It has been my past experience that at 3 months behind that is when companies will begin to “deal” with you. Call your credit card company’s default department and begin talks with them and if you have to ask to speak to a manager ask for one. They want their money and they normally will make some sort of deal. It seems Chase and USBank are two of the hardest to deal with and won’t deal until you are 3 months or more behind. Call and ask them for a workout package so they can see what goes out each month and can help you find a payment plan. If you can avoid a debt consolidation company avoid it – they charge outrageous fees and can negotiate what you can yourself usually.
Don’t let it stress you out too much – we live in the credit card age and most of the lower – middle income brackets are in the same boat. Pay your mortgage and essentials and deglutinate the credit cards to where you can pay what you can.
your story prompted a sympathetic “ouch” reaction. You don’t say why you feel you don’t qualify for Chapter 7 bankruptcy, and you may have your own good reasons for not sharing all the details of your situation. However, there are cases where bankruptcy may be the best, and possibly the only, way for people to re-balance their finances and start their lives over. Bad things happen to good people – disability, unemployment, unexpected family crises — and, as they say in the song, “you gotta know when to hold’em, know when to fold’em.”
What state/city do you live in? You may be able to find a bankruptcy attorney who offers a free consultation. Although you may suspect that they are “selling” bankruptcy, you may also get some surprisingly objective and honest advice. A good attorney won’t take a case he/she feels will not be successful. However, be forewarned that they collect their fees up front, and those fees can be steep. There are additional filing fees that go directly to the state. Keep all options on the table, for your own peace of mind and for your financial future. Hope this helps. (Been there, done that.)
Are there any assets you could sell off? With $40,000 in credit cards, I’m wondering if it’s possible to try and maybe sell some of the stuff that was purchased on them to at least get you some cash flow to start making the minimum down payments.
I would try going to a non-for profit debt counseling firm first. Most of them do not charge anything and I’ve heard great things about them.
My husband and I went to a financial class at our church which was wonderful. We started the year at $17,000 in debt and are down to about $5000. We have made great strides. We just reduced expenses and increased income and put together a strict budget.
I would just hate to have you to go somewhere that is going to charge you more money than you already owe.
Hopefully we can get this loan paid off and out from this 650.00 month payment and start putting some back before I get laid off after Christmas. And my husband and I are also hoping to find something part time (yes Mcdonalds will do if they work around our other jobs) for the next 6 months. We have put a 6 month goal on getting certain bills paid off (mostly collateral ones and the smaller, under 1000.00 balance, credit cards that we have so that we can have something for an emergency) and getting our savings built again.
We have finally decided to let all of the creditors that will not work with us go by the way side because we have been as honest and given as much as we can and yet they still refuse to work with us. If they start threatening legal action then we may pursue bankruptcy but right now our credit is so damaged that nor anything else could cause it more harm.
I just read this how you got out of debt story, I was actually amazed how did all that. could you please send me some info on how exactly you make up a spread sheet! Im kinda new to this whole computer thingy!!lol
Thank you much.
You always pay your bills and debts that are due! I am talking about those Items that are not necessity. Don’t get that drink at the gas station. Buy the cheaper brands of things at the store, and only necessities, not nice-ities. Just cut corners where you can. But DON’T neglect your obligations. I have sold many things on eBay. I like it, but also like Craigs especially for large items. Unlike eBay, you don’t pay a fee to list items, but they are not an auction site so you have to set a price. I recently sold a desk for $200.00. I had many people who wanted it.
This is my exact response for the next 45 days as we have a 2400.00 title loan costing us 650.00 a month and we CANNOT continue for the next 10 months like this. As it is we can’t make this month payment on time (16th) and I am sitting here wondering if they will come get my car before payday Thursday and we can get the payment made. But anyway we are letting the house and cell phones ( we have emergency line access and everyone we talk to are within walking distance or we drive right past during work commute) plus our DD has her own cell phone that family can reach us on in the event of emergency, Internet (we can use the library), our movie pass (24.99 month), all utilities are current so we are just letting them slide until we get notices next month then I will work out pymt arrangements, even house payment can be paid at the end of month for Aug and even groceries are getting slimmed down to pb&j sandwiches and 1 meal daily (and as I am a diabetic we are going to order 1 box of groceries and 1 box of this months meat special from the Angel Food Ministries -41.00- and I have volunteered to help several church members with their gardens in exchange for produce). And every penny of income we have for the next 6 weeks will go to paying off this title loan. So the only expense we will have will be gas and household (toilet paper and laundry detergent)
Thank you so much for sharing your story. I am working toward this goal as well, so it’s good to be in a support group like this where we can help and inspire each other through this. It’s certainly not easy, but it sounds like you’re staying focused and I know you’ll get there soon. Glad to have you here.
Is this to say not to pay utility bills and such? This is kind of dicey. I will always pay household and food first. As I’m diabetic, if I don’t have food or house, I would have no money to pay off debt.
Thanks for all the replies. It’s good to be able to share with like minded people. I’m sure that most of us at some time feel like a slave to our debt. Even though there is no easy way out, there is at least a way to get out from under it if we stay the course. We all have goals, (mine is to finish my commercial rating on my pilot license) and with a lot of hard work we can achieve!!!
P.S. my next step is to start selling on Ebay. I’ve got tons of stuff that I don’t need anymore and plan on putting it out the door and toward my goals.
Congratulations and keep up the good work. Don’t let anyone or thing disuade you. When you are debt free you will feel even better than you do now.
Here are some tips that you may have heard of (or not).
Snowballing: Snowballing is when you have a set dollar amount you use to pay toward your total debt each month. The amount remains the same until you are out of debt. You can start paying bills off in a number of ways. Choosing to put the amount over the minimum payments toward the debt with the highest interest rate will save you most in the long run, however, choosing to put it toward the smaller balances can give you good momentum to keep going. Everytime you pay a bill off the total amount in your budget going to your debt stays the same, but you increase your payment to a larger amount on the next outstanding debt on your list to pay off. I hope I am being clear.
Envelopes: This system is great for controlling spending. There are a number of ways to use it. I originally read about it in “Financial Peace” by Dave Ramsey. You take ordinary envelopes, label them different categories from your budget (ie… one for Groceries, one for Gas, one for recreation, etc…) you must use the money in all the essential envelopes for what it is intended. Lest you find yourself with out money for groceries….
This is important: the only envelope you can borrow money from is the recreation (or other non essential) envelope. When doing recreation activities it is important to stay within the amount left in your envelope. This is a good method for tracking your money. On the outside of the envelope write what you spent the money on as you go. At the end of the first week, you will know if you are staying in your budget and what things you tend to use your money for. You will also have avoided putting things on your Credit Card that are easily handled with cash. Be careful carrying those envelopes around. Spending cash for items tends to help curb spending habits. Credit is so easy and you have no visual concept of or hands on attachment to your cash.
parks: this is a CHEAP fun summer activity for the kids I read in a magazine. (I believe it as Focus on the Family) Map out the parks in your area. Then take the kids to a different park in the city everyday until you have been to all of them then revisit your favorites.
austerity for a month: Pretend you have no money..:)For one month cut out all the essentials. What money you save can go towards debt, retirement, or perhaps get the kids involved and what you save could go toward the summer vacation.
pay car note 2 times a month: paying any note more than once amonth will cut down on the amount of interest you are paying. Many banks will help you set up Bi-monthly payment on automatic draft. If you credit rating is still far from excellent you may still get a loan for bad credit at www.TnbLoans.com or other similar websites.
Call past due creditors to see about negotiating a lower rate/or even balance. Many creditors will lower your rates/some even give you a break on what you owe, if you explain that you are trying to pay off your debts and want to make payment arrangements with them..
So anyway, these are a few ideas for you or for anyone who may want to try them. You have to pick out the methods that are right for you. You obviously are doing a great job with what methods you are currently using. Keep up the good work! Cheryl
My husband and I racked up quite the debt. We had $80,000 personal debt. Plus we owe two years back taxes at $20,000. So we owed a total of $100,000. We started paying off the debt in June 2004 and will be out of the personal debt in May 2008. I am writing to the IRS at the moment for an Offer and Compromise. But I didn’t start that until I consulted a lawyer. I have been lucky enough to find a really great service called pre-paid legal(They have been in business for over 30 yrs and are traded on the New York Stock Exchange).
They offer memberships for a low monthly fee and you can call and consult an attorney for NO CHARGE. I got the most expensive service they offer which also has identity theft protection. With your membership you get a free will. Something I know I couldn’t afford without this service. Also I owed some money to someone and they transfered the debt to a lawyer who was threatening to put a lien on my house. So I just called up my pre-paid legal service and they sent a letter on my behalf and we worked out a payment plan.
And to top it all off, you can become an independent contractor and sell the service to earn extra income. My husband I decided to do this with the goal to earn an extra $200 a week. Well we have been in it for two weeks and we have earned $800(with very little effort). That money will get us out of our debt much faster. And the best thing was that it only cost us $25 to start our business. Where else can you go and start a new business for $25?
check out their website at www.legalshield.com
Since you will be getting the funds from the retirement plan, you should get some kind of written notification that you have applied and the money is being removed from the retirement account and will take XXX weeks to complete.
You can copy that letter and show it to your mortgage company, so they know you are not just lying for more time and stalling. They will more likely to wait for the money if they know for sure it is coming in a definite time, which will be set in the letter from the retirement fund.
Hi everyone. I’ve read a lot of good information in this blog and I’m happy I joined. My husband and I successfully trimmed and almost eliminated our credit card debt with just 700 to go on one card. My problem right now is that we got behind on our mortgage. I promptly contacted them and they set up a forbearance plan for us. We missed the second payment and I called and they said if we paid the 2nd and 3rd together we could resume the forbearance plan. We weren’t able to. Now we have received our IRS tax refund and have the possibility of borrowing a hardship loan from my retirement plan once I set up another kind of account with retirement. I’m not sure how long that all will take.
So…today I called mortgage co. and they said we’re “in foreclosure.” A man came out to verify that we are living in the house. It really scared me. He said he was sent by the mortgage company and “didn’t know why.” I asked the mortgage co. what we must do to bring it all current, and the woman told me to call back on Wednesday and they will have the amount for me, including attorney’s fees, that we will have to pay, and possibly set up a payment plan. That gave me a little bit of hope.
Here is my question, then: for those of you who have been through this, what kinds of “fees” are we talking about? How much? Will the attorney’s and “other fees” be several thousand dollars on top of the amount we’ll have to pay to bring the mortgage current? My other question: will I have time to get the loan from my retirement plan to do this?? Will they give us a payment plan again, or did we blow it?? I’m really frightened about this and am not sure what the typical scenario is. Any help on this group or through private email is most appreciated!
Mortgage co. is AMC (American Mortgage Company) so if anyone’s dealt with them I’d appreciate hearing that too…
I agree with calling them and asking for a payment plan – be very careful about automatic debits – I have had cc companies take advantage of that and debit my account for more than agreed on and once the money is out of your account, it’s hard to get them to put it back.
And NEVER, NEVER, NEVER, NEVER let a cc company debit your checking or savings account!!!!!!!!
That is the first rule (exception is if the cc is your bank). They will take out more than they say, they will keep taking out after your tell them to quit, you will have to close the account to stop them. What are you going to do, tell a Judge they took money you owe them???
There are other ways!
Call them and explain the situation. Maybe the have a payment program where you can sign up and they debit your checking account directly. If they won’t “play ball.” Tell them you are going to switch credit cards. I sometimes get credit card apps in the mail for 0% interest. I would suggest switching your balance to them if you get one as long asas you don’t have a yearly fee on your credit card you currently own.
I have a cousin that will max out a card. Then she freezes it in the freezer and doesn’t use it again until the ENTIRE BALANCE is paid off. She will use another card until it maxes out.
You can call your creditors on your own and simply ask them to lower the rate. Ideas: You can go about it several ways. One way is to tell them you are trying to pay the account off and can they help you out by lowering the rate. Sometimes in exchange you may be asked not to use the card, but sometimes they reduce the rate and the amount owed. Another way is to tell them that you have been shopping around for a better interest rate and could they meet an offer of xyz%. Many times they will do it, better to make xyz% interest than none!
Next recommendation is to try to use a cash method of paying for things…. make sure you keep a log of yor transactions with the balance you have left after each use of an ATM Card. Infact… to get control of spending, just use cash and no ATM CARD. IF you have a hard time not using your credit card… try freezing it in a tubberware in water. Then you have to go home and thaw it before you make a purchase…
Anyway… don’t know if any of this helps, just wanted to let you know that you can negotiate with your creditors and don’t need to hire anyone to do it for you, but also to let you know that negotiating down and paying off debt will better help you if you learn why you are overspending and don’t continue in that manner. WHat is the saying… something like once you get control of your money, you will find it is no longer controlling you.
We have several cc’s that have high balances that we know that we incurred. We are not looking to avoid paying back the equity, but due late payments and over the balance happenings, the interest rates are between 24-32%. The late payments were caused mostly by online banking mishaps on my part. I either thought I had the payment set up and didn’t or didn’t have it set up to arrive on time.
If we could just get the interest rates lower.
Anyone else with this same issue?
We have fallen into the credit card hell. I want to consolidate and cut them into pieces. Any ideas?
Been there, done that and it stays on your credit report for 7 yrs. It does help a lot getting debts down though depending on which company you go with. Check them out good. If you have past due marks on your credit already then you are going to have something negative on your credit report anyway. So that opens up your options…
Remember you can work with the cc companies too. You don’t have to hire someone. You can think about switching to a promotional 0% or low interest card.
You could think about a loan. This would probably be difficult if you have negative marks on your credit. Ideally the best thing for your credit score may be to work with the ones you have. But if you can save on the interest and put that toward the balance then transferring to a low rate card/loan would be good too.
First though … Do a budget and find out what you can afford to pay the companies if you are going to negotiate with them directly.