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.
I have no personal experience here but I listen to enough talk radio to hear a commercial or two:
http://www.turningpoint.org/
do you own stock or rental property?
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.
Do you own your own home? Maybe you can get everything consolidated. Be careful of debt consolidators. Do your research.
Take a dollar down to the local convenience store, put your numbers in and cross your fingers.:)
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
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.
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.
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.
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.
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" !!!!!!
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.
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!
You just have to make up your mind that every cent you can wring out of your income for the next year or two is going to debt, no luxuries, no eating out, no gifts. Just debt. The time will fly by once you have a plan and the current pain is turned into a light at the end of the tunnel.
Failing that, bankruptcy is certainly a viable option for restructuring, especially if you're trying to postpone debt rather than have it erased. Personal bankruptcy doesn't carry anywhere near the stigma which it used to - and there's different kinds of bankruptcy (Chapter 13 to postpone debts vs. Chapter 7 to erase them). Consult a bankruptcy attorney in your area.
I am not however such an attorney, and this is not legal advice.
Stack rank your credit cards by interest rates.
Pay the minimum payment on all your credit cards except for the one with the highest interest rate. Subtract those minimum payments from the $1350 and pay the balance of the $1350 on the card with the highest rate.
Once the card with the highest interest rate is paid down, continue making minimum payments on the cards with the lowest rates and shift the remainder of the $1350 to the card with the highest rate.
Repeat until all cards are paid down. On your last card, you will be paying the full $1350 a month until it is paid down. Obviously if your income situation is improved, you might want to raise that $1350 a month to a higher amount so you can pay them down even faster.
Good luck! And remember that there are two types of people in the world: Those who pay interest and those who collect interest. You want to be in the latter category just as soon as you can!
I prepare bankruptcies for a living and can tell you that most of the advice FReepers have offered you on this thread is excellent. Please take it and best of luck to you, hope you land on your feet. I'll send up a prayer for you too.
I've been through this. I had to work off over $120,000 in debt. It took me from age 47 to 62 - fifteen years of relentless discipline.
I agree with the suggestions of Tom Jefferson above.
You need to negotiate with each and every one of your creditors. You need to make it clear to them that personal bankcruptcy is looming.
You also have to realize that while YOU may not want to declare bankruptcy, it can be forced upon you. You need to enlist the support of your creditors by demonstrating to each of them that you have the WILL and the MEANS to pay off your debt to them over time, but that you need terms you can live with.
Creditors are usually willing to work someting out, but whatever deal you make with them has to be honored to the letter and without fail. If for example you commit to a payment of $200 each month by the 15th, you had better be there on time and in full each and every month.
This is going to be long, painful and discouraging for you. It is going to take you maybe ten years to dig out from this and at your age this will be tough - VERY tough. You are facing a test of character few ever have to deal with. Most would go the bankrupcy route.
Get started on this today. Don't wait for tomorrow. Start calling your creditors NOW. You will find strength in action.
Keep records. Get a financial software package like Quicken and put your entire family finances on this program Use it to monitor all your accounts - income and outgo - and to set and keep a budget as religiously as church.
Good luck.
I can only offer you the advice that has seen me through your circumstance, and, circumstances that are given only to those who the Lord knows can bear them.
Have a good long talk with God. Pray for the strength and direction only He can bring to you...
Rev. JD