Posted on 07/04/2004 8:16:50 PM PDT by John Robertson
Also, not too long ago I turned in the family SUV (a leased Ford Expedition) and have yet replace it, instead pocketing the best part of $1000 per month.
Tough times don't last ... tough people do!
First do not DO NOT use a credit counseling service, they are mostly rip-off artists.
You know what the issues are so:
1. Cut all unnecessary expenses (even Macdonalds). Establish a monthly budget including some fun money but establish it. You will be amazed at how much cash trickles out of your fingers on casual expenses (gum, popsicle, lunch out etc.).
2. Make direct contact with every credit card you use and request extended repayment terms from them. Be straightforward in explaining what is what. The companies want their principal back, chargeoffs screw up their portfolio statistics.
3. Contact your first trust lender. Ask for a consolidation of your second into your first on extended terms to see if you can lower your payment amount.
4. put all of your credit cards in an envelope and leave them there. Get used to paying cash for as much as you can.
5.Contact your second trust lebnder and ask for extended repayment terms to lower your payment amount.
6.Do not go to a private lending service or finance company; they will cut your throat.
7 See if a second job might be available on Saturdays & Sundays to generate a little more income.
8. Check your asset base to see what you can sell and/or otherwise do without. Any cash no matter how small should be earmarked for debt reduction.
9. Lastly, bankruptcy is the very last resort. You will mess up your credit for an extended time; better to be a slow pay, which will disappear in two to three years than a bankrupt which will be on the public records for ten.
Take it easy, do not stay up late agonizing over this it will ruin your health and distract from what must be done. Explain to the family that you had the "for better" part, now it is time for some "or worse" part until you all work your way out of the jam. If everyone is committed to the program, you will succeed.
Regards, and keep your chin up.
24 - Some good advice from Sam, and others.
Let me add -
1. Make sure you take care of your mental health - this can make you very depressed. Go to a public mental health clinic to keep your sanity - it can rally help.
I have been through it too, and it's hard, but some of what I learned:
1. In addition to SamAdam's exellent procedures, also - Negotiate with the credit card companies. Ask for supervisor, and supervisor's supervisor, and supervisors's supervisor supervisor. Often, with some work, explaining you are trying to avoid bankruptsy, you can cut a deal with them to lower your interest, stop excessive extra charges (late payment, underpayment, etc etc etc - they have all kinds of extra charges to skyrocket your amount owed in a short time), and you can actually neotiate a dramatic cost payoff cut. EG, Bringing a $5000 CC debt to pay off for $2500 is 'normal', and you can even get it down to 1/3 of amount owed. But you must get to the proper level of supervisor, or corporate division, where they have the authority to do it. (asking many questions will get you to these levels - and they vary with the company, so find out when you are talking, who you are talking to, and what department- and make notes - and call them back individually).
2. Sending each CC company a minimum payment (eg $5 or $10 per month - even though that is not the minimum they request, but also, you can negotiate new minimums - and each level higher you go can negotiate lower minimums - until you get to the corporate bottom line minimum), not very happy with it, but it will show them you are still trying.(this is the way to cut your $1350 min payments). They will raise hell, but, as long as they cash your check, it will help. After a while,your loans become 'non-performing' for the level at which they are, and then they sell off the debt to another corp at a discount, who has much less invested, and will be much more willing to negotiate. (American Express however, doesn't seem to do this).
You can do it yourself, w/o the credit 'saving' places - they often cost you a lot of money more than if you do it yourself.
Note - another Idea, which I did - rent out your house (covering the mortgage), and move into a cheap abode temporarily. (Be careful though, to maintain it as your homested or it can be taken as an investment/rental property, but you can do this for a year or so without major problems - depending on your state law).
good luck
Thanks. We have business debt, no personal debt to speak of but I won't use my house for collateral because I paid it off about 10 yrs ago.
I suggest that John and his wife get part-time jobs at night (in addition to their day jobs) and use that income solely to pay down the credit card debt.
Let's say that the both of them get 25-hour-per-week part-time jobs at $8 an hour. Many part-time jobs pay more than that but let's stick with that number for the purposes of discussion. After taxes, those two jobs would net them close to the $1350 a month that they are already paying the credit cards. Thus they would be able to double their credit card payments and pay them down much more quickly.
I realize that when you are in your mid-50s, working two jobs is not easy. But if they are serious about digging themselves out of this hole and avoiding bankruptcy, this is one way to do it. By paying $2700 a month on the cards, they should be able to retire their $45,000 credit card balance within a few years if they stick with the plan and stay disciplined.
I wish them good luck.
We made hundreds of dollars in a few hours.
Buddy of mine invested in a drain snake - he makes north of $100/hr, for as many hours as he is willing to work.
First: List all your debt.
Second: Look for what you can get rid of. Car debt is usually something that can be taken care of rather easily if painfully. You are likely going to driving a junker for a while but if it lowers your debt and frees up some extra cash it is worth it.
Third: look at your expenses. Once again write everything down. See where you can cut, the house and utilities come first but see where you can cut utilities. Air conditioning, watering your lawn and so fourth are things that you can live without. Even if it is only ten dollars a month it adds up.
You can cut corners with the food bill. Rice and beans are cheap. No eating out for a while, not even the drive through and give up soda for a bit. Look every where you can to save a few cents. Buy cheaper brands of things.
Spend every penny on paper before you write the first check.
Cut out the luxuries. If you can live without it then do so. Videos, new shoes, car washes, everything but the basics must go.
You likely have more flexibility then you think. Tuck a few hundred away for emergencies and put any extra on your smallest debt payment.
Fifth: Anything you can sell, sell it.
Sixth: Second job, see if both of you can get one. Put all money earned on those jobs toward the debt.
Ok, if you have already done that then you need to work on restructuring your debt. See if your local bank will help you with a consolidation loan. Cut up your credit cards but do not close the accounts. If you do the interest rates will skyrocket on your remaining balance with them. (bitter experience here)
If worse come to worse consider selling your house. You can likely rent someplace for a whole lot less then you are paying in house payments.
John, for what it's worth to you: I once had an accountant friend share some information with me that made me feel better in similar circumstances. He let me know that this sort of mess can happen to anyone, and often happens to productive people who work hard. The way he explained it to me was "The more money you have, the more opportunities you have to make mistakes." He didn't offer a single word of technical advice that wasn't asked for; he just wanted me to know that I wasn't the first to "miscalculate" and that he was on my side. To your good health and good fortune.
That is GREAT advice, Jimmy. A number of reps I've spoken to from cc companies for myself have told me that generally, credit counseling services will show up as a negative on the credit report. Some of the newer ones ARE reipoff artists ... they'll take your money and NOT pay the creditors - a lose/lose for you. (Crooks.)
Liquidating and paying off your debt and starting all over again is far better than filing for b'ruptcy -- if in fact filing is your last resort. Avoid being ripped off by legal fees and planners' fees.
Rent your house and become an on-site apartment house manager to receive free rent and utilities.
Don't drag it out.
Don't use a credit card to pay medical bills.
Maintain your unblemished credit rating!
And shop at Wal-Mart.
.
well, not knowing for sure your state laws, but assuming that your state recognizes homestead exemptions, if you file bankruptcy, your house is safe. It cannot be taken in the bankruptcy for business or consumer debts (again unless it is mortgaged and you want to surrender it and discharge that debt, which you don't). So you are safe.
To All: Thank you and bless you for your fast responses. So many more than I expected, and so much sooner!
And I'm working on a deadline project that will bring in some needed bucks, so I can't answer all right now. But I will, in a few days or a week.
At a glance, it looks like there's some very useful advice, including some welcome encouragement.
We don't use credit cards for living--haven't, for two years. Live in PA, outside Pittsburgh. And whoever suggested cutting high-speed internet...not gonna happen. I need it in my work. I need so I don't feel like I'm living in 1910. It's as essential a utility to me as the telephone is.
We are not high-livers, never have been. RARELY eat out. When we do, it's a diner, or a chain like Applebys. But haven't done that in a while.
Anyway, that's it for now. Have a wonderful holiday weekend. I'm inside, working on my project.
To All: Thank you and bless you for your fast responses. So many more than I expected, and so much sooner!
And I'm working on a deadline project that will bring in some needed bucks, so I can't answer all right now. But I will, in a few days or a week.
At a glance, it looks like there's some very useful advice, including some welcome encouragement.
We don't use credit cards for living--haven't, for two years. Live in PA, outside Pittsburgh. And whoever suggested cutting high-speed internet...not gonna happen. I need it in my work. I need so I don't feel like I'm living in 1910. It's as essential a utility to me as the telephone is.
We are not high-livers, never have been. RARELY eat out. When we do, it's a diner, or a chain like Applebys. But haven't done that in a while.
Anyway, that's it for now. Have a wonderful holiday weekend. I'm inside, working on my project.
Why doesn't your client simply sell one of the vehicles ? I find it implausible that she has enough negative equity in both vehicles to plunge her into bankruptcy.
I have no advice that hasn't been said better already, but I do hope everything works out for you.
Only one room apartment is needed. One desk or table. Desk chair DOES need to be of good quality and comfy. Microwave for heating up frozen dinners. Going out to eat or movies only takes away valuable freeping time. Lord only knows what might break while you are out. Recreational shopping is out of the question. Clothing expenses cut down to bath robe (on a good day). You can sell off everything else and not even miss it.
What more advice do you need?
All teasing aside, you have been lifted up in prayer. I have struggled finacially and it is hard. I now live abundantly on very little, but have meaning and purpose. I pray that you seek to find such rewards in your life as well. You are being given the chance to re-align your priorities. May God bless you.
Clever. I'll bet that would work at flea markets and such, too.
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