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.
Don't count on getting a raise. That's like expecting the lottery to bail you out. And you can't afford to own a home - sell it, and move into an apartment. If you have any equity, use it to pay off some debt (the highest rate).
Rent a 1 BR apartment (sell off any furniture that won't fit, and use the proceeds to pay off debt).
You don't need cable tv, or any fancy phone services (like call waiting, caller id, etc.)
You only need one car, and if you don't have one that's paid for, sell what you have and buy a used one that you can pay cash for. And maybe you or your wife could get a part-time job in addition to the ones you already have.
If you truly want to get out of debt, you have to change your life style. That's the hardest part, esp. if you have friends and family who are living better than you can manage.
Thank God I'm a federal government employee.
Check out payablesmg.com and contact us if intereste.
If all you have is $45k in bad cc debt, not that hard to deal with.
Maybe inconvenient but not bk material.
Gg
If you have multiple cards you will probably get offers from one or more to move debt from other cards to them at some lower rate. I received one from American Express Blue, any debr transferred to them remained at the offered rate until paid off (not just for some set time period). It was well worth it in my case. The trick then is to dump the other cards and make as big a payment as possible to the one remaining open account. Sounds like house & car payments may be too high as well, but can't really tell. Good luck & keep positive, stress is a killer.
Why do you say that, tk? I've always heard the opposite.
Cancel the cable TV. That's $40 a month right there.
well, as a debtors bankruptcy lawyer, I would not rule that out. A couple of questions you should ask. Do you want to buy a new home in the next few years? A new car? (although that isn't really a problem on cars). If not, then you might strongly consider it. Just because you are in financial problems doesn't make you a deadbeat, and filing bankruptcy doesn't either. My experience with the credit counselling outfits is they are only as good as your creditors. By that I mean, if your creditors won't accept intercession from credit counselling agencies, then they are a waste of time and money. And I will tell you, a lot of the credit card places won't accept them. There are a lot of good suggestions in this thread. But again, they are only as good as your creditors. A lot of them can and will be arses. And even if they work with you, some will still report negative information to the credit bureaus. Bankruptcy doesn't have the negative effect it used to. All my clients, immediately upon discharge begin getting bombarded with pre-approved credit card offers, pre-approved auto loan offers and others. And most mortgage companies will approve home loans after 4-5 years out from bankruptcy. There is no point in killing yourself. If you use all you have and earn to pay all those down, it will still take you 15-20 years, and then where are you? Retired, and broke.
I know a lot of you will flame me for this alternative, but sometimes it is best to cut bait and move along. I've got one case where my client just got divorced. Her ex wanted the new pickup truck so she let him have it with the debt. She then purchased her a used car to replace the truck. Well, two months later, ex-hubby files for bankruptcy since he can't make the payments, and decides to surrender the truck and discharge the debt thereon. I have been in negotiations with the creditor, a large financial institution, and guess what, they won't work with my client at all. She can make the payments or they are suing her. And she can't make 2 car payments. She has cut living expenses to the bone and can't cut anymore, and she can't make the payment. They won't even take a settlement and compromise. The want the full balance or nothing. And since the ex didn't make payments for 2-3 months, then if she were to want to keep the truck, and make 2 car payments (which she can't) she will have to pay over $1,000.00 that she doesn't have to bring it current. My point...many creditors will not work with you. And idle threats about bankruptcy won't matter. I have threatened that to client's creditor, and they said..."go ahead".
Anyway, that's my 2 cents.
I haven't seen anyone suggest this but if you have a good relationship with a local bank, go talk to them. I worked myself out of a similar situation with a series of 120 and 90 day notes. Paying off the high interest cards while selling off my assets and banking the money then paying the notes off or paying the interest and renewing the loans This may not be good for you but if your credit is good I think they will be glad to help out.
Contact your church, there is a wealth of wisdom there and people that will help in more ways than you could ever know.
Good luck, I have been exactly where you are for the exact same reason. Using credit cards to get my business started.
Ramsey is going to have you asking yourself serious questions. Can you afford the car payments for your current vehicles? Consider selling all of them and driving the cheapest car that rolls you to work until you are out of trouble. Cancel the unnecessary luxuries...cable, cell phone, pricey internet access, satellite TV, health clubs, extra phone lines.
Ramsey's motto is, "If you are willing to live like no one else for a time, later you will be able to live like no one else". Your going to be contacting your creditors to make arrangements for repayment. Get the details IN WRITING. You absolutely don't want to declare bankruptcy. It will haunt you forever.
John,
My advise. Avoid all the credit / debt consoldation services. Find yourself a good bankruptcy attorney and talk to him/her. Explain your situation and see what they think you should do.
A few years back, my sister went through a hell of a time after her boyfriend ran up massive amounts of debt on her credit, then skipped out. I had to help her through it. My first thought in all such situations is to call my attorney, and that's what I did. Here's some of what I remember.
There are a number of options. You can do a re-organization, which you work out with the court. This allows you to pay back your creditors over time, within a budget you can afford. Once you go this route, the creditors must stop trying to collect the debts as they are also bound by the court. Remember that any creditor is taking a risk when they offer credit (home, auto, credit cards), and that sometimes, that risk works against them. No one likes to be a thought of as a dead-beat, but if you are in as deep as you say, it may be the solution that you need. You're most important thing to protect is your family and your property. Sometimes, that means swallowing your pride.
Also know that bankruptcy no longer has the stigma it once did. Most creditors will still lend to you (at higher rates, of course). Also, if you find that you have to liquidate, you may be suprised at how many people will come out of the wood work to offer you credit cards, car loans, home loans, etc. My sister was able to resume a normal life fairly quickly. This may seem counter-intuitive, but what they know is that you cannot re-apply for bankruptcy for another seven years, so any debt that they have with you is something that they will be able to collect.
Anyway, keep things in perspective and good luck.
Malachi 3:11 And I will rebuke the devourer for your sakes, and he shall not destroy the fruits of your ground; neither shall your vine cast her fruit before the time in the field, saith the LORD of hosts.
Malachi 3:12 And all nations shall call you blessed: for ye shall be a delightsome land, saith the LORD of hosts.
Hi John,
You have FReepmail. In the meantime, having been there, the BEST general advice you can have is to communicate with every single creditor on a regular basis. Be proactive, be polite, be accurate, and get it all in writing.
Be one of the few decent people they talk to each day, and they'll do everything they can for you. If you get a jerk on the line despite all that, ask for a supervisor, and politely ask for a different rep. Explain that you are sincere in taking care of the debt, and that you keep your promises, and that you would prefer to work with someone that can work with you.
If you don't make them chase you, they can do a lot for you. I even had some post-divorce negatives (paid, of course) deleted from my credit bureau file before the 7 years were up. Sometimes they won't, but you never know till you try.
I cannot overemphasize the critical need to communicate with them.
God bless, and I'll be in touch tomorrow.
best...
Try this site: www.daveramsey.com
I listen to his talk radio show once in a while. Looks like he's got links/ideas on his website that may be helpful. This subject is what his show is all about. Maybe he is heard in your area as well--his show is national. Even if he is not in your area, you may try to give him a call. Think he has a book as well. Good luck to you.
Hey you beat me to it. I recommended Dave Ramsey as well.
I have heard that in a bankruptcy you get to keep your house, is that true?
Yes, you can keep any collateral that you may have used to secure a debt as long as you are willing to reaffirm the debt itself. If your house is paid off, then you can most definitely keep it under the homestead provisions of your state laws. Homesteads are exempt from execution for payment of debts unless it is collateral for a debt or some government debts (ie, taxes).
So, yes you can keep your house.
You will need a credit counselor/company BUT be very careful of your choice, I would only go this way as the next to last step (Bankruptcy). If you cannot get a major, major refinance on some property whereas you could pay off all the credit cards - then you may want to take a look at bankruptcy. Otherwise, you can look at a 5-7 year climb out of the hole. Weigh it out in terms of time.
I have been there; credit counselors/agencies & finally calculated that bankruptcy was best in my case. It will take as a minimum of 30-60 days using a credit counselor agency for them to enact lower interest rates and their "plan". Again, if you can generate enough capital through a refinance to completely pay-off ALL credit cards then it is possible. You have to understand that you have to trash the cards and do all those thrifty things that the previous posters listed. With that amount of debt, I would seriously consider bankruptcy chapter 7.
Man.... I'd Shoot myself.
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