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I Had Cancer and My Husband Was Unemployed. We Are Struggling With Payday Loans. – Kim

“Dear Steve,

I will try to be brief:

I owe about $12k to installment payday loan companies such as Checkngo.
I owe about $2k in medical bills
I owe $9k on my car
I owe $2k to the IRS (new this year)

Credit isn’t great – about 680 but I do have a good job that I’ve been at 6 years.

Had cancer last year and my husband was unemployed and sick and as you can see I panicked and got very high interest rate loans

Payments on just the payday loans are $2k a month, Car loan is $350

We have cut back on pretty much everything we can, have 1 car only, no cable tv, don’t water the lawn even !

I cannot pay these huge amounts each month

My question(s)

Would debt relief help me? I did take these loans and I just cannot every pay them back at the 100% interest rates – Even if I could make the payments a $5k loan would be $40k by the time it was paid back.

Or would bk be a better option? I read horror stories about how I will never be able to even rent a house again etc.

Any advice would be very much appreciated.

Thanks

Kim”

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The Answer

Dear Kim,

First, let me dispel some of the myths about bankruptcy and renting. Yes, it is possible that a major apartment complex might have an issue renting following bankruptcy but for the vast majority of private landlords, it’s not a problem. Additionally, I can’t remember a single past client that was ever turned down by an apartment complex when they offered to put up a larger security deposit.

The critical issue here is that, as you describe it, your level of money available for payments sounds barely able to meet your obligations. In a situation like that some form of intervention is required to alter the monthly payment to make it more affordable.

This would be either through a legal payment reduction and financial second chance with bankruptcy or a more aggressive approach through debt settlement.

At this point I think the better approach is going to be to assign you homework to learn more about each option and what it would mean for you.

Only by educating yourself can you make a good and informed decision about what the best next step is going to be. My gut reaction is bankruptcy because I think that is the fastest way for you to regroup and be able to save money in an emergency fund to protect yourself moving forward.

I’d like for you to click here for debt settlement information and click here to find a local bankruptcy attorney. Once you talk to each, come back and update me in the comments and let me know which approach seems more reasonable for your personal situation.

Big Hug!

I Had Cancer and My Husband Was Unemployed. We Are Struggling With Payday Loans.   Kim
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I Had Cancer and My Husband Was Unemployed. We Are Struggling With Payday Loans. - Kim by

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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.
  • Kim

    so I finally got the guts up to decide to file bk. I’ve paid a lawyer 90% of what I owe him to actually file but he’;s not returning calls or emails. I’ve creditors calling 20x a day , already have 1 small claims case won against me and have more claims literally showing up at my work. I can’t afford another lawyer so what can I do. I’m literally ill with worry about the creditors calling and the real possiblity of my wages being garnished

    thanks for any ideas

    • Kim

      Steve, not sure if you answered this or not,  I see something for twitter (sorry complete social media novice)

    • http://GetOutOfDebt.org Steve Rhode

      Kim,

      Sorry to hear the lawyer is not returning your calls. Not to worry. If you can, drop by the office and chat with the staff. Or even just call and talk to the staff and find out what’s up. 

      You are almost there and I know it feels like things are closing in but before more panic arrives, let’s see if you can be an awesome detective and just get to the bottom of the communication issue.

      Steve

  • Kim

    So I’m filing for bankruptcy in October but have to go to small claims court next week for an installment loan I can’t pay. Have no idea what to expect or what to say and my lawyer isn’t being of any help. Do I just say yes I owe the money? Do I say I’m filing? I have no idea and I’m a little afraid
    Any advice?

    thanks again
    Kim

    • http://GetOutOfDebt.org Steve Rhode

      Kim,

      You should just answer truthfully. The answer seems to be that you do owe the money, you don’t have it and you are filing bankruptcy.

      I know it’s a stressful experience but just tell the truth and be yourself.

      • Kim

        Thanks again Steve I wasn’t sure if I should mention the bankruptcy or not. Like you say the whole thing is stressful. LOL even just getting the money for my lawyer has been toiugh (one more installment then I can actually file)

      • http://GetOutOfDebt.org Steve Rhode

        The reality is that since you are going to file in October you actually don’t need to appear. By not appearing you will lose by default but it doesn’t seem you have any option to repay the loan at this time anyway. maybe the fact that you know you’ll lose anyway and not having to go to court can provide you with a little stress relief.

        You are always welcome to go to the hearing though and learn from the experience. Who knows, maybe you’ll learn something that will help you to help others facing a similar situation. Good things can come from bad times if you let yourself learn from it.

  • Steve Rhode

    I think you answered your own question when you said your paycheck wasn’t enough to make the payments and feed the family.

    Which comes first for you?

  • Kim

    Met with a bankruptcy lawyer, debit is actually $20k. Very scary. Need to decide whether or not to close my account before next due dates. My whole entire pay check isn’t enough to cover the payments and of course I need to be able to feed my family. Any advice about that?

    thanks

  • Kim

    Met with a bankruptcy lawyer, debit is actually $20k. Very scary. Need to decide whether or not to close my account before next due dates. My whole entire pay check isn’t enough to cover the payments and of course I need to be able to feed my family. Any advice about that?

    thanks

    • http://GetOutOfDebt.org Steve Rhode

      I think you answered your own question when you said your paycheck wasn’t enough to make the payments and feed the family.

      Which comes first for you?

      • Kim

        Thanks Steve, that just makes so much simple sense. Sometimes you read so much you overwhelm yourself. I was worried that someone who try saying that I deliberately took the debt knowing I couldn’t pay it back – which isn’t true.Hopefully by the time any of these payday loan people get to wanting to get a judgement I will have filed the bankruptcy

      • http://GetOutOfDebt.org Steve Rhode

        Please keep me posted on your progress moving forward. I care.

      • Kim

        I spoke to Damon, a debt place and a bankruptcy lawyer. Both Damon and the lawyer suggested bankruptcy as I have no $ for settlements. Closing my bank account today – am a little concerned about Friday when none of the payday loans will be paid.

      • http://GetOutOfDebt.org Steve Rhode

        Just proceed with the bankruptcy. You will get collection calls probably but just tell them exactly what the situation is and who your attorney is.

  • Steve Rhode

    Since every situation is different, the best approach is to contact the parties in your homework assignment and just listen to what they have to say. Don’t commit to anything. I just need for you to listen to the advice and then we can talk about what you came away with.

    At that point we can then get a good idea about what approach will be best for you.

    Whoever told you, you were foolish, was an idiot. Don’t listen to them. Sure, we all make mistakes but let’s learn from them and move forward.

    Go meet with the local bankruptcy attorney ASAP and get educate about what bankruptcy would REALLY mean for you if you went that route. It would stop the loans and give you an affordable payment if you had to go the Chapter 13 route.

  • Kim

    Wow Steve thank you so much for the quick reply. Your website is great but a little overwhelming
    Is there some sort of FAQ for both options so I can “pre” educate myself? I read someone’s post that seemed to indicate if you have a good income ($90k) that bankruptcy might not be an option. I simply can’t keep making the payments as it’s more than 50% of my net income just to the installment payday loans. I’m current now but it’s now missiion critical. Unfortunately all of these paymens are auto debits – it’s now to the point where I won’t have enough money to pay my rent.

    Also I appreciate so much the non judgemental stance. On another website I was told I had made a terrible mistake and was foolish. Not constructive advice.Or that BK means I will never get a loan again or another job. Overkill I know but between worrying about my first cancer check up next week and all this debit I’m ill

  • Kim

    Wow Steve thank you so much for the quick reply. Your website is great but a little overwhelming
    Is there some sort of FAQ for both options so I can “pre” educate myself? I read someone’s post that seemed to indicate if you have a good income ($90k) that bankruptcy might not be an option. I simply can’t keep making the payments as it’s more than 50% of my net income just to the installment payday loans. I’m current now but it’s now missiion critical. Unfortunately all of these paymens are auto debits – it’s now to the point where I won’t have enough money to pay my rent.

    Also I appreciate so much the non judgemental stance. On another website I was told I had made a terrible mistake and was foolish. Not constructive advice.Or that BK means I will never get a loan again or another job. Overkill I know but between worrying about my first cancer check up next week and all this debit I’m ill

    • http://GetOutOfDebt.org Steve Rhode

      Since every situation is different, the best approach is to contact the parties in your homework assignment and just listen to what they have to say. Don’t commit to anything. I just need for you to listen to the advice and then we can talk about what you came away with.

      At that point we can then get a good idea about what approach will be best for you.

      Whoever told you, you were foolish, was an idiot. Don’t listen to them. Sure, we all make mistakes but let’s learn from them and move forward.

      Go meet with the local bankruptcy attorney ASAP and get educate about what bankruptcy would REALLY mean for you if you went that route. It would stop the loans and give you an affordable payment if you had to go the Chapter 13 route.

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