K.M. asks from Carol Stream, IL on January 16, 2010
Another question...Here is the situation.
My husband and I....well, mostly me, actually...are in a terrible amount of debt. We have a meager savings, but otherwise, are living paycheck to paycheck. Between my student loans and credit card payments, we are paying over $1500 a month. We can make the minimums, but are not getting ahead - just treading in this horrible debt ridden water. Now that we have a child, this situation will only get worse. We both have decent paying jobs, but the debt and interest are killing us. In August we will have the added expense of childchare! Once that is here there is no way that we will be able to stay current with our payments. It is a situation that we need to get in control and fast. We want to pay off the debt, but don't know how. We do not want to go through a debt consolidation where they take months to negotiate repayment all the while NOT paying the creditors and thereby ruining your credit. Does anyone know of a reputable not for profit consolidation company? Or, does anyone know if Chapter 13 can be filed separately? Or, just any other advice?
2 moms found this helpful
So What Happened?™
Wow! Thank you so much for the out-pouring of advice. It is greatly appreciated. My husband and I have set aside some time to talk at length about our situation and I will share your responses and personal messages. I am not sure what we will do - but it is nice to hear all of the options and support. Will let you know which direction we head...well, we are heading towards financial security...will let you know HOW we are planning to get there. :) Thanks again! ~K.
J.W. answers from Chicago on January 17, 2010
My husband is a bankruptcy attorney and here is his quick advice. "Chapter 13 can be filed jointly as husband and wife or as individuals. But before doing a Chap 13, you should see if you qualify for a Chap. 7, most people in you situation do qualify for Chap. 7. The advantage of Chap. 7 is it only lasts about 90 days and won't have to pay credit cards back. You will still have to pay for student loans whether you file for either Chap. 7 or 13."
He does free consultations to see if people qualify and will guide you through whatever is best for your situation. Here is his website: www.debthelpchicago.com
I hope some of this helps.
1 mom found this helpful
S.K. answers from Chicago on January 17, 2010
K., I was in the same place. I finally decided to do debt consolidation instead of continually making my credit worse. I researched companies and ended up going with Money Management International. They had good reviews on CNN and MSNBC. My payments were negotiated with the credit card companies in just a short amount of time. I have the one payment debited from my checking account monthly, and MMI pays my creditors. I found their process simple; and best of all, the people I spoke with did not make me feel shameful for my awful financial situation.
It's been 8 months, and while I still have about 2 years of payments to go, I am well on my way.
1 mom found this helpful
T.G. answers from Rockford on January 17, 2010
I have heard awesome things about Dave Ramsey and would like to read his book. My MIL read it and said that we were already basically following his concepts but I am thinking now I should go ahead and read it for myself. If you go the debt consolidation route, our church recommends Family Credit. http://www.familycredit.org We met with them a few times to go over our debts and options (their national office is in Rockford but they do stuff online and over the phone). They were patient and explained it all. In the end, they actually advised us to consider bankrupcy. They gave us a couple books on the subject and the card of a lawyer we could contact. They advised us this way because they did not see us being able to keep up with the payments, even in their program. Our payments were not really going to drop much, but, all our cards would be paid off in 4 years. Evidently, if you mess up the program, your credit cards can charge you lots of fees and high interest rates. They said we may be better off paying the lawyer fee and being done with it rather than putting the money toward repayment, defaulting and having to pay lots of extras. We really didn't want to file bankrupcy. We have just been trying to make it on our own for the past year but are thinking we need to go back to Family Credit. Our experience in trying to negotiate with our credit cards was that they weren't willing to talk until we were behind on our payments and they were afraid they may not get anything. But by then your credit score takes a huge hit.
As far as saving money, we use coupons and eat according what is on sale, try very hard to use up leftovers so nothing goes to waste, we gave up our land line phone, talked to our student loan holders about deferrment/forbearance options, paid off a car with our tax return, we try not to make unnecessary trips and consolidate errand running. We did keep our cable but only because it was only going to cost us an extra $10 on top of our internet which we had to have for work anyway. It really was our only "entertainment" expense. We have lived without it for years in the past and since our promotion has expired and they aren't willing to give us a better deal, we may do away with it again. Dh doesn't like this idea but he understands. Picking up Netflix instead of cable may be an option. They have tons of tv series available. Another option to look at is adjusting the withholdings on your paychecks to get more monthly income in. We talked to our CPA before doing this.
I know this was long-winded, but unfortunately we have a lot of debt experience. Feel free to drop me a note if you have a question. Good luck!
1 mom found this helpful
M.W. answers from Dover on January 17, 2010
Call your credit card companies and tell them that you are having a hard time making payments, they will work with you. They will put you on a 6 mounth pay sch. that has no interest or fees. You will have to call them each month and make a payment just make sure you make the payment on time.
If you need more time they will give it to you.
M.H. answers from Chicago on January 17, 2010
See if you can talk to a financial adviser, they will help you look at your finances and see where you can cut and make the ends work. That will not be a debt consolidation, they will help you look and see where the money is going. Remember, that you have to go back to the basics and really see what you "need" vs what you want. It is hard. I was over 14k in credit card debt and my parents showed repeat showed me the way out. I will be forever grateful to them for that. Now we have our mortage, car payments, insurance, electric and phone, recently we added cable. But the cable was put in with the agreement if we are having problems it is gone, because you do not need cable to live. I know that my MIL thought I was crazy for not having cable, but really I could not afford it. To me alone it was not worth the $45 a month (this was before my hubby and I were married). We are looking to buy a house, but I am not sure if we can afford it right now. We will keep saving and moving in the right direction. Good luck.
C.H. answers from Chicago on January 18, 2010
If you are serious about consolidating your debt, the only company TransUnion recommends is Consumer Credit Counseling Services (it's a non for profit organization). Their number is 800-388-2227. We have no ties with them what so ever. Try to stay away from filing bankrupty. I've never heard of an attorney who will tell you just how bad it will affect your credit report. Not only will their be a BK reported on your credit report for 7 -10 years (depending on which type you go with), but each and every creditor will also continue to report negative on your report for 7 years.
It's a slippery slope and most people who file don't learn and will end up with the same amount of debt again and again.
C.S. answers from Chicago on January 17, 2010
Contact your local Government loan office and counselor. There are some options available, especially since you have an additional family member. They are considering deferred payment options for those loans. Also, Look into Prosperity Partners, there are seminars available to help guide you, even one on one financial counselors are available at very low risk to you. They work with many non for profit agencies too, and may be able to guide you to the best solutions for your situation. www.prosperitypartners.com
Direct # ###-###-#### or email ____@____.com
L.S. answers from Chicago on January 18, 2010
Hi K. - I'm sorry about the difficult financial position you are in. I skimmed some of the responses and see that you're getting a lot of advice, much of it encouraging you not to file bankruptcy. I don't know if that's good advice or not, and I'm sure you don't know yet either, so if you want to talk to a bankruptcy lawyer and find out your options in that regard, please feel free to call my brother, Tim Liou of Liou Law Firm ###-###-####) in downtown Chicago. All he and his staff do are personal bankruptcy filings (Chapter 7 and 13). I sent him your inquiry, and he e-mailed back, "Please tell K. that she would be best off filing Chapter 13 and to give me a call."
Good luck to you, whatever you end up doing. Wanting to improve your situation is a huge step in the right direction.