PF gave me some good advice a few weeks back about what to do. A few updates and new challenges.
The total damage from cash and extended credit leveled out at $288,500 give or take. This was over about 14 months total.
I have so far take care of the IRS – between insufficient income tax withholding and penalties for borrowing against retirement funds, I owe the IRS about $40k before penalties. This money is never going away so I have worked out a payment plan over 24 months with them. I have applied for penalty reduction as an innocent spouse and if that is approved it will save me about $5k.
I agreed to a deed in lieu of foreclosure with the lender on my home, and they agreed to a one time relocation assistance grant of $5k. Moving out of the home in mid-June.
I negotiated a settlement of $4k cash on a $50k HELOC that would have been wiped out by bankruptcy or foreclosure. The bank agreed to completely delete it from credit report if I make it $5k instead of $4k and I’m working on the extra money to make that happen.
All of the credit cards have been setup on repayment plans with reduced interest, mostly by threatening a total wipeout in bankruptcy and also some intense scrutiny of their account security practices. My lawyer was able to get some phone recordings where my wife literally called and said she was me – literally not her but me – and the agent knowing full well changed addresses, credit limits, etc.
The rest of everything else I have almost stabilized. I negotiated a surrender of one of the two cars and was able to get $1500 in equity out of the process because it had been purchased with a large down payment.
AMEX has been amazing. They were able to recover funds from my wife’s drug dealer who has done transactions using AMEXs processing network. (What a world when dealers take plastic).
I was also able to physically recover some tangible things like jewelry and precious metals because they were not joint property and were taken from my safe deposit box by my wife. The bank who gave her access improperly coughed up $25k in cash to avoid a lawsuit because of their lax security and assisted financially in recovering some heirloom jewelry that had been pawned.
My wife remains in in-patient drug and addiction counseling.
It is possible that I do file bankruptcy. My employer has graciously advanced me a months pay that I used to stabilize the worst debts and secure new housing and transportation.
I was able to rework my budget to one that was 30% bills, 0% debt service, 20% short term savings and 50% long term savings to one that is 20% bills, 70% debt service, and 10% short term savings. I project that I will be back to 0 net worth in about 30 months.