Debt Advice?

K.,

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.

Good Luck,
J. W

1 mom found this helpful

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.

Good luck!

1 mom found this helpful

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

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.

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.

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.

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

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.

L.

Hi K.-

We have very good friends going through this same situation, be very careful about debt consolidation programs. Many times it will affect your credit negatively because it will either show as a nonpayment or a settled debt which are both less than great! If you are in serious trouble you need to sit down for a free consulation with a qualified attorney, I don't live near you but there is a great attorney in Chicago and Joliet named Stuart Handleman (his associates are all great as well) we have personally used him as well as people we know, and if anyone will get what you want done in a timely matter it's him. Also know that if you are interested in filing there are high costs, usually at least $3000. You will have to make the decision to either stop paying your bills and save up the money or find another solution. One spouse can file separately on either ch 11 or ch 13. Please be very leary of hidden fees and other tricks of the debt consolidation companies! Personally, I have met with so called debt consolidation companies and it's a joke! I'm not saying there aren't qualified companies out ther, I just have never found them or know of anyone that has found them! Also know that the more money you make, the better off you will be after the bankruptcy and if you do the repayment plan it will take 3 years to repay and it will be on your credit report for 10 years as opposed to 7 with a straight bankruptcy. I hope this helps, trust me we have been where you are and it will get better! If you need any other advice please feel free to contact me!
-R.

Hi K., I have got great news, you can get out of this. My husband and I were in a similar situation at this time last year. I found Dave Ramsey and he has changed everything. He is on the radio, 1220 am from 1pm to 4pm and has written several books. The best one is The Total Money Makeover. We got it last year for Christmas, both read it in less than 4 days and that was it, no looking back. Not only did we get all of our debt paid off in 8 months, but it made my husband realize that he too needs to participate in our finances. It has also been a bad year for our income(he is in construction)but for the 1st time in our 10 year marriage we have started saving money. I am telling you, if you do what Dave says you can change your life and it is so freeing!!!!
Don't do debt consolidation, have faith in God and in yourself that you can do this. It is hard work, but so worth it to know that you did it. It has also made my husband and I closer in our marriage, because we realize we are on the same team. We are starting to win with our money and it feels great.
GOOD LUCK!!!!

Here is what we have done. Talked to each of the credit card companies we owned money to. Most were very understanding and willing to reduce are rates. One of the credit cards I talked to recommended Dave Ramsey's book. Which I did get from the local library.

Having no credit cards really makes me think if I really need something or not. It cuts down impulse buying. If someone could wave a magic wand and make it all your debt disappear it would be wonderful. But then you wouldn't have learned the tools you need to stay out of debt. Let us know how you are doing.

Take care
J.

Call all of your debtors and be honest about your situation. Cut up your credit cards, and pay with a debit card so you are only buying what you can afford. These days most creditors are willing to work with you and negotiate a repayment plan, because as long as they are getting SOMETHING they are happy because so many people are defaulting. Don't feel ashamed, alot of peole are in the same situation these days. The debtors will appreciate your honesty and should be willing to work with you. Debt consolidation is a sham, work directly with the creditors.

Dave Ramsay, Dave Ramsay, Dave Ramsay! Don't file bankruptcy! You didn't get into this situation overnight and you can't get out overnight. But you CAN get out of debt. Get a Dave Ramsay book from your library ASAP. Good luck!

Here is my story that I posted for another mom:

I am not sure what your debt is, but I can only tell you our story, we had about $10,000 in credit card debt, the collection calls were depressing me and we were going to file bankupcy. We were advised that since the debt wasn't that high to try to pay it off than ruin our credit. We got in touch with a mortgage broker and just asked what is the best thing to do or any recommendations (we lived in an apt. so no refinancing or anything) he gave us a name of a consolidation company, we have been in the program for over 2 years and are less than a year to go. EDIT UPDATE, WE HAVE ABOUT 4-5 MONTHS LEFT AND WE ARE ALL DONE! The company doesn't settle your accounts but rather, gets them to lower the interest rate and negotiates a monthly payments, we have to pay the consolidation co. about $42 a month for the service along with what goes to the companies. I know what your saying "why not do it yourself and keep the $42" because if I left it up to myself I wouldn't keep up with the payments, that is how we go into this mess in the first place. When we were looking into consolidation places I almost fell for one of the "scams" you put money into an account each month, they take their monthly fee and when you saved enough money they call, or was it you call make the deal and pay it. The problem with this is that while you are saving, you aren't paying anything on the bill and they can take you to court and get judgements against you. Those don't work. We pay our consolidation once a month they make the payments from the money we sent, and you still continue to receive statments from you credit cards so that you know they are getting paid. The downside to this is that you have to close any accounts you put in the program and are not allowed to open any lines of credit until you are done with the program (exceptions are buying a house or a car, or if any medical situation arises). If you want the name of the company I would be happy to provide it, please let me know. They are not all bad, it is just finding a legitimate one that is hard. Good luck to you.

I should add that since we started this and have been in the program a while, we just bought our first house in June and are well on our way of being debt free. In a way it does look bad on your credit report, like you are in bancrupcy, but we have paperwork showing that is not the case we just needed to prove everything when we went for our loan.

When I left my ex husband, he had hidden massive amounts of debt from me, including lying about paying our taxes for 2 years. Because I had perfect credit when we married, I was the primary cardholder and signature on most of our accounts- and although on paper in the divorce he said they were his responsibility, in reality because he never made payments on time or just continued to ignore bills, *I* got stuck with all the bad debt and it ruined my credit. I ended up having to declare bankruptcy as the only way to legally and financially sever myself from my ex-husband and his amazing lack of responsibility. It was a difficult decision, but because of the particulars of my situation, it was the best thing for me to do. I am not saying it is the best option for you, but it IS an option.

I am sure people will send you all kinds of 'money-saver' ideas and hopefully you are doing those already. What I found while trying to get out of debt and clean up the incredible mess my ex left our finances in is that COMMUNICATION IS THE MOST IMPORTANT THING.

Other people here have said that, and I cannot stress it enough! YOU must call all your creditors, every month if you have to, and keep notes each time of who you talked to (ask for a name or ID number and what call center location they are at, so you have a record) and what they tell you. It is ALL ON YOU to do this- banks and other companies will not always keep track of what they tell you.

If you call each company and keep explaining your situation, they will most likely help you out- they just want you to keep paying! As for your student loan- get a hardship disbursement immediately and you will be able to stop making payments for a while, freeing up that money for something else.

Just keep in contact with everyone, every single month. Also, IMO, the idea of running your own home day care is NOT a great one, unless it is something you want to do or were planning to do anyway. Caring for other people's kids is a serious responsibility and can be seriously stressful, so don't do it lightly, thinking it will be a quick money fix! Good luck!

I am seeking similar advice, too and we are in debt also because of the same reasons. I went to Harper college for a paralegal certificate, graduated top of the class and never got a job in that field (not enough experience evidently, so paralegal might not be the thing for anyone to get into unless one knows great connections) and I am still paying that back along with medical bills from cancer recently( i am okay woopee!!) Interest rates are so high on charge cards. My son was telling me about Dave Ramsey books, I am going to check it out. He advises. WE are frugal also so I know what you mean. I will watch for the other posters answers.AND DO NOT LET ANYONE MAKE YOU THINK YOU SHOULD FEEL ASHAMED. We are very careful, very frugal and do not waste a penny. Sometimes people want to make you feel bad about these things and it is the way our economy is. The interest rates are very high on things and you need other things that require a charge card sometimes. WE had to have a refrigerator. We needed a stove and I thought I would climb in my career path by going to school. so do not demean yourself or let anyone else do it either. You are seeking help, not criticism.

Hi K.,
I feel your pain, and i think i can help. When those moms said Dave Ramsy...they were right. DONT FILE BANKRUPCY!!!!! Its not you last option. I am a Financial Advisor with Primerica Financial Services. If you would like I could sit down with you and your husband and help you out. We do what is called and FNA (financial needs analysis)report. Its a complimentrary credit review. I would love to help another mother out. let me know if youre interested.

I also recommend the Dave Ramsey books--from the library (free!). We were in a similar situation a few years ago and from his advice (very easy to follow) have paid off $40,000 in debt in the last 3 years, even with me working just part-time to avoid full-time daycare costs. I did a home daycare for awhile so we saved on that plus I made income and saved on gas, eating out, etc. Good luck--you can get out. Just have to get started! We are getting ready to make the last payment on our second vehicle and since we paid off the other last summer, we won't have any car payments for awhile. His books not only give you tips, but help you get a good understanding on your feelings and attitude about the spending and debt.

Call up the folks in charge of your college debt and relay this information and ask them for a break of some sort.
Your great-grandparents would put your claims of not spending to test. Here are a few of my ideas to follow until baby is born. Never eat out, eat beans and rice (Aldi's has both at rock bottom prices) cut down on the portion of meat at a meal, eat oatmeal from the big container, not the little packets, instead of expensive cereals, don't buy any new clothes, use some of your old clothes for rags and don't buy paper towels, don't use a baggie every time you turn around, use plastic containers or lightweight foil to store leftovers, take bag lunches, but don't buy those expensive portion sized foods, same as above, use plastic and wash and reuse them. Give up alcohol and Starbucks and cigarettes and deserts. Buy only for the week, they say we spend more when we stock up with large boxes, and we waste more. Cancel your cable and read books from the library for entertainment, or play board games. Find out about all the free things available in your area. Don't be too proud to visit a food pantry. Family may give you a shower, try to get them to give you the essentials. Comparison shop. Baby items abound at garage sales.
Just read the home day care idea, a good one. As you can imagine from my suggestions, I don't spend a lot on the home day care I have run for 20 years. Don't think that your home has to be perfect or that you have to spend money setting it up. I always had the parents of babies bring their Pack 'n Play for sleeping. Older kids can bring a bag of toys from home, there's always tapes and books from the library and coloring books and crayons and paper that is only printed on one side to use for drawing. Just imagine you are living in pioneer times. Good luck.

Look at your budget very carefully. I know you said you don't spend frivilously, but now is the time to look at EACH little expense. Do you go out to eat? Stop. Are you running all your errands in one trip to save gas? Do you go shopping with lists so you avoid extra purchases? Do you shop sales? Use coupons? Do you have cable TV? Cell phones and home phone? How often do you buy new clothes? Can you turn down the thermostat a few degrees? Take shorter showers? Or does it need to be big? Do you need to move to cheaper housing?

Focus on the credit cards, student loans have low interest rates. Can you pay five dollars extra on each of your cards? Do it! See how soon you can double your payments. Focus on the highest interest rate. Also call your companies, they may be willing to lower the rate.

If you are paying 29% interest on credit cards, now is not the time to have savings. Take that money and pay down your highest card. You're making 2% while paying 29%, not worth it.

I don't know the amount of your debt, so I can't tell you how long it will take to pay it off, but there are debt calculators online.

This is a great time to do it, before you have kids, but consider this, if you can't pay it down now, then you can't save for a "rainy day" later and you could easily be back in the same situation if one of you lost a job-back with the credit cards.

Good luck!