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Windfall and What To Do With It?


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Due to a significant loss in household income (including spouse's 2020 unemployment during the pandemic), I exhausted all financial means to maintain unsecured debt payments several months ago. As a result, I am 90 days delinquent on most of that debt. No issues with the mortgage or other secured debt. The household income situation is the best it can be for now. I literally was planning to meet with a BK attorney this month to discuss options. However, I have an unexpected windfall coming my way. This windfall would only wipe out approximately 25% of the unsecured debt. I'm not sure what would be the best way to utilize the proceeds. Any recommendations? Should I go ahead and meet with an attorney before doing anything with the windfall? The windfall will be one-time money.

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I agree with CVs approach here.  Get yourself current and save any extra to supplement income until you can get back on track/save for an emergency.  You might want to see about getting in hardship programs with the CCs and get the rates lowered if you haven't.  Another reason to go this route is that if you make any large payments you are a prime candidate to get balance chased, so should something else come up you won't have the available credit to use, nor are you likely in a position to borrow more given the 90 day lates.

 

As an aside, if you went the BK route you would lose that windfall to the BK as it would be used to satisfy your obligations/disbursed to your creditors...so you would end up with a BK and no funds, and trying to hide it is a big no-no.

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