Question on a buncha debt

Question

I’m in a bind. I’ve got a lot of debt. I’m trying to figure out the order to deal with it.

• $115,000 owed to IRS bills
• $69,000 in credit card debt (written off, going to collection)
• £28,000 owed to divorce attorneys
• £25,000 remaining on £30,000 Barclays loan
• $21,000 owed to my parents

Currently I’m not working, although I’m on a paid non-compete. I can’t get another job, and I’ve been informed by a bankruptcy attorney that I earn too much right now to declare bankruptcy. I’m a full-time single father to a child with special needs (autism). I’m trying to line up a new job without success thus far. I’ve got about £70,000 sitting in a bank account and I’m working with the IRS to determine if I can settle the debt. The big tax bill originated from liquidating my US IRA and the tax required. Debt in the UK is a priority as I live here. Originally I was considering paying the credit card debt in a settlement for $0.50 on the dollar, or that’s what the bankruptcy attorney recommended I do, with him collecting a fee for doing so. Now I’m thinking it would be best to pay off as much of the IRS tax bill as possible, especially given GBP/USD exchange rates are more favorable than they have been in recent years. Also considering that I do not live in the US at present. Then I’m considering declaring bankruptcy in the US when the non-compete payments run out early next year. Any advice, or non-traditional things to consider, would be most appreciated. For some additional context, not sure if relevant, but I was diagnosed with both ADHD and autism as an adult in 2024.

Answer 1

Now I’m thinking it would be best to pay off as much of the IRS tax bill as possible, especially given GBP/USD exchange rates are more favorable than they have been in recent years.

You're right, but for the wrong reason. Exchange rate is not your problem. The problem is that the IRS has a great deal of power that they can wield to collect the debt. Maybe you're somewhat insulated from that for now by living abroad, but generally tax debt should be taken care of as soon as possible.

I don't know what the ramifications of owing money to attorneys in the UK are (do you owe the attorneys or your ex-spouse?) but that might be the next target just to keep them off of your back.

I can’t get another job

You don't say how broad your non-compete is, but I doubt it keeps you from working at all. It probably just keeps you from working in the same field. I suspect you could find other jobs that do not violate the non-compete, even if they don't pay as much.

There's not a quick fix - you have a huge hole to fill and the main shovel you have is your income. The first step is to get on a bare-bones budget so that you can put as much of your income towards the debt as possible. Every Dollar/Euro you spend is money that is not going to fixing the mess. Selling any assets (cars, property, stocks, etc.) that you don't need (regardless if they are good "investments" or not) will accelerate your progress.

not sure if relevant, I was diagnosed with both ADHD and autism as an adult in 2024.

It's not financially relevant, but might be relevant if it causes behavioral patterns that created the debt in the first place. If you can't overcome those behaviors, you may need better safeguards to stop you from overspending.

Hopefully you can find a way for those conditions to actually work for you by becoming incredibly focused on this goal.