assuming that you are not paying taxes as an expat).

First step will be to put together a workable austerity budget. This is where the cooperation becomes important. You and your wife need to get onto a budget that you can survive, hopefully without getting scary bleak and with a small margin for error, and you are headed for having to do this whether you ultimately default or not. Monthly negative cash flow is not sustainable, so these changes are coming regardless (the whole country is in the same boat after all). Figure out exactly how much you can live on and what you can cut out, and you may want to get the help of fresh eyes to do this (cable TV is viewed as essential by some, but many never have paid for TV, etc.) Simple math, but a hard answer to give up things we have grown accustomed to in some cases. You have no alternative, so sooner is better and more productive than later. Stay current on the credit card payments while you do your planning so they don’t trip into the penalty interest zones or you will lose a lot of room to maneuver, and don’t go without something like health insurance.

Next is challenge the assumptions and look for flexibility. Do you have any siblings who can contribute towards your mother’s support? Here is where hard decisions include having her move into one of her children’s houses and getting a sibling to contribute towards the costs. As a personal matter, I would do a lot of things before asking her to live on less than 16.2K per year if that is her only income as you say. Not a great time economically to have these conversations, but better than flying the situation into the ground without doing anything. Is your mother getting social security? You mentioned only a pension, but there may be other forms of public assistance available (prescription drug benefit decisions under Medicare are complicated but in some cases save money). Talk to a social worker in your mother’s county, they work with these issues regularly, and while you may need to call a few of them to get to a good one, some social workers are the best people around.

Continuing the search for flexibility, you may need to call the student loan originator and see what flexibility on repayment terms you have there. Most lenders are much easier to work with before you get too far behind, and I have heard that student loan terms can allow for periods of forbearance or even extension of payment terms to allow reduced or suspended monthly payments. You may be able to negotiate repayment terms with the credit card companies, but I would be very cautious about calling them for fear of tipping my hand; they don’t have all that great of a reputation for working with their clients unless forced to do so, and I would approach them after doing the bulk of the analysis and decision making.

Check if you can liquidate assets to pay other obligations, but I would not touch the retirement savings. Retirement savings are protected from creditors in bankruptcy, but more importantly, you are going to need them someday. The car in the states is a candidate, especially if it is just sitting. 9K is 9K, and it would pay down your credit card balances or provide a financial buffer in case of job loss. The 7K in company stock will be subject to claims from the credit card companies if it is not in a protected account (pension or IRA), so you need to consider that this is on the table for your budget planning, and by all means comply with your insider restrictions because messing with these rules is a headache you don’t need (the SEC action and job loss are unpleasant).

So when you have a sense of the actual numbers and the potential flexibility, then you talk to your wife and together you make the call on whether to pay the credit card debt or default. If you try to pay off the credit card, you will have to live very carefully, probably for several years, but probably not much different than a default really. If you default, you will need to talk to a bankruptcy attorney (depending on how aggressive this attorney is, they might be able to suggest some planning like living on the 7K in company stock and making more contributions to the 401(k) for a period before filing, but don’t do something like this without real advice because you will shoot yourself in the foot), and in addition to the mark on your credit record, bankruptcy can also be viewed negatively by present and future employers (there are some EEOC rules about a bankruptcy being a fresh start and hiring discrimination based on bankruptcy is prohibited, but like a lot of employment rules, it is hard to prove – you just don’t get the job you apply for and never know why). Default will probably lead to asset liquidation, and the credit card companies will get the value of the car and company stock, so one way to look at this is whether you want to declare bankruptcy over 24K which is all that would be discharged on the credit cards after they get the car and the 7K in company stock if it is not in a protected retirement account.

I also suggest that you talk to a credit counselor who may have good suggestions that you won’t find on an anonymous internet site. And I don’t think that a permanent relocation with a salary reduction to local levels is market for most expat deals, so get some advice before you agree to terms like that in the future (most of what I see are terms like tax equalization and relocation gross ups, but I don’t see that many).

Best or luck to you.

PW

[Dazed and Confused]

FreeFalling,
So I have no greater expertise or authority than anybody else in looking at your situation, but you sound like you are feeling a bit overwhelmed. I also had to care for an elderly parent and it was a big obligation.

The bottom line answer is that you will have to decide your own priorities, and you need an accurate understanding of the situation to make these choices. I foresee one question deciding much of how you can proceed. How well do you get along with your wife? Can you talk to each other and work together on a plan? If the answer is yes, your situation really is not so bad and there are workable, though somewhat painful, alternatives. If no, you have a problem and that needs to change.

Threshold issue: when you say default, I assume that you mean your credit card debt. This is really the only debt that you have which can be affected even by bankruptcy if you were to go there because student loans cannot be discharged in bankruptcy. Your situation is not unrecoverable because you basically seem to have 2x your income (pulling out the 15K obligation to support your mom, you have 70K income and 140K in debt assuming that you are not paying taxes as an expat).

First step will be to put together a workable austerity budget. This is where the cooperation becomes important. You and your wife need to get onto a budget that you can survive, hopefully without getting scary bleak and with a small margin for error, and you are headed for having to do this whether you ultimately default or not. Monthly negative cash flow is not sustainable, so these changes are coming regardless (the whole country is in the same boat after all). Figure out exactly how much you can live on and what you can cut out, and you may want to get the help of fresh eyes to do this (cable TV is viewed as essential by some, but many never have paid for TV, etc.) Simple math, but a hard answer to give up things we have grown accustomed to in some cases. You have no alternative, so sooner is better and more productive than later. Stay current on the credit card payments while you do your planning so they don’t trip into the penalty interest zones or you will lose a lot of room to maneuver, and don’t go without something like health insurance.

Next is challenge the assumptions and look for flexibility. Do you have any siblings who can contribute towards your mother’s support? Here is where hard decisions include having her move into one of her children’s houses and getting a sibling to contribute towards the costs. As a personal matter, I would do a lot of things before asking her to live on less than 16.2K per year if that is her only income as you say. Not a great time economically to have these conversations, but better than flying the situation into the ground without doing anything. Is your mother getting social security? You mentioned only a pension, but there may be other forms of public assistance available (prescription drug benefit decisions under Medicare are complicated but in some cases save money). Talk to a social worker in your mother’s county, they work with these issues regularly, and while you may need to call a few of them to get to a good one, some social workers are the best people around.

Continuing the search for flexibility, you may need to call the student loan originator and see what flexibility on repayment terms you have there. Most lenders are much easier to work with before you get too far behind, and I have heard that student loan terms can allow for periods of forbearance or even extension of payment terms to allow reduced or suspended monthly payments. You may be able to negotiate repayment terms with the credit card companies, but I would be very cautious about calling them for fear of tipping my hand; they don’t have all that great of a reputation for working with their clients unless forced to do so, and I would approach them after doing the bulk of the analysis and decision making.

Check if you can liquidate assets to pay other obligations, but I would not touch the retirement savings. Retirement savings are protected from creditors in bankruptcy, but more importantly, you are going to need them someday. The car in the states is a candidate, especially if it is just sitting. 9K is 9K, and it would pay down your credit card balances or provide a financial buffer in case of job loss. The 7K in company stock will be subject to claims from the credit card companies if it is not in a protected account (pension or IRA), so you need to consider that this is on the table for your budget planning, and by all means comply with your insider restrictions because messing with these rules is a headache you don’t need (the SEC action and job loss are unpleasant).

So when you have a sense of the actual numbers and the potential flexibility, then you talk to your wife and together you make the call on whether to pay the credit card debt or default. If you try to pay off the credit card, you will have to live very carefully, probably for several years, but probably not much different than a default really. If you default, you will need to talk to a bankruptcy attorney (depending on how aggressive this attorney is, they might be able to suggest some planning like living on the 7K in company stock and making more contributions to the 401(k) for a period before filing, but don’t do something like this without real advice because you will shoot yourself in the foot), and in addition to the mark on your credit record, bankruptcy can also be viewed negatively by present and future employers (there are some EEOC rules about a bankruptcy being a fresh start and hiring discrimination based on bankruptcy is prohibited, but like a lot of employment rules, it is hard to prove – you just don’t get the job you apply for and never know why). Default will probably lead to asset liquidation, and the credit card companies will get the value of the car and company stock, so one way to look at this is whether you want to declare bankruptcy over 24K which is all that would be discharged on the credit cards after they get the car and the 7K in company stock if it is not in a protected retirement account.

I also suggest that you talk to a credit counselor who may have good suggestions that you won’t find on an anonymous internet site. And I don’t think that a permanent relocation with a salary reduction to local levels is market for most expat deals, so get some advice before you agree to terms like that in the future (most of what I see are terms like tax equalization and relocation gross ups, but I don’t see that many).

Best or luck to you.

PW

[Dazed and Confused]

FreeFalling,
So I have no greater expertise or authority than anybody else in looking at your situation, but you sound like you are feeling a bit overwhelmed. I also had to care for an elderly parent and it was a big obligation.

The bottom line answer is that you will have to decide your own priorities, and you need an accurate understanding of the situation to make these choices. I foresee one question deciding much of how you can proceed. How well do you get along with your wife? Can you talk to each other and work together on a plan? If the answer is yes, your situation really is not so bad and there are workable, though somewhat painful, alternatives. If no, you have a problem and that needs to change.

Threshold issue: when you say default, I assume that you mean your credit card debt. This is really the only debt that you have which can be affected even by bankruptcy if you were to go there because student loans cannot be discharged in bankruptcy. Your situation is not unrecoverable because you basically seem to have 2x your income (pulling out the 15K obligation to support your mom, you have 70K income and 140K in debt assuming that you are not paying taxes as an expat).

First step will be to put together a workable austerity budget. This is where the cooperation becomes important. You and your wife need to get onto a budget that you can survive, hopefully without getting scary bleak and with a small margin for error, and you are headed for having to do this whether you ultimately default or not. Monthly negative cash flow is not sustainable, so these changes are coming regardless (the whole country is in the same boat after all). Figure out exactly how much you can live on and what you can cut out, and you may want to get the help of fresh eyes to do this (cable TV is viewed as essential by some, but many never have paid for TV, etc.) Simple math, but a hard answer to give up things we have grown accustomed to in some cases. You have no alternative, so sooner is better and more productive than later. Stay current on the credit card payments while you do your planning so they don’t trip into the penalty interest zones or you will lose a lot of room to maneuver, and don’t go without something like health insurance.

Next is challenge the assumptions and look for flexibility. Do you have any siblings who can contribute towards your mother’s support? Here is where hard decisions include having her move into one of her children’s houses and getting a sibling to contribute towards the costs. As a personal matter, I would do a lot of things before asking her to live on less than 16.2K per year if that is her only income as you say. Not a great time economically to have these conversations, but better than flying the situation into the ground without doing anything. Is your mother getting social security? You mentioned only a pension, but there may be other forms of public assistance available (prescription drug benefit decisions under Medicare are complicated but in some cases save money). Talk to a social worker in your mother’s county, they work with these issues regularly, and while you may need to call a few of them to get to a good one, some social workers are the best people around.

Continuing the search for flexibility, you may need to call the student loan originator and see what flexibility on repayment terms you have there. Most lenders are much easier to work with before you get too far behind, and I have heard that student loan terms can allow for periods of forbearance or even extension of payment terms to allow reduced or suspended monthly payments. You may be able to negotiate repayment terms with the credit card companies, but I would be very cautious about calling them for fear of tipping my hand; they don’t have all that great of a reputation for working with their clients unless forced to do so, and I would approach them after doing the bulk of the analysis and decision making.

Check if you can liquidate assets to pay other obligations, but I would not touch the retirement savings. Retirement savings are protected from creditors in bankruptcy, but more importantly, you are going to need them someday. The car in the states is a candidate, especially if it is just sitting. 9K is 9K, and it would pay down your credit card balances or provide a financial buffer in case of job loss. The 7K in company stock will be subject to claims from the credit card companies if it is not in a protected account (pension or IRA), so you need to consider that this is on the table for your budget planning, and by all means comply with your insider restrictions because messing with these rules is a headache you don’t need (the SEC action and job loss are unpleasant).

So when you have a sense of the actual numbers and the potential flexibility, then you talk to your wife and together you make the call on whether to pay the credit card debt or default. If you try to pay off the credit card, you will have to live very carefully, probably for several years, but probably not much different than a default really. If you default, you will need to talk to a bankruptcy attorney (depending on how aggressive this attorney is, they might be able to suggest some planning like living on the 7K in company stock and making more contributions to the 401(k) for a period before filing, but don’t do something like this without real advice because you will shoot yourself in the foot), and in addition to the mark on your credit record, bankruptcy can also be viewed negatively by present and future employers (there are some EEOC rules about a bankruptcy being a fresh start and hiring discrimination based on bankruptcy is prohibited, but like a lot of employment rules, it is hard to prove – you just don’t get the job you apply for and never know why). Default will probably lead to asset liquidation, and the credit card companies will get the value of the car and company stock, so one way to look at this is whether you want to declare bankruptcy over 24K which is all that would be discharged on the credit cards after they get the car and the 7K in company stock if it is not in a protected retirement account.

I also suggest that you talk to a credit counselor who may have good suggestions that you won’t find on an anonymous internet site. And I don’t think that a permanent relocation with a salary reduction to local levels is market for most expat deals, so get some advice before you agree to terms like that in the future (most of what I see are terms like tax equalization and relocation gross ups, but I don’t see that many).

Best or luck to you.

PW

[alarmclock]

In Soviet Russia, bankruptcy files for you!

Can you clarify, “support for my family (wife, kids) costs me ~60K” — is this some sort of child support + alimony? I assume no since you didn’t say ‘ex-wife’. It seems like $75K/year for mom+wife+kids could be lowered significantly; mom=’free daycare’ so wife can get p/t job (though they are probably thousands of miles apart, and wife does not have work visa?). You should be able to cut those costs considerably anyway.

[alarmclock]

In Soviet Russia, bankruptcy files for you!

Can you clarify, “support for my family (wife, kids) costs me ~60K” — is this some sort of child support + alimony? I assume no since you didn’t say ‘ex-wife’. It seems like $75K/year for mom+wife+kids could be lowered significantly; mom=’free daycare’ so wife can get p/t job (though they are probably thousands of miles apart, and wife does not have work visa?). You should be able to cut those costs considerably anyway.

[alarmclock]

In Soviet Russia, bankruptcy files for you!

Can you clarify, “support for my family (wife, kids) costs me ~60K” — is this some sort of child support + alimony? I assume no since you didn’t say ‘ex-wife’. It seems like $75K/year for mom+wife+kids could be lowered significantly; mom=’free daycare’ so wife can get p/t job (though they are probably thousands of miles apart, and wife does not have work visa?). You should be able to cut those costs considerably anyway.

[alarmclock]

In Soviet Russia, bankruptcy files for you!

Can you clarify, “support for my family (wife, kids) costs me ~60K” — is this some sort of child support + alimony? I assume no since you didn’t say ‘ex-wife’. It seems like $75K/year for mom+wife+kids could be lowered significantly; mom=’free daycare’ so wife can get p/t job (though they are probably thousands of miles apart, and wife does not have work visa?). You should be able to cut those costs considerably anyway.

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