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Should We Stay With Cambridge Credit Counseling? – Ed

“Dear Steve,

Sometimes you’re damned if you don’t and damned if you you do. For no reason other than probably high balances, my wife and I experienced what millions experienced last year – the banks raising our interest rates to almost 30%.

After paying on these cards over minimum for six straight months and not seeing the balances go down and coming to the conclusion that I will still be paying on them when humans land on Mars, I decided to close all accounts and join with Cambridge Credit counseling.

We cannot file for bankruptcy since we are still under statute of limitations after having filed in 2004. Have been with Cambridge since 1/2010 and have seen my balances dramatically lower since most of our interest rates are in the 7% now (3 cards for me and 3 for my wife) all six cards equal to less than $12,000.

No problem with paying any of our other obligations. HOWEVER as you know, a person under credit counseling cannot get any new credit . we are able to save about $250/month after all expenses and groceries.

Unfortunately, that $250/month has to be used for NEXT YEAR’s house, flood and car insurance or we are in trouble. so the big question is, we are anticipating two major problems this coming year-we live in florida and our air conditioning needs replacement ($5000) and we need some new tires/brakes etc on two cars ($1,500) what do we do? don’t have the cash to purchase these items and can’t get the credit?

Do we stop paying Cambridge and just let the creditors sue? We can’t go without A/C in Florida and need working cars. We both took early retirement and live soley on Social Security. What would you suggest? Cambridge is excellent, but they can’t expect a customer to be in their program for 4 yrs without some sort of problem.

Sincerely,

Ed”

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The Answer

Dear Ed,

You are exactly right, you are right on the damned if you do, damned if you don’t line.

I totally understand you have upcoming obligations you have to meet. Air conditioning, especially in Florida becomes a nearly life or death issue, especially as you get older.

It might make sense to stop paying your creditors and let them come after you. In the meantime you could save up the monthly payments and pay them in advance to your taxes and utilities to cover your obligations for next year.

While you would wind up in collections again and they’d hound you for payment, unless you had assets hanging around the creditors would sue you but it sounds like your benefit income could not be attached.

I would suggest you spend some money and schedule an appointment with a local attorney. It is critical that you clearly understand what the consequences of stopping payment are and what, if any, assets you have might be at risk. If the attorney says the most creditors can do to you at this point is threaten you, then knowing that, you can deal with it.

If the creditors continue to chase you in the years ahead you could file bankruptcy when you are eligible and shut them down then.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

Should We Stay With Cambridge Credit Counseling?   Ed
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Lewis Roberts

    You will be eligible for a chapter 7 filing again sometime in 2012, if you pass the means test, etc.

    You should pay for necessities before paying the credit cards.

    Worst case scenario, if you were to be sued and cannot exempt everything from garnishment or liquidation in any state court case, would be to file a chapter 13 bankruptcy to stop the creditor actions.

    Then once the 8 years passes from the previous chapter 7, you could dismiss the chapter 13 and file a new chapter 7 to wipe away the current debts.

    http://www.lrlawoffice.com

  • Lewis Roberts

    You will be eligible for a chapter 7 filing again sometime in 2012, if you pass the means test, etc.

    You should pay for necessities before paying the credit cards.

    Worst case scenario, if you were to be sued and cannot exempt everything from garnishment or liquidation in any state court case, would be to file a chapter 13 bankruptcy to stop the creditor actions.

    Then once the 8 years passes from the previous chapter 7, you could dismiss the chapter 13 and file a new chapter 7 to wipe away the current debts.

    http://www.lrlawoffice.com

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