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Mary Hunt

Dear Mary: Please give me some pointers on bouncing back from bankruptcy. Will this have any effect on future employment opportunities? — Emmaline

Dear Emmaline: Pay your bills on time; never be late. Do not run up big balances. Do not apply for a lot of credit. Never use more than 30 percent of your credit limits. Never allow a credit card balance to roll from one month to the next. Above all, let nothing prevent you from saving 10 percent of your net income.

Many states allow employers to require credit reports from prospective employees; it’s the new character reference. Your bankruptcy could adversely affect your job opportunities. The same will hold true for applying for a mortgage or life insurance. That probing question of, “Have you ever filed for bankruptcy?” will require truth and honesty.

If you are diligent, your credit report soon will reflect a definite change of behavior and your new lifestyle. This will be evident to anyone looking closely at your credit report.

Only time can neutralize the effects of bankruptcy. Once 10 years have passed, it will be much better, as it can be reported by credit bureaus for only 10 years. Unfortunately, the sting is not likely to ever go away completely.

Dear Mary: We are thinking about filing for bankruptcy. We owe $30,000 in credit card debt plus $1,000 in outstanding medical bills.

Every month, we are falling further and further behind because we have a $2,500 mortgage payment, monthly bills, babysitting, groceries, gas, etc. I know things are not going to clear up overnight, but can you please help us get some relief — quickly? — Ron

Dear Ron: My heart goes out to you. I’ve been in financial trouble, too. You need to know your problem is not the result of medical bills or a big mortgage payment. Your problem is credit card debt. It might appear the medical bill has pushed you over the edge, but it’s the credit card debt that is such a problem. You are addicted to spending money before you’ve earned it.

Bankruptcy won’t address this problem. Quick fixes don’t teach us much. You borrowed the money and spent it freely, and now you have a moral obligation to repay it. I believe you are ideal candidates for credit counseling. My best advice is for you to contact the National Federation of Credit Counselors at their website or by calling 800-388-2227 today.

If it’s any consolation, my credit card troubles at one point were more than three times yours. It took 13 years, but together, my husband and I repaid every dime, including interest and penalties — no concessions. It changed my life.

Dear Mary: My husband and I really have gotten ourselves in deep this time. At the time, we thought it was a good idea. We bought a franchise, funding the upfront cost using our personal credit cards.

The manager we hired was inept and untrustworthy. Now, we are in credit card debt to the tune of $250,000.

We are trying to crawl out from under this problem and are out of working capital to keep things going.

We can’t find anyone who will make us a consolidation loan. Please respond quickly; we are sinking fast. — Desperates

Dear Desperates: I wish you had written before you headed down such a dangerous path. Instead, you violated nearly every rule of self-employment: You went into business with borrowed funds; you hired employees before you were profitable; you thought of credit as “working capital.” Need I go on?

I will say if there’s one thing you did right, it was not taking out a home equity loan to fund this nightmare.

As much as your unsecured creditors might scream and yell, hassle and harangue, they cannot take your home. And they cannot eat you. But they can sue you if you are unable to keep up with your monthly minimum payments, which would be an even worse nightmare.

Bankruptcy might be your only recourse. You might be relieved of this burden through bankruptcy, but discharged debts don’t disappear. The rest of us pay them through increased prices.

It pains me greatly to suggest it’s probably time for you to consult with a bankruptcy attorney.

Mary invites you to go to EverydayCheapskate.com, where this column is archived complete with links and resources for all recommended products and services. Mary invites questions and comments at everydaycheapskate.com/contact, “Ask Mary.” Tips can be submitted at tips.everydaycheapskate.com. This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of EverydayCheapskate.com, a frugal living blog, and the author of the book “Debt-Proof Living.”