Need Guidance: $60k in Debt, Should I File Bankruptcy or Grind It Out?

Question

Hey everyone,

I’m 25 and could really use some honest advice. I’ve made some financial mistakes in the past and now I’m sitting on roughly a little over $60k in debt (car repossessions, credit cards, loans, student loans, collections, and child support). My credit score is just a little over 500.

I work as a server at a restaurant, and I average around $4k a month (some months a bit more, some a bit less). I’ve been picking up extra shifts to increase my income, and I’ve managed to save just over $5k so far.

My ultimate goal is to turn my life around and eventually invest in real estate. But right now, I know no bank would take me seriously with how my credit looks. I’ve considered filing for bankruptcy, but I’ve also been told it will follow me everywhere and limit me down the road. My thought process was—if I file now at 25, I’d still have time to recover.

On the other hand, part of me wonders if I should just buckle down, hustle, and focus on paying it all off instead.

I’d love to hear from those of you who have been in similar situations or who’ve helped others get out. Should I file for bankruptcy or grind it out and pay everything off? What would you do if you were in my shoes?

Any honest and sincere feedback is appreciated.

Alecia Loveless · Answer

@Caleb Rivero I’d recommend you keep hustling. $60K isn’t that bad. I screwed up at had $40K of debt twice and got it paid off.

I’m able to live off around $2000 a month with discipline and you could do the same.

Keep picking up extra shifts.

One thought if it’s possible in your area would be to go to bartender school and get certified. In my area it’s around $500 for a 2 day course and you learn a lot of skills and the basic techniques and then you’re “certified”. This won’t make a difference at some restaurants but at others it might. Then you not only have serving options but options to fill in at the bar which can also be lucrative.

In my area there’s big hotels where you can get hired part time as a banquet bartender or server for events which usually involves good pay and great tips for a few nights a week.

Jason Malabute · Answer

This isn’t financial or legal advice, but something to keep in mind is that bankruptcy will have a long-term effect on you. It can give you relief now, but it also stays on your record for years and may limit options down the road.

JD Martin · Answer

It really depends on the nature of your debt and how it is allocated ( I'm assuming you have no assets to garnish). You say credit cards, loans, car repo, student loans, collections and child support. Well, there's no bankrupting your way out of child support, nor should any man worth a damn want to do so. There's no bankrupting out of student loans. So if that 60k in debt is 50k of student loans and back child support, you might as well grind because you don't owe that much. If it's the other way around, it might make sense just so you can make your primary responsibility (child support, then student loans) whole and current and clear the slate everywhere else.

Mostly it sounds like you need more money. If you can live somewhere for near free while you clean up your act - say back in your parent's basement - you should focus there. Most parents would probably be keen with their kid sleeping in the basement for a year if they were serious about getting their act together. If that's not an option, you should forget about extra shifts and find a second job.

Drea Na · Answer

@Caleb Rivero First off -You got this!

Next, as mentioned bankruptcy won't do anything for child support and student loans, doesn't seem like there's any point in going down that road.

I would lay out all the credit cards - call the companies, negotiate (sometimes they will lower the interest or stall it altoether for a period of time). Can you move all the credit card debt to one card and make one payment? Don't ignore them, call and see how they can help, some will let you defer a payment to give you some breathing room.

Be honest with yourself and your debtors - build a bullet proof plan of success forward and don't beat yourself up. You will get through this, build discipline which will support your real estate journey in the future.

Hope this helps :)

Drea

Caleb Brown · Answer

Others have given great advice. I would concur with them. I think focusing on cutting all costs and hustling is your best bet. JD gave great advice, if you bankrupt it won't wipe out all the debt you mentioned and it'll hurt you down the road. I would find a side hustle outside of serving that can pay you more for the work you put in. The other caveat is work on your skills to move up in your career. Don't add more debt to do so but working as a server is not a great long term plan. You can cut expenses but your income is something that can be increased at a larger pace which can sway things more. Personally I started a side hustle of flipping items onto FB or eBay. It's something that I can spend extra time and have used those funds to get ahead on things along with using for emergencies. Also look up Dame Ramsey, The Money Guy Show or I Will Teach You To Be Rich

Ky Perry · Answer

Man, first off — respect to you for being open and honest about where you’re at. A lot of people never even face their situation, and the fact that you’re saving money, increasing income, and thinking about your future puts you ahead of most.

Here are a few thoughts:

• Bankruptcy isn’t always a death sentence. For some, it can be the reset button that allows them to rebuild faster. But it also comes with consequences and stays on your record for years, so it’s not something to jump into without professional advice.
• Grinding it out is possible. With $4k/month income and the hustle you’ve got, you could set up a strict budget and knock debts down one by one (snowball or avalanche method). It’s slower, but you build discipline and don’t have the bankruptcy mark.
• Credit can be rebuilt. Even if you filed bankruptcy or paid everything off late, people bounce back. You’re 25 — time is on your side.
• Professional guidance helps. Talking to a nonprofit credit counselor or financial advisor (not the ones who charge crazy fees) might give you clarity on whether bankruptcy really makes sense.

If I were you, I’d focus on keeping expenses low, building that emergency fund bigger than $5k, and tackling the highest-interest debt while getting advice from a pro before making the bankruptcy call.

The fact that you’re already saving and thinking long-term tells me you’ll bounce back — whether you grind it out or reset. Stay focused, because real estate will still be there when you’re ready.

Jake McCain · Answer

I would grind it out (with a structured plan). You will need to make some tough decisions in the near future. Look at where you want to be in 5 years and work backwards. The skills that it takes to get out of your situation will help you be a great operator when you get to your ultimate goal.

Caleb Rivero · Answer

Thank you for the encouragement and wise words!

Caleb Rivero · Answer

@Caleb Brown Thank you! I'll look into it.

James Derry · Answer

Hi Caleb, it's great that you are catching this now and choosing to do something about it. I was in a similar situation with my student loans and car repossession.  I found assistance in the loan repayment.   You could get help with your situation by speaking with a student loan rep.  If you haven't taken a forbearance on your loans, you may be eligible for this.  Or, they will be able to offer you and  with a repayment plan to help you focus on your goals.  However, make sure you know all the details of repayment. They may charge you a fee or interest if a repayment plan is determined. This strategy could help you slow one payment down so you can focus on other high interest or high monthly payments. Whichever you choose.  I tend to agree that if you can find a strategist from a non-profit it can benefit you greatly.

Need Guidance: $60k in Debt, Should I File Bankruptcy or Grind It Out?

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