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August 25, 2013

A bankruptcy just for her?

My husband and I would like to buy a home in the next year or so. My credit is in pretty bad shape, so we’ve decided to work on getting his credit in better shape in order to qualify for a mortgage loan. I have $104,000 in debt, and $92,000 of that is in student loans. He has $13,000 in debt, with $7,000 of that a repossession on a car for which he was a co-signer. Can I file bankruptcy on my debts only?

You can’t file bankruptcy on certain, specific items. By the way, student loans are not bankruptable. Even if you filed, you would still have all that debt hanging around your neck.

I want you to own a home, but I don’t want your home to own you. Neither one of you has done very well with money so far, and at this point I’m afraid a house would be a curse instead of a blessing in your lives. I would encourage you to build a stronger financial foundation before you buy a house. In short, this means you need to get out of debt, save money, and start living on a budget.

Buying a house when you’re broke and deeply in debt is never a good idea. I’m not trying to be mean, but I really think you’re asking the wrong question. I don’t want you to try to use bankruptcy as some kind of escape from this situation. Right now, I want you to change your behavior with money and get things cleaned up with a good, organized financial plan in your lives.

Should a budget change every month?

Yes, it should. Your life changes every month, and your budget should reflect the ebb and flow of your life.

Now, some things will stay the same. Your house payment or rent should fall into this category. If you have a car payment, which I hope you don’t, that would be the same, too. There shouldn’t be a big difference in the amount you spend on food most months, though. You might spend more in this category during November and December thanks to the holidays, but overall it should remain pretty steady.

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