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I Am Current on My Bills But Have Really Nothing Left. – Sheilah

Sheilah

“Dear Steve,

We make good money. Have 5 credit cards totalling $73,500. Already have a loan out on my 401K. I’ve got a child going off to college in two years. Creditors are now increasing my interest rate (they say across the board) because my credit rating is less than 719. I am so stressed I won’t what to do. By reading your website, I’d say Bankruptcy and Debt Settlement are out. I am current, but have really nothing left. After the mortgage, vehicles, prescriptions.

What is the best option for me?

Sheilah”

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The Answer

 

Dear Sheilah,

This is a situation of applying the right solution to fix the problem. Not eliminating options off the start. Let’s put everything back on the table, including bankruptcy and debt settlement.

Okay, I’m not a huge fan of modern debt settlement so I’m tossing that one right off the table again just to confuse you.

Your situation sounds like you are current on your bills but just making it. With $73,500 in credit card debt your monthly payment on that must be about $1500 per month. That is a lot.

Your credit score is probably suffering because your balances are slipping up and your debt to income ratio is getting out of whack.

If you want to improve your credit then increase your income and pay off the debt as quickly as possible. Done.

But you won’t be able to save any real money towards college and you’ll have to send your child off to school on student loans. That’s pretty scary these days.

In your current situation it also sounds like there is little to no money leftover each month to put into savings as an emergency fund. And if your balances are still slowly creeping up because you are using the credit cards to make ends meet, now you’ve got some much bigger issues.

So let me leave this up to you. You could go into a credit counseling program and your monthly payment will be about the same as it is now. Or you could think about bankruptcy, get a lower payment plan in place that you can actually afford or discharge your debt completely. If you were able to discharge the debt completely you’d finally be able to save for an emergency fund and put some money away for college.

If you want to try to pay down your debt on your own, read “Do I Buckle Down and Payoff My Debt or Enter a DMP? – Erica.”

Big Hug!

I Am Current on My Bills But Have Really Nothing Left.   Sheilah
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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.
  • Mike

    Looks like I only need 4 “secret” numbers: GE Money Bank (services 10 of my 17 cards), HSBC (1 under Household Bank and 2 under Orchard Bank), CitiFinancial (CITGO and Home Depot), and Chase (BP).

  • Steve Rhode

    Start by calling the number on the back of the card and ask them who is servicing the card these days.

  • Mike

    Steve,

    I know you’ve started a very comprehensive list of “who to call, and what to expect” on the new DIY section, but I was wondering (I’m not web-page savvy) if you could like my creditor list above with their corresponding link from THE list???

    Mike

  • Mike

    JCPenney, Wal-Mart, Orchard Bank, Chevron, Citgo, CareCredit, Home Depot, BP, PayPal, Household Bank, Lowe’s (I know this is only 11, but there are 17 accounts involved, as my wife and I each have cards with most of these). Any assistance will be greatly appreciated.

    Mike

  • Steve Rhode

    Post the names of your creditors and I’ll see if I can come up with some current contacts for you.

  • Mike

    But, the only numbers I have are those on my cards, which everyone knows has NO authority to do anything but waste my time. The following is quoted from the ebook:

    You can’t just send this offer to the address on your statements, because the people there have no authority to make a decision like this on behalf of their company. For this plan to stand any chance whatsoever, it is CRITICAL to get it into the right hands, for example the M.A.N. This stands for someone with the Means, Authority and Need to accept your plan. The only people with the means, authority and need tend to be fairly high up in lending institutions and can be frustratingly difficult to track down. It’s taken us years to establish contacts and relationships with the right people at hundreds of lending institutions. If you want to save yourself an awful lot of time, effort and hassle, get in touch with me, so I can point you in the right direction. Once you’ve got the names and addresses of the right people, well, then it’s all down to fate. Send out your proposal and cross your fingers.

    Do you need my list of creditors? Or perhaps you have a link to the most common? I can understand not publishing hundreds of addresses, but I would like to cut down on my time and frustration…..

    Looking for Help (out of my 42K, 17 card hole).

    Mike

  • Steve Rhode

    Ahhh, OK, once you come up with your plan the best step would be to contact the creditors directly and ask about their hardship programs to see if they can meet what you can do.

  • Mike

    How to Eliminate Your Debt Like a Pro

  • Steve Rhode

    Which above ebook?

  • Mike

    Steve,

    I know this thread is old, but…I am gathering the information needed to attempt to follow your approach from the above ebook. Once I develop my package, do you still offer the list of those with the Means, Authority, and Need (the M.A.N.) to accept my plan?

  • http://www.debt-elimination-services.net George Webber

    This is a common problem that many people are facing today with the financial markets trying to squeeze every dime they can out of you. But I would strongly suggest you start looking at what you can do with your current cituation, before bancrupty. With proper budgeting and careful planning I am willing to bet you can handle your debt issue quicker then you realize. The first questionwould have you sat down and created a realistic house hold budget to know what exactly you have available to you to tackle the issue. If you are serious about fixing the issue with your debt you may have to make a few tough choices about what you are spending your money on currently. I work with my Clients to do just this currently, and is most cases I am able to assist them in quickly developing a plan that will help them work towards the goal of eliminating their debts. Dont let your credit card companies win with their games, they have vulnerabilities like any other companies. Sometimes you just need to someone else to show you a few tricks to help you reach your goals. If you are able to maintain your minimum payments on your current debt load then I would not be considering any rash options. Sit down with a good finnacial counselor and have them help you, if you not able to find one I would be happy to help you write a custom plan that will allow you to eliminate your debts fast. Good luck to you and I hope you find a suitable plan that you can be happy with.
    - George

    • http://GetOutOfDebt.org Steve Rhode

      George,

      I know where you are coming from but one factor that is often forgotten or discounted in the budget approach is long-term execution or implementation. I once conducted a survey of 50 clients and compared their “budget” and then their actual income and expenses over a four month period. What I found was that their “budget” overstated their income and understated their expenses. More than 75% of the initial budgets were off by more than $250 a month. And for most in trouble, that was a deal breaker for them.

      Unless someone is willing to fundamentally change the way they live their life, a traditional budget will drift into failure. Many budgets are doomed to fail from the very start by being plans of depravation rather than of balance. They also fail to factor in ample savings at the same time as reducing debt which can lead to failure as well once the first big unexpected expense is collided with.

      My advice and point of view come from the perspective of what long term reality is in the majority of cases. That acknowledged, I agree that some people are motivated to make fundamental changes in the way they live their lives to make a plan on how to control their income work for them.

      I do think that the spending plan approach can be more successful than a traditional budget. In my free ebook How to Eliminate Your Debt Like a Pro I lay out this approach starting on page 81.

      When you are developing a budget for someone that is just getting by, how much in savings do you factor in and what expenses do you think should be cut out? I’m interested in learning more about your approach and what you think works for people long-term.

      Steve

      • Mike

        Steve,

        I know this thread is old, but…I am gathering the information needed to attempt to follow your approach from the above ebook. Once I develop my package, do you still offer the list of those with the Means, Authority, and Need (the M.A.N.) to accept my plan?

      • http://GetOutOfDebt.org Steve Rhode

        Which above ebook?

      • Mike

        How to Eliminate Your Debt Like a Pro

      • http://GetOutOfDebt.org Steve Rhode

        Ahhh, OK, once you come up with your plan the best step would be to contact the creditors directly and ask about their hardship programs to see if they can meet what you can do.

      • Mike

        But, the only numbers I have are those on my cards, which everyone knows has NO authority to do anything but waste my time. The following is quoted from the ebook:

        You can’t just send this offer to the address on your statements, because the people there have no authority to make a decision like this on behalf of their company. For this plan to stand any chance whatsoever, it is CRITICAL to get it into the right hands, for example the M.A.N. This stands for someone with the Means, Authority and Need to accept your plan. The only people with the means, authority and need tend to be fairly high up in lending institutions and can be frustratingly difficult to track down. It’s taken us years to establish contacts and relationships with the right people at hundreds of lending institutions. If you want to save yourself an awful lot of time, effort and hassle, get in touch with me, so I can point you in the right direction. Once you’ve got the names and addresses of the right people, well, then it’s all down to fate. Send out your proposal and cross your fingers.

        Do you need my list of creditors? Or perhaps you have a link to the most common? I can understand not publishing hundreds of addresses, but I would like to cut down on my time and frustration…..

        Looking for Help (out of my 42K, 17 card hole).

        Mike

      • http://GetOutOfDebt.org Steve Rhode

        Post the names of your creditors and I’ll see if I can come up with some current contacts for you.

      • Mike

        JCPenney, Wal-Mart, Orchard Bank, Chevron, Citgo, CareCredit, Home Depot, BP, PayPal, Household Bank, Lowe’s (I know this is only 11, but there are 17 accounts involved, as my wife and I each have cards with most of these). Any assistance will be greatly appreciated.

        Mike

      • Mike

        Steve,

        I know you’ve started a very comprehensive list of “who to call, and what to expect” on the new DIY section, but I was wondering (I’m not web-page savvy) if you could like my creditor list above with their corresponding link from THE list???

        Mike

      • http://GetOutOfDebt.org Steve Rhode

        Start by calling the number on the back of the card and ask them who is servicing the card these days.

      • Mike

        Looks like I only need 4 “secret” numbers: GE Money Bank (services 10 of my 17 cards), HSBC (1 under Household Bank and 2 under Orchard Bank), CitiFinancial (CITGO and Home Depot), and Chase (BP).

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