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Need Advice To Avoid Personal Bankruptcy
July 4, 2004 | johnrobertson

Posted on 07/04/2004 8:16:50 PM PDT by John Robertson

Dear Freepers:I am in serious financial trouble. I need some advice. I do NOT want to file for bankruptcy.


TOPICS: Your Opinion/Questions
KEYWORDS: bankruptcy; creditcarddebt
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I am in serious financial trouble. I need some advice. I do NOT want to file for bankruptcy. But our $3-$5000 monthly net is NOT making it. We're going to drown, in just a few months. Credit card debt is pulling us under. It's taking about $1350. net dollars every month. Shortfalls are made by tapping home equity, but that's running out.

I will spare you the tale of the misfortunes and miscalculations that led us here. But, please spare me the lectures and hectoring about how I never should have had credit cards, I should sell everything and move to the country and eat rabbits. No one chooses to get into this position, and I trust most of you to take me at my word that I built up almost $45K in credit card debt through some business missteps, unforseen circumstances, and that, word of honor, not a single "luxury" was ever put on one credit card.

There are a lot of smart Freepers onboard, many well versed in finances, so please have at it. I am overwhelmed by the debt counselers, managers, etc. Reduce my interest, cut my payments way down? Sounds great. But I can't even begin to sort these things out.

We're married, we're in our mid-50s. We've been financially stable over our 32-year marriage (not counting the last 4-5 years, when this built up), have never filed for bankruptcy, no late or missed payments, and have as good a credit rating as anyone can have with our debt-to-income ratio.

The good news is, my income (which is the variable part of the figure above), stands an excellent chance of improving significantly by or before the end of the year. We need to be able to tread water till then.

Thank you, if you can make the time to impart some advice.

Happy Fourth.

1 posted on 07/04/2004 8:16:51 PM PDT by John Robertson
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To: John Robertson

I have no personal experience here but I listen to enough talk radio to hear a commercial or two:

http://www.turningpoint.org/


2 posted on 07/04/2004 8:20:40 PM PDT by mcg1969
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To: John Robertson

do you own stock or rental property?


3 posted on 07/04/2004 8:22:04 PM PDT by Jasper Willowtree
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To: John Robertson
OK, sorry, I missed the part where you said you're tired of debt counselors. But you're just going to have to find one you trust and do what he says. By the way their FAQ link is broken, here is the right one: http://www.turningpoint.org/FAQ.htm
4 posted on 07/04/2004 8:22:23 PM PDT by mcg1969
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To: John Robertson

John,

There are credit counselors around. I am not one of them. But it seems to me that the thing to do is to reduce your living costs so that you CAN live on the $3-5,000 monthly net (minus 10%).

Then, contact all of your creditors and tell them you have the choice of filing bankruptcy or working out the credit with them. Tell them you don't want to file bankruptcy and you have worked our you budget so that you can allocate 10% of your montly income to reduce the debt. Then actually set aside 10% of your income into another account and use it to make periodic reductions on your debt.

Of course it will mean a major adjustment in your life style, but you know what the alternative is.


5 posted on 07/04/2004 8:22:27 PM PDT by Tom Jefferson
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To: John Robertson

Do you own your own home? Maybe you can get everything consolidated. Be careful of debt consolidators. Do your research.


6 posted on 07/04/2004 8:22:27 PM PDT by cyborg
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To: John Robertson

Take a dollar down to the local convenience store, put your numbers in and cross your fingers.:)


7 posted on 07/04/2004 8:25:56 PM PDT by WinOne4TheGipper (Fahrenheit 7/11- The temperature at which fat idiots burn.)
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To: John Robertson
Do you have enough equity in your house to get a home equity loan for the 45k credit card debt?

The home loans are available at about 5% as opposed to the almost 20% credit card interest.

Should cut that credit card payment way down.

Best wishes

8 posted on 07/04/2004 8:26:19 PM PDT by spectre
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To: John Robertson

Do you have any equity left in your house?

In your current situation, it's worth tapping every last dime. If you refinanced and got out enough equity to pay off your credit cards, would your income cover the house payments? They have all kinds of variable rate mortgages now, even up to 100% of the value of your home, and home values are way up. You may be able to get a mortgage, even in your current situation, if you can show an income. The idea is to give yourself some time to get yourself together financially.

Or you could use some of the cash to pay off only SOME of your credit card, and use the rest to supplement your cash flow.

I think it's wise that you do everything to avoid bankruptcy.


The first step is to stabilize yourself, even temporarily. Then you can start thinking about figuring out a long term solution.




9 posted on 07/04/2004 8:29:46 PM PDT by FairOpinion (If you are not voting for Bush, you are voting for the terrorists.)
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To: John Robertson
You're going to have to cut expenses to the bone in order to keep up your debt service. Think long, hard and tough about what's really a necessity and what's a luxury. Do you really need cable TV right now? How about an expensive broadband Internet account. Do you really need 3-4 phone lines? Do you really need to eat out? Have you already cut up the credit cards? If not, do it now. Have you consolidated all of the various credit card accounts into a single debt consolidation loan with low interest? Are you watching every penny?

You know how much you make, and you know how much you can afford to pay every month. Eliminate all unnecessary expenses and only spend money on absolute necessities until you're over the hump. Cut up those credit cards NOW and get a low interest debt consolidation loan so that you're making one payment that you can afford.

Maybe you can sell off some assets on ebay. Even a few hundred dollars can make a difference when you're trying to stay afloat.

This advice is pretty general, I know, but it works, assuming you're not already past the point of no return.

Above all, stop spending and don't add new debt.

10 posted on 07/04/2004 8:30:44 PM PDT by Batrachian
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To: John Robertson

As someone who has gone through bankruptcy, I can tell you, do all you can to avoid it. That includes going to a good debt counselor to help you rearrange your finances. Take the time to understand, make plans and take the action necessary to bring your debt under control. Solutions might be anything from a low-interest debt consolidation loan to making arrangements with creditors (especially credit card companies) to lower rates & payments. Many of your creditors will deal favorably with a debt counselor since getting payment slower or with less interest is better than not getting it at all.


Some things you can do yourself are to reduce or eliminate as many expenses as possible, from cable TV to eating out etc., and possibly take on extra work or some other means of bringing home more money.


11 posted on 07/04/2004 8:32:21 PM PDT by visualops (Let's win another one for the Gipper, and donate to FR too!!.)
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To: John Robertson

An alternative to Turning Point is Consumer Credit Counseling. Look them up in the phone book or on the web. About 10 years ago I had a girlfriend who had used them. She got out of debt shortly after I met her. They did a good job of reducing the interest she was paying and of negotiating better (lower) repayment terms. Because the interest was lower she paid off the debt faster than she would have on her own.

As a general rule, credit card companies will not negotiate with you as an individual, but will negotiate with a counseling service. The issue is that there are many counseling services, some of which have a very bad reputation.

Start looking into it as soon as you can, July 6, for instance--first thing in the morning. Call several services. Look for ones which are free or which charge low fees. Some people have made large payments to counseling services and have received little or no help, ending up worse off than before.


12 posted on 07/04/2004 8:32:48 PM PDT by CurlyDave
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To: Tom Jefferson; John Robertson

Problem is that even negotiating your interest down via some of those debt counseling agencies will hurt his credit, making it harder to borrow, or refinance his house.

I suggest refinancing with even a "shady" outfit -- they are giving John the money, not the other way around, and frequently they are quite flexible.


13 posted on 07/04/2004 8:33:15 PM PDT by FairOpinion (If you are not voting for Bush, you are voting for the terrorists.)
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To: cyborg

"Shortfalls are made by tapping home equity, but that's running out"

Cyborg, did you not read or do you not understand the above sentence. You cannot make home equity loans if you do not own the house. Duh..............


14 posted on 07/04/2004 8:33:17 PM PDT by LaMudBug
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To: cyborg
Yard Sales worked for me about ten years ago.

No one needs all their stuff but someone will buy it.

Just a thought.

15 posted on 07/04/2004 8:33:43 PM PDT by smoothsailing (Eagles Up !!!!)
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To: LaMudBug

You don't have to be snotty. I was just trying to be helpful.


16 posted on 07/04/2004 8:34:58 PM PDT by cyborg
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To: smoothsailing

Yup... I'm thinking of doing that myself.


17 posted on 07/04/2004 8:35:24 PM PDT by cyborg
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To: John Robertson

In the short term, contact your creditors and discuss the situation with them. Be honest !! Quite often, they will give a person some "breathing room".

Also, get a second (or part-time) job. Does your spouse work ? I know it isn't glamorous, but deliver pizzas a few nights a week.

If you aren't offended, I'll keep you in my prayers.

P.S. Read what the Bible says about money. There is an example where we are allowed to "test God" !!!!!!


18 posted on 07/04/2004 8:35:26 PM PDT by RightWingNut
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To: John Robertson

You do not have a personal page, so I have little background on you. I will send FReep mail. Your choice as to following the advice or not. We were in some serious financial trouble three years ago and are now frantically putting money into investments to catch up on where we should have been. It takes a steady hand on the helm for success. Check you mail.


19 posted on 07/04/2004 8:39:09 PM PDT by SLB ("We must lay before Him what is in us, not what ought to be in us." C. S. Lewis)
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To: John Robertson
Make sure you have a positive mindset. Go into 'austerity mode' and turn it into a positive and enriching experience. For example, we bought ourselves a pizza stone and started having homemade pizza rather than ordering out. We save a lot of money and find that we greatly prefer the homemade pizza!

Rent a movie rather than go to the movies - play a game of cards or read a book (from a used bookstore) rather than rent a movie.

Turn survival itself into it's own hobby - and always keep that positive attitude!

20 posted on 07/04/2004 8:39:36 PM PDT by The Duke
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