‘It counts as homelessness’: This California woman went from a homeowner to living in a trailer with $30K in debt. Here’s how she got into financial trouble and how she can get out of it

Vicious cycle of disability and homelessness

Despite the ongoing housing crisis in California, Rachel says she managed to purchase property for $300,000 at the age of 23. “I had money. I was real good with money,” she insists on Hammer’s show. However, she also admits to missing some mortgage payments during her time as a homeowner.

After a wrist injury left her permanently unable to lift heavy objects, Rachel says she had to quit her job as a registered veterinarian technician, and the eventual breakdown of her marriage further compounded her burgeoning financial struggles. Unable to manage the $2,000 monthly mortgage payments, Rachel eventually decided to sell the house rather than face foreclosure.

Unfortunately, Rachel’s plight is quite common in the U.S. As of 2023, 13% of the U.S. population lives with some form of disability, according to the latest data from the Bureau of Labor Statistics. Most of this cohort struggles to hold down a job, as only 22.5% of disabled Americans were employed.

Meanwhile, data suggests the financial impact of a divorce is more pronounced for women. Women lost roughly 40% of their income in the year following a divorce, while men saw a 5% increase, according to a 2018 study published in the Demography journal. Women’s poverty risk also surged from 7% to 45% within a year of divorce, before recovering to 25% several years later.

Faced with these headwinds, Rachel has struggled to keep a roof over her head. Since her trailer doesn’t count as a permanent address, she has been unable to find a full-time job, which further exacerbates the financial strain.

To make ends meet, Rachel relies on odd gigs, ranging from pet sitting to remote admin assistance. However, she estimates her monthly earnings range from $200 to $600 for these various gigs.

Unfortunately, Rachel’s modest income was just the beginning of her financial struggles.

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Debt makes matter worse

Without the income to support herself, Rachel has relied on credit and rentals to survive. She has an outstanding loan of $8,135 at a 22% interest rate for her trailer park membership fee. She told Hammer that the membership can’t be cancelled, only sold. Hammer describes it as a “camping timeshare.”

But Rachel is also struggling with another debt that is more than twice as large — she owes $22,991 to Costco, a debt that is already in collections. The retail giant has already sued Rachel over the outstanding debt.

“Your credit's already f****d,” Hammer tells her. "This might be a bankruptcy situation."

How Bankruptcy can get Rachel out of debt

Many Americans face a similarly grim situation as Rachel. In November, 2024, personal bankruptcies in America rose 7% from the previous year, according to the American Bankruptcy Institute.

At this point, with a modest income and insurmountable debt, bankruptcy may be Rachel’s best option. According to Robert M. Lawless, a professor at the University of Illinois College of Law, bankruptcy is an essential part of the “social safety net” and can help people turn the page on unsustainable debt.

“At its core, bankruptcy provides a discharge of debts, which allows people to plan for a better future,” writes Lawless.

Unfortunately for Rachel, a debilitating injury and a traumatizing divorce were exacerbated by some poor financial decisions, but that doesn’t mean Rachel can’t work her way out of this troubling financial situation. By declaring bankruptcy, Rachel can get the help she needs to create a plan to pay off her debt while holding off creditors from pursuing any more legal action against her.