Should my sister declare bankruptcy???

[nsmall]

Trying to help my older sister folks.

She is 44, she is a NON TENURED college professor and makes 85k a year, her job is on a yearly contract so it could disappear in 2020.

SHE HAS $25,000 IN CREDIT CARD DEBT  pays the minimum due on each card plus $150 a month in principle on the cards

SHE HAS $135,000 IN STUDENT LOAN DEBT  claims she pays $1100 a month in interest only payments on the student loans

She drives my paid off 1999 civics, rents in LA ($1400 a month), has no assets besides her extensive shoe and clothes collection

She has no kids, claims she pays a lot in taxes, claims she has no extra money a month to pay down debts.

1. How much does it cost to declare bankruptcy?
2. Will bankruptcy eliminate ALL of her credit card debt?
3. Can bankruptcy eliminate any college loans?
4. Will they liquidate anything?  Her car is worth $1500, and she has nothing else.  She has like $300 in her checking.
5. Please try to hold back from mocking her, I know this all ridiculous...... but doesn't bankruptcy sound like a decent idea as she can only pay $150 a month towards principle on these cards?
6. Lastly, besides a torched credit score what are other negative consequences of declaring bankruptcy?  Will she ever be able to rent once she moves with bankruptcy on her record?

Thanks a lot in advance.  I want to help her and for the first time in her life, she is asking me to help her as she knows she is totally out of control with money.

[Goldielocks]

My layman's understanding of bankruptcy....  check with a real expert! Look for better opinions!


- a basic car is protected (as people need it to work / live), as are retirement accounts.
- If you are deemed high income, you can't get full bankruptcy, only a modified / reduced pay back plan. So only the cc debt is in question, here.
 - Student loans can't be voided in bankruptcy in USA, unless these are just refinanced consumer / generic loans.

She makes a lot more than her CC debt, so should not need bankruptcy protection.
By my calculation, housing, student loan debt is $2500 per month.  She takes in $5k/month.

Where is the rest of the $2500/mo going?   The CC debt could be negotiated to a lower rate, maybe, and she could pay it off in 3 years using $1000/mo payments and $1500 for the rest of her living costs.

-- does she qualify for Income based loan payments?  Is this interest only payment already a loan mitigation agreement?

Thoughts?

[marty998]

How confident are you that bankruptcy will change her spending habits? If it won’t, then I don’t really see the point of putting herself through it.

(I did lol at the comment about her shoe collection being an asset!)

[stashja]

About the shoe collection, if she's an adjunct in a place where girls collect expensive shoes (LA) she needs it to keep her evaluations by students high enough to keep her job. I teach in thrifted clothes and my doc martens bought in 2003 and I pay for it in evals, usually 8.5-9/10 average. A woman can get the remaining extra half point or so if she is a good dresser, and if I didn't have tenure I would go for it. When I got tenure, I sold all my heels and weird swanky dresses on eBay. I get a bit jealous of colleagues' "love her style!" evals but I'm safe. Your sister needs to dress to impress. Double that if she teaches sorority brats.

[Brianmcg321]

Bankruptcy won't solve her problem. As was stated student loans will still be owed.

She needs to spend some time on MMM, or buy her a Dave Ramsey book.

She makes enough money to pay off these debts. She's obviously blowing the money somewhere else.

[mistymoney]

Bankruptcy isn't going to help alot, and it can have far reaching consequences for up to 10 years. For just 25k, totally not worth it. imho.

With 85k salary, she would likely be chapt 11, and end up paying about 10k of it back in the settlement anyway, so only 15k, then maybe 2k laywer and fees?

so only 13K?


As a highly educated individual, she should try to take on some PT work with every cent of that funneled into debt payments. I know a professor at an R1 university that takes on some online courses for some other entities. Not sure where.

Does she have skills she can parlay into a small side consulting gig? Research, editing manuscripts or dissertations, etc.

Can she go after any grant funding? PI gets a decent cut.

[former player]

Has she been paying into social security, does she have a pension, does she have a retirement fund?  If she does, her longer term future looks a lot better than it might.  Also, if she does have money in a retirement fund the last thing she should do is borrow from it in any way - retirement funds are secure from bankruptcy.

What are the interest rates on the credit cards, and what is her credit score?  Can she refinance the credit cards to lower rates, or get a personal loan at lower rates?  If she can sort out a respectable rate of interest on that $25k she should be able to pay it off within the year.

Even with a need to appear smartly dressed for work she probably has some items she could sell without it leading to her looking as though she has downgraded her appearance.  I would also say: fashions are beginning to change now.  In particular, if she has any valuable high-heeled shoes she can spare she needs to sell them now, as unless they are museum quality and unused their value will start going down - fashions are moving in a very different direction.

None of this will do any good unless she changes her spending habits.  She sounds like a Dave Ramsey candidate.

[maizefolk]

nsmall, it sounds like there are a couple of things to unpack here. First of all you have a bunch of "she claims X" and "she claims Y" when you talk about your sister.

First of all, about taxes, yes your sister is in the income range where, as a single person, taxes really start to be significant and it can get a little discouraging to see how big the difference is between a pre-tax and post-tax raise can be. Using a quick online paycheck calculator she's likely taking home about $4,900/month, and her marginal tax rate (including federal, state, and payroll) is likely on the order of 40% right now, so I could see it being discouraging for her to try to take on additional side work to increase her income further, particularly if she'd be getting paid at at 1099 independent contractor in which case she's pay even more payroll tax and likely owe ~47% tax on additional side income.

As others have stated, the biggest rock around her neck right now are the student loans, and bankruptcy won't help with those. If she's paying interest only on those she seems likely to already be in some sort of income based repayment plan.

What field does she teach in? Short of a move out of LA (only makes sense if she can keep her $85,000/year salary but reduce living costs, possible in some fields but not others, $85,000 is, unfortunately, already on the high end for an adjunct), or a switch over to a job that pays significantly more I don't see any good ways out.

I am sorry.

About the shoe collection, if she's an adjunct in a place where girls collect expensive shoes (LA) she needs it to keep her evaluations by students high enough to keep her job. I teach in thrifted clothes and my doc martens bought in 2003 and I pay for it in evals, usually 8.5-9/10 average. A woman can get the remaining extra half point or so if she is a good dresser, and if I didn't have tenure I would go for it. When I got tenure, I sold all my heels and weird swanky dresses on eBay. I get a bit jealous of colleagues' "love her style!" evals but I'm safe. Your sister needs to dress to impress. Double that if she teaches sorority brats.

@stashja Yikes! I've certainly heard about double standards in teaching evaluations but this part had not even occurred to me.

I'll be over here in the corner being thankful I neither teach in LA nor teach as a woman.

[ender]

Your sister is about as close to the target audience of Dave Ramsey as is possible.

If she is paying $1100 in interest only on those student loans, they are about a 10% interest rate. That might be true, feels awfully high though.

$1400/month in rent leaves a lot of options to paying off debt for her. But a giant IF she is willing to change lifestyle.

[Cassie]

If she is willing I would help her set up a budget. I can't believe the student loans are interest only at that amount each month and she makes enough $ to pay off her CC.

[nsmall]

Thanks so much for all of your responses. I'll have to talk to her about some of the questions you asked.  Thanks again, I'm going to share all this information with her.

[SwordGuy]

Aside from the other good advice, she needs at least one roommate.   As many as she can get, actually.   If she only has 1 bedroom then she needs a bunk bed or to rent out the couch to someone else who really wants to pay off their debt.

And a 2nd job.

She needs to get that credit card debt paid down and stop buying things that aren't essential.   Then she needs to hammer away at the student loans.

[WalkaboutStache]

Your desire to help her is admirable, but unless and until she gets hit in the face with the consequences of her decisions, she will not change her obviously out of control spending. 120K in student loans is common in the sense that a 70K SUV is common: sure, everyone has them, but outside of professional degrees which are absurdly inflated they are an indication of poor financial choices. In fact, most of those inflated professional degrees are poor choices. 

Unfortunately, she does seem to have a raging consumption habit that a bankruptcy would not solve.  You won't be able to help her with this one - she will need to come to terms with her addiction.  Unlike a drug addiction, this one is under her control. At 44 it is time for her to see the light here. Cut spending, get a roommate, find a non-academic position where she can earn more. Adult up.

Side note on that non-academic job: adjuncts do not make 85K unless they are in a very hot field where industry would just pay silly money.  We all make decisions we wish we did not have to.  This is one of her moments for her.

[slappy]

How much of her "shoe collection" is actually an asset? I understand what others have said about dressing nicely, but surely there is something she can sell to bring in a little bit of money? Also, it sounds like she needs a second job.

[Linea_Norway]

Can you present it like that a room mate pays for her study loan? That might be more motivating, as I presume she won't be happy with the suggestion.

For her working extra hours and paying almost 50% tax, that will only pay off if her hourly rate is high. There is no point in doing an extra job in a low paid function. But 50% of a decent hourly rate might still contribute a lot.

The roommate and saving money will give a 100% reduction in cost and is therefore even more important than extra income.

Can she do a no-buy year with her existing clothes and shoes? There really should be no reason to buy any more than she already has. And maybe sell a few of the most fancy pairs that actually bring in some money. And just keep enough fancy outfits to wear at work. Does she have any other items that can generate immediate cash?

Please keep us informed. I am curious whether she wants to put in the effort, or whether there was some hope that a bankrupcy was the easy way out.

If any of the loans have high interest, is it possible to refinance it to a lower interest?

[Sibley]

1. She needs a budget
2. She needs to then cut her budget significantly. No more shopping.
3. Roommate
4. Look for new job where she makes more. Preferably a lot more.
5. Never help people more than they're willing to help themselves. Help her setup a budget, point her to Dave Ramsey, then see what she does.

[DeniseNJ]

She might also call her cc and negotiate a lower interest or payoff amount and also refi the student loans.

[minimustache1985]

She needs a budget.

Having paid $1100 to live with roommates in LA county 10 years ago, $1400 isn’t outrageous so I assume her living arrangement isn’t exactly posh as is.  If a roommate would create substantial savings then great, but I’m not sure the juice is worth the squeeze there or that she doesn’t already have one.

However housing and SL adds up to $2500, and as PP noted her take home is double that.  I’m sure a not small chunk of it is going to the CC’s, but some of it is also probably going to things she can’t afford and CAN cut like eating out.

With a 40% marginal tax rate between state/fed/ss every dollar she saves is worth about $1.70, so I’d put things to her like that- is that $20 dinner out worth earning $37 for?  Is that next pair of shoes worth almost double the register price?  There will be some meals/events that help her professionally, but beyond that she needs to be cooking at home, and it sounds like she has the shoe collection covered.  If she needs new ones to be “fashionable” for student reviews she should Poshmark some used ones to get the money for them.

As far as side gigs she should consider tutoring.  With her tax rate she needs a decent rate to make it worthwhile but wealthy parents in LA will pay one for a freaking college professor if her field/expertise is relevant to their kids needs.

[cchrissyy]

bankruptcy is a terrible idea!
 it will only help the credit card debt but does nothing to fix her long run situation, and will have very long term impacts on her credit, which is probably important to her as a renter.  This solution is too severe for the size of her credit card debt.

[Dicey]

What about the legit places that consolidate your debt and get you on a payment program? Consumer Credit Counseling, IIRC. She seems like the perfect candidate. The bankruptcy card is a big one and she'd be wasting that card if she used it now.

And I second everyone who says you're farting in the wind (or more decorous words to that effect) if she's not willing to stop the frivolous spending. Please be careful.

Slightly off topic, but I keep wondering about the following scenario. Buy a house. When it rises in value, re-fi it. Use the money to pay off the SL's. Then go on a spender bender and rack up a bunch more debt. Declare bankruptcy. Boom! Your SL's are discharged. Not advocating this; I don't even know if it's possible. Just saying that's the kind of thing I'd want to save the BK card for.

[nsmall]

Original poster here.  Thanks again for the advice.  I will offer her these opinions shared on this thread.  I think I need a new thread about how to negotiate with the creditors. 

For the record, she has a studio apartment in Korea Town, so she is not willing to get a roommate.  She already works a ton of hours per week.

My main concern is that she has been at her job for 3.5 years and has done NOTHING to reduce her debt.

I'm getting excited because she is actually asking me for advice.  I think she finally wants to at least try to change her financial situation.

[nsmall]

My layman's understanding of bankruptcy....  check with a real expert! Look for better opinions!



-- does she qualify for Income based loan payments?  Is this interest only payment already a loan mitigation agreement?

Thoughts?

I have no idea what you are talking about.  Sorry.

One of her cards she has had for 10 years is 22% and its $7000.  I wish I was joking. 

[nsmall]

What are the interest rates on the credit cards, and what is her credit score?  Can she refinance the credit cards to lower rates, or get a personal loan at lower rates?  If she can sort out a respectable rate of interest on that $25k she should be able to pay it off within the year.

Her interest rate is high, her credit score is Low.

[Linea_Norway]

What are the interest rates on the credit cards, and what is her credit score?  Can she refinance the credit cards to lower rates, or get a personal loan at lower rates?  If she can sort out a respectable rate of interest on that $25k she should be able to pay it off within the year.

Her interest rate is high, her credit score is high.

High credit score, combined with a good income should help refinancing her debt from 22% to something much lower.

[nsmall]

My apologies, she has a low credit score.

[Linea_Norway]

Is she someimes away from home for some days? Then airBnB could be an option?
Or maybe move somewhere a little bigger, but more nor expensive, where she could take in a roommate?

[slappy]

My apologies, she has a low credit score.

What is her credit score? It is a late payment issue or a utilization issue?

[Linea_Norway]

Could you put her on your card, without giving her access to using your card, to up her credit score? I sometimes read something about this on this forum. Other people know more about this.

[freya]

Sounds like a situation that needs to be turned around, quickly.  However - she's the only one who can do it.  Offer advice and a sympathetic ear, not necessarily in that order, and make sure she keeps you posted.

Her housing and auto costs are pretty low for LA, so that's promising.  Give her a copy of "Your Money or your Life" which talks about gazingus pins - she'll recognize that pretty quickly as shoes are mentioned specifically as an example!

Also does she have any retirement savings at all?  If not, she's behind the 8 ball there, too (and btw she should not raid her account).

So, there are things she can do Right Now and also some out of the box ideas that she needs to strongly consider.  For Right Now:

- If she's paying $1100/mo for student loan interest on a $135K balance, that's a 10% rate.  Yowza.  Can that be refinanced?  You can help her do online research for this.

- I know you said low credit score, but there are tricks to reduce the interest on her credit card debt:  call the bank and negotiate for a lower rate, get a card with an introductory 0% rate and roll the highest interest debt onto it, go to her local bank or credit union and ask about personal loans.    Also, there are agencies in LA that can help to manage credit card debt for a small fee that may be worth it for her.

- YNAB.  Even given the price tag, she needs this BADLY.  It would be a nice gift if you want to stake her to the first year.  The fact that it costs $$ will give her extra impetus to make good use of it.

- If it's allowed, list the studio on Airbnb at least for times when she's not home; crashing with friends or family to increase the rental income is another possibility.

Then, she should take a step back and consider her situation.  Given her age and education she's earning a crappy income in a HCOL area in a go-nowhere time-sucking job.  What does she teach, and what was her degree in?  She needs some better options, and there have to be some.  Most of them probably involve moving out of LA.  Look for jobs in "underserved areas" that come with student loan forgiveness, for a start.

[nsmall]

I will ask her about her loan interest rates.

Her degree is in Ethnic Studies and she works at a well known private school, but yes, it is so expensive to live in LA.  If she gets tenure, she will get a raise.

She has nothing saved for retirement besides social security and the various colleges (four) pensions she has worked at for the last 10 years.

I told her I could help her confirm and/or consolidate the money she has invested from these various colleges, but she has yet to even look into it.

[stashja]

You say “when she gets tenure.” Is she tenure track or an adjunct (or something else... VAP?) this is the most important question

[Kepler]

Just to say as well: while it's true that female academics can get punished by students for various reasons, it's more complicated than saying that female staff need to dress in some special, snazzy way to improve their evaluations.  (If you look at the evaluation research - which is not for the faint-hearted... - handing out chocolate-chip cookies is probably a better investment, if you want to raise your evaluation results, than wearing fancy shoes...)

I am a female academic.  I am also ugly :-)  That doesn't worry me - I have other virtues :-)  I also do nothing about the ugliness :-)  I don't wear makeup.  I am very short, and I don't do anything to compensate for that.  I wouldn't have a clue what is fashionable.  I break all sorts of rules that female academic staff are routinely given - and not just about appearance: I teach hard classes, I have high expectations, I teach subjects students dread, and I am not an easy marker...  I fail people who would skate by in other classes...  And I am an award-winning tertiary teacher with over a decade of stellar student evaluations... 

My point is not that everyone can do what I do: teaching is a complex interpersonal relationship, and people bring different relational skills to the table.  I can only speculate why I can "get away" with what I do, when there is evidence that other people can't - in part, I suspect it's because I am absolutely comfortable with who I am and how I look, and I simply don't expect anyone else to care about something so trivial, and so... they don't.  But this isn't something you can advise someone else to do: I haven't taught myself not to care about this - it's one of my personal superpowers that I have never cared... It may or may not be a transmissible skill...

Still: if someone deeply in debt is continually financing new clothing out of fear about their student evaluations, they might want to take a look at some research into what /else/ affects student perception.  I've never made cookies for my students - but there is better evidence for the impact of doing that, than for dressing some particularly fancy way - and it's almost certainly cheaper...  But there are also educationally substantive strategies - ones that are less extrinsic than cookies and fashionable accessories - and she could look into those, if this is a serious driver of clothing expenses...

[freya]

Ethnic studies...oh dear.  That's very limiting.

The original post said "non tenure track", but you just said "when she gets tenure".  Is it possible for her to advance upward through the ranks, what kind of salary increases are we talking about, and when might she expect a promotion?

Don't touch her retirement accounts...that's of secondary importance right now.

If she wants to stay put and pay down that student loan herself, she'll have to go all out Mustachian.   Would she be interested in putting together a case study, after using YNAB to track her spending for a month or two?

[AnxietyFly]

135k is student loan debt is a death sentence. I couldn't imagine trying to get by with that much of a burden.  A bankruptcy will not help out the situation. 

[BlueHouse]

My brother went through bankruptcy a few years ago, and he's a really smart guy, so I can empathize with you.

The most important part I learned:

 He didn't even know what he really owed.  He felt so overwhelmed and embarrassed of the situation that he just couldn't really get himself to get a firm handle on what the real status of his debts was.   He kept guessing "I probably owe this much and this other asset is probably worth that much".   You need to impress upon your sister that you cannot make good decisions until you both understand EXACTLY what is owed, and to whom, and on what terms, etc.  This is painful and difficult but it must be done.

Good luck and good on you for helping your sister sort through this. 

[mistymoney]

135k is student loan debt is a death sentence. I couldn't imagine trying to get by with that much of a burden.  A bankruptcy will not help out the situation.

I sure hope not... :|

But it is serious! She has very few fixed expenses, renting, no dependents, etc. so it can be dealt with on her salary, but she needs to get serious and pay more than the interest. But perhaps wipe out the CC debt first.

She has got to get serious about this, and it is unfortunate that bankruptcy is just not going to help her much at all.

[nsmall]

Sorry for mixed messages.  Original poster here.

My sister is on a tenure tract job and will get a boost in pay if she gets tenure, possibly going to happen in 2020.

Unfortunately, I've been sharing all this info with her and it seems like I care more than she does.

At this point she is....
     Not declaring bankruptcy.
     Not calling the creditors to lower payments.
     Not willing to have a budget, But she said she will write down what she spends money on this month.  Not sure that is a victory.

[Dicey]

Sorry for mixed messages.  Original poster here.

My sister is on a tenure tract job and will get a boost in pay if she gets tenure, possibly going to happen in 2020.

Unfortunately, I've been sharing all this info with her and it seems like I care more than she does.

At this point she is....
     Not declaring bankruptcy.
     Not calling the creditors to lower payments.
     Not willing to have a budget, But she said she will write down what she spends money on this month.  Not sure that is a victory.

One of the very best things I learned from this group is never to help someone more than they are willing to help themselves.

[Linea_Norway]

Sorry for mixed messages.  Original poster here.

My sister is on a tenure tract job and will get a boost in pay if she gets tenure, possibly going to happen in 2020.

Unfortunately, I've been sharing all this info with her and it seems like I care more than she does.

At this point she is....
     Not declaring bankruptcy.
     Not calling the creditors to lower payments.
     Not willing to have a budget, But she said she will write down what she spends money on this month.  Not sure that is a victory.

At least she is willing to do a little job herself, writing down the spending. Your job is to add it up at the end of the month and see if it equals the amount drawn from her account. She probably left out a lot.

Maybe she reached out to you in the hope that you would take away some of her loans. Or that you had some other magical easy solution. It is probably no fun to be told that from now on, she will have to live super frugal, stop buying clothes, change jobs to an area where other teachers don't want to work. And all of the sudden, she has to work on paying off her loans.

I even think that getting tenure/higher pay next year won't change a thing if she doesn't start budgeting on how to use that bigger salary.

Could you present her with a plan of what to do with that extra money if/when she gets it? Like how to pay off her debts with the difference between today and the new salary?

[Metalcat]

You can help, but you can't fix.

You can only help as much as she asks you to help, and even then, she still won't be asking you to try and fix anything.

You can't fix this, period.
The sooner you understand that, the sooner you will figure out how to actually help her.

[socaso]

She doesn't sound like she's willing to make much change to fix her situation. She is probably overwhelmed. The vast majority of people I know in LA just accept debt and high cost of living as part of life. I know it's frustrating that she seemed to want help and is backing off now but you can't fix her. She has to try for herself. Tell her to write down her expenses for the next month and when the month is over make a time to sit down with her and go over the list. Don't be surprised if she didn't really do it.

Also, you can still point her to resources. Send her links to MMM and other bloggers you like. See if her local library has some financial books or if you can find inexpensive second hand copies of books send them to her. Don't do too much! She has to take the lead. I have attempted to help people with their finances and budgets and most people don't want to do the work.

[maizefolk]

My sister is on a tenure tract job and will get a boost in pay if she gets tenure, possibly going to happen in 2020.

Unfortunately, I've been sharing all this info with her and it seems like I care more than she does.

So this changes thing substantially thank you for clarifying.

If she's tenure track and possibly getting tenure in 2020 that means this summer/fall she's in the process of putting together her tenure package and in a desperate feels-like-life-or-death-struggle-even-though-its-not battle to get any last academic accomplishments (papers, books, invited talks, conference papers, what have you) out in time to have them influence the Promotion and Tenure committee's decision.

Next summer she's get either really good news or really bad news. Either way I bet she'll be a lot more receptive to long term planning then than she is now. I was a complete mess (even more so than I am now) the whole year I went up for tenure, and the fog didn't start to fade until I got my tenure letter last spring. And I was close to FIRE and in a field where there is significant private sector hiring.

If I was drowning in debt and didn't see any non-academic alternatives if the P&T committee voted no, I'd have been even more insensate to the outside world during that year.

[Linea_Norway]

Also, you can still point her to resources. Send her links to MMM and other bloggers you like. See if her local library has some financial books or if you can find inexpensive second hand copies of books send them to her. Don't do too much! She has to take the lead. I have attempted to help people with their finances and budgets and most people don't want to do the work.

I think David Ramsey might be a better inspirational guide for someone with that much debt. The OP's sister is not ready to think about FI or RE yet, which might be very unobtainable to her ever. But just getting out of debt would be a good first step, overwhelming enough.

[freya]

My sister is on a tenure tract job and will get a boost in pay if she gets tenure, possibly going to happen in 2020.

Unfortunately, I've been sharing all this info with her and it seems like I care more than she does.

So this changes thing substantially thank you for clarifying.

If she's tenure track and possibly getting tenure in 2020 that means this summer/fall she's in the process of putting together her tenure package and in a desperate feels-like-life-or-death-struggle-even-though-its-not battle to get any last academic accomplishments (papers, books, invited talks, conference papers, what have you) out in time to have them influence the Promotion and Tenure committee's decision.

Next summer she's get either really good news or really bad news. Either way I bet she'll be a lot more receptive to long term planning then than she is now. I was a complete mess (even more so than I am now) the whole year I went up for tenure, and the fog didn't start to fade until I got my tenure letter last spring. And I was close to FIRE and in a field where there is significant private sector hiring.

If I was drowning in debt and didn't see any non-academic alternatives if the P&T committee voted no, I'd have been even more insensate to the outside world during that year.

+1.  This timeline is indeed an important piece of information.

She absolutely should be focusing on getting her tenure package polished up and also getting any articles she's working on published.  It's a very anxiety-inducing time, because the decision that is handed down is going to be life changing.

The one thing that she might consider doing right now is starting to use YNAB, because this will actually help to calm her financial anxieties while starting to compile data on spending patterns that will be important info later on.  It's a comfort to know that you won't overdraw your checking account when the credit card bill comes due.

Doing some selective refinancing (e.g. the high interest student loans and/or credit cards) might also be helpful, and you can help there by doing some of the research for her.

Don't suggest anything else.  The idea of going into bankruptcy now is frankly crazy, because it will seriously harm her tenure prospects because of the time suck and stress that would result.  Ditto consolidating old retirement accounts.

[nsmall]

I will give an update if anything changes.  She has a really strong willed friend I have told her to hire (for free, they are really tight) to negotiate better interest rates.  Her friend always gets free hotel rooms or flights for example when a mistake is made.

Unfortunately my sister is so complacent if they just lower her one high rate of 22% to 17% she said that would be good enough.

I would do anything to help her, but at this point I will only offer advice if she asks for it. 

[historienne]

If she's tenure track and possibly getting tenure in 2020 that means this summer/fall she's in the process of putting together her tenure package and in a desperate feels-like-life-or-death-struggle-even-though-its-not battle to get any last academic accomplishments (papers, books, invited talks, conference papers, what have you) out in time to have them influence the Promotion and Tenure committee's decision.

Next summer she's get either really good news or really bad news. Either way I bet she'll be a lot more receptive to long term planning then than she is now. I was a complete mess (even more so than I am now) the whole year I went up for tenure, and the fog didn't start to fade until I got my tenure letter last spring. And I was close to FIRE and in a field where there is significant private sector hiring.

If I was drowning in debt and didn't see any non-academic alternatives if the P&T committee voted no, I'd have been even more insensate to the outside world during that year.

First, if she's in the humanities at a private school in LA, then she is likely to get tenure.  All of the schools that meet that description have reasonably high tenure rates.  Nothing is guaranteed, but chances are good. 

Second, do any/all of her loans qualify for PSLF?  Her employer almost certainly qualifies.  She should get as many of her loans as possible on a PSLF-eligible repayment program, and then pay whatever amount that requires.  Frankly, she should have done this years ago, but better late than never.

The credit cards are the more serious issue.  Agree that she should get help negotiating them.  When/if she gets a post-tenure raise, she should also throw ALL of it at the credit card debt.

None of that is stuff that you can or should try to do for her.  But if she wants to, she can get out from under this pretty straightforwardly.  It will take time and a degree of sacrifice, but nothing super dramatic.

As a side note, I agree with the poster who noted that she's probably under an intense amount of stress right now, if she's in the tenure process.  She may be in a better mental space to deal with this stuff once she gets tenure.  And if she's devoting all her mental effort to getting tenure right now rather than dealing with her credit card debt, well, that's probably actually the wiser financial move in the long run.

[Bernard]

Moving from the American normal to the path to FIRE is a mental process. It's realizing that normal is crazy and that there is a solution at hand. All of this happens inside the brain. Your sister is in a financial position to turn her life around, and she has enough time to do so. I remember a MMM blog about a couple who worked minimum wage jobs in a Texas town, and Pete even showed them how to live below their means. Where a will is, there is a way. It's not like she is a day laborer living in the slums of Calcutta. Once she has hit rock bottom and is ready to do anything, the healing can begin. Looks like she isn't there yet.

[freya]

Unfortunately, I've been sharing all this info with her and it seems like I care more than she does.

That right there is the crux of the problem.  On the one hand, she has you, the FIRE movement and this forum.  On the other hand she has virtually all of US society, the LA lifestyle, and social & mass media telling her to work forever in order to spend & consume.

She may never switch to your way of thinking and it will be even less likely to happen if you push too hard.  That may prove to be the reality of the situation.  Down the line, try to avoid being regarded as the family piggy bank as so many of us savers are.  That means not divulging anything about your savings & net worth in your conversations with her now.

I think the best you can do is point her to the MMM blog and just tell her it's both fun bedtime reading AND informative, and let it go at that.  She'll call you when she wants help - IF she decides that.

[nsmall]

Really appreciate all of your help.  My sister has yet to call the credit card companies.  I will continue to encourage her and you all helped me understand what I can and/or shouldn't do/expect for/from her.