Bankruptcy felt like an escape to a couple earning about $200,000 a year after their debt climbed to roughly $555,000.

Regina, a caller from San Antonio, said the pressure had become overwhelming.

"What do you do when you can't pay the minimums?" she asked host George Kamel on "The Ramsey Show." She said the couple was overwhelmed by creditor calls and unsure whether to keep answering them, try negotiating payments, or allow accounts to fall behind.

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Kamel and co-host John Delony reviewed the figures she provided. Regina said the $555,000 total did not include a mortgage. The debt included credit cards, student loans, medical bills, personal loans, and a small piece of land.

About $50,000 was on credit cards, while roughly $150,000 came from consumer loans. When asked what the money had been spent on, Regina responded bluntly: "A whole lot of stupid stuff."

When Income No Longer Offsets Risk

Despite the income level, Delony focused on the debt relative to earnings. He said the couple was "one illness away" or "one layoff away" from financial collapse. Regina said her husband wanted to file for bankruptcy and preferred to continue as they were before filing later to start over. 

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She did not agree and was unwilling to file. Delony told Regina that bankruptcy would not resolve the situation. He added that it could turn the next decade into "a living hell," particularly given her background in banking and IT.

Liquidation And Downsizing

"You are broke people," Kamel told Regina, outlining a different approach and saying everything possible needed to be sold, including vehicles and items purchased with borrowed money.

The focus then shifted to housing. Regina said their home was worth about $580,000, with roughly $400,000 still owed. Kamel said downsizing or renting could free about $180,000. He added that selling other assets could bring the total reduction to roughly $380,000 of the $555,000 debt.

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With income of about $200,000 a year, Kamel said the remaining balance could be eliminated within a few years without bankruptcy.

What Bankruptcy Wouldn't Fix

Delony told Regina the problem could not be solved by one person acting alone.

"You can't do this alone," he said, stressing that both spouses needed to be fully involved.

Delony warned that the debt would return unless the deeper issues behind it were addressed by both spouses. "You are not together on the same page, and you don't have the discipline," he  said.

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