Get Out of Debt - Free Help

Somali Pirates Are a Good Credit Risk. Maybe They Need An American Express Card?

GetOutOfDebt.org - Steve Rhode — Wed, 19 Nov 2008 21:57:36 +0000

The hijacking and hijinks of the pirates in Somalia have been in the news. Apparently a new home based business has sprung up off the coast of Somalia as armed pirates board shipping vessels and hold the ship and crew for ransom.

The hijackers have a favorite part of the coast to park their ships while they await the ransom to be dropped from the sky, in cash. On last count there were 13 ships parked and awaiting ransom to be paid.

The new pirate business is improving the money generated by local merchants on shore. Each day supply vessels come to shore to by new supplies for the pirates and their hostages. Small businesses have no problem extending credit to the pirates since they are paid in full once the ransom is delivered. Best yet, the pirates pay their bills in cash.

One local merchant said she is so confident in the pirates, she instituted a layaway plan just for them.

“They always take things without paying and we put them into the book of debts”. “Later, when they get the ransom money, they pay us a lot.”

I guess the pirates have just not figured out they could get reward credit cards to use to pay for hostage goodies. That way they’d get free air miles without blackout dates.

Source: Somali Pirates Are a Good Credit Risk. Maybe They Need An American Express Card?

Ed is Disabled and Falling in Debt Fast. What Can He Do?

GetOutOfDebt.org - Steve Rhode — Wed, 19 Nov 2008 21:30:35 +0000

Ed wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty. If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help.

“Dear Steve,

I am disabled and falling in debt faster than i can handle. I am barely staying alive with trying to feed my family. I am behind on my mortgage and regular bills (utilities). I stopped paying on my credit cards just to try and keep my utilities from being disconnected. credit card companys are calling me constantly for there payment. I don’t even have the money to pay the lawyer for claiming bankruptcy. I don’t know where to turn. please help !!

What can I do???

Ed”

Dear Ed,

You’ve done the right thing by stopping payments to the credit card companies. You need to focus your repayment efforts on the mortgage and utilities at this point.

What I don’t know is if you can reasonably expect to be able to afford your mortgage any longer. It might just be that will your reduced income that you can’t afford the home. In that case you should give the home back to the bank and then go bankrupt to eliminate all your past debt, including any money the bank may want from you following the foreclosure of your home. I am assuming that you have little to no equity in your property.

At that point you can stop running for cover all the time and just focus on building a safer financial future for you and your family using what you’ve got coming in each month.

There are self-help bankruptcy materials available and you can usually get free bankruptcy forms from the local bankruptcy court.

If you decide that you can move then you can stop making the mortgage payments to save a rent deposit and to file for bankruptcy. That should allow you to do what needs to be done.

Big hug.

Steve

Source: Ed is Disabled and Falling in Debt Fast. What Can He Do?

Trisha is a Single Mom, Separated, and Facing Bankruptcy. What Should She Do?

GetOutOfDebt.org - Steve Rhode — Wed, 19 Nov 2008 21:19:10 +0000

Trisha wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

“Dear Steve,

I am a single mom and heavily in debt. I was living with my husband (we are legally separated) because of finances but recently I moved out. I am not behind on my payments at this time because I didn’t have to pay rent, utilities, etc. It is only a matter of time before I can’t make my credit card payments. I don”t know what I should do. Help!!

Should I file bankruptcy?

Trisha”

Dear Trisha,

Your situation is fairly typical. When a couple splits they now have two households to maintain on the same income they used to maintain one. Divorce and separation is often the event that leads one or both partners to bankruptcy.

I suspect that the only reason you are not behind yet is that since you recently moved out, all the new payments have not hit yet, or that you are using what little saved money you might have to make ends meet.

I think that you should use this event to not only start your marital life over but your financial life as well. If you do decide to go bankrupt it will eliminate and debt in your name and remove your liability to repay any joint debt that he has said he would pay.

The most important thing to remember about divorce is that even if he agrees to pay a debt that you might be jointly responsible for, it is still your responsibility to repay that debt if he does not. When you get divorced, you divorce your spouse, not your creditors.

Before you make any decision and certainly before you send any more money to creditors, I think you should find and meet with a local bankruptcy attorney for a free bankruptcy review. Get a legal opinion from the bankruptcy lawyer about what bankruptcy will mean for you and then make a choice about what you want to do. If you decide to not go bankrupt than come back and let me know. I’ll come up with a Plan B for you at that point.

Big hug.

Steve

Source: Trisha is a Single Mom, Separated, and Facing Bankruptcy. What Should She Do?

Kam Says “I Have Charged Off Debt In Collections And I’m Scared to Tell My Husband”

GetOutOfDebt.org - Steve Rhode — Wed, 19 Nov 2008 21:05:16 +0000

Kam wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

“Dear Steve,

Over $70,000 in credit card debt has been charged off from the original creditors and now reside with multiple collection agencies. One of the charges is approximately $30,000, which I pay $200 per month (to Creditor’s Interchange). I have ignored the various other collection letters/calls because they want money from me that I just don’t have.

I’ve just received a letter from an attorney regarding one of the accounts (over $9000). Bankruptcy isn’t an option because my husband’s parents have money invested in accounts that list my husband as a joint or secondary and we were told that if we filed, they would take half of that money since my husbands name was on the account.

My husband doesn’t know the extent of the debt and I’m afraid to tell him. We had a discussion about debt about 8 years ago when we owed about $3,000 (total) and he had a fit, yelled, screamed and didn’t speak to me for two months. I feel like I’m drowning…

What do I say to that attorney? Do you think he’ll accept payments of $50 a week? That is the MAXIMUM I will be able to afford. Then, how do I address the other collection agencies? I’d like to pay them something to start repairing my credit, but I can’t give them what I don’t have! Thank you.

Kam”

Dear Kam,

If your husband is a joint account holder and jointly responsible for the debts than he deserves to be told the truth.

Of course, his ignorance about his personal finances is not an excuse to behave badly. He has a responsibility to look at his credit report at least once a year to see what it out there in his name. If he had seen this early, and you’d had an unpleasant confrontation, you probably would not be where you are today.

What typically happens in these situations is that when one spouse comes clean with the other, things are a bit tense and chilly around the house for a week or two and then it thaws out and the two get to work on resolving the problem.

I think the attorney letter is designed to scare you but it could also lead to you being sued for the debt to recover what you owe. If you are sued, your husband will find out about the debt when he is called to court. And if the creditor wins, which they almost certainly will, the creditor could garnish his wages or go after cash in the bank to pay off the court award.

This is quite a hole you’ve dug yourself in but the best and most responsible thing you can do at this point is to be honest with your husband, accept responsibility for your actions and stop trying to solve $70,000 of credit card debt with $50 a week payments. That is not going to solve a thing.

Even without fees, jacked up interest, and penalties, the monthly minimum payment on $70,000 of credit card debt is going to be about $3,750 a month to dig yourself out of this mess in the next 10-15 years.

You are not making anything better by avoiding the reality of your situation. Take control, take action and in the long run, it will work out for the best.

Big hug.

Steve

Source: Kam Says “I Have Charged Off Debt In Collections And I’m Scared to Tell My Husband”

One Million Free Airline Tickets

GetOutOfDebt.org - Steve Rhode — Wed, 19 Nov 2008 18:48:24 +0000

One of the things I loved to hate when I lived in the UK recently was the airline Ryanair. The flight were mostly on time but at outlying airports. The cabin staff was not great but always managed to get their little cart with sandwiches you could buy down the aisle. Ryanair was the first airline I ever flew on that sold lottery tickets in flight and had advertising on the baggage bins above the seats.

But all of those shortcomings were easily forgiven because you could often get free or one penny flights to many destinations in europe. All you had to pay for was the tax. I’m serious!

U.S. airlines could learn a thing or two from Ryanair. That is if they actually wanted to push more people around the sky for reasonable rates.

I just heard that Ryanair is now giving away one million free tickets, you pay the government tax on that, and I had to take a snapshot of the offer, otherwise you’d never believe me.

What I’m Reading and Watching Today

GetOutOfDebt.org - Steve Rhode — Wed, 19 Nov 2008 18:28:49 +0000

I do more than just write answers to questions, I read as well. And my days involve math as well. It’s like being back in school, but this time with a calculator and spell check. Oh where were you when I needed you. Back then we had flash cards and now we have flash RAM.

I still remember when my high school chemistry teacher let us put down our slide rules and bring in a calculator. And those early calculators were expensive. But my best memory was when fellow classmate, Jeff Kemp, latter NFL quarterback, brought in the first calculator and someone stole it. Damn you chemistry students!

So anyway, the original plan for this post was to share with you what I’m reading today to see what is going on. I’ll just post a running list below.

What I’m Reading Today

What I’m Watching Today

Source: What I’m Reading and Watching Today

C Wants to Defer Student Loans Without Hurting the Credit Report

GetOutOfDebt.org - Steve Rhode — Wed, 19 Nov 2008 17:15:00 +0000

C wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

“Dear Steve,

I paid my way through college and fortunately could afford to take out only subsidized Stafford loans amounting to $10,000. After graduating I planned to find a full time job but have only found part time temporary jobs. I clustered these jobs over the last eight months and have been able to pay down my debt to about $7,500. Unfortunately my temporary jobs have run out and I am currently applying for work. I received my final pay check one week ago and have a dozen applications pending. The job hunt and hiring process can be lengthy and I don’t want to spend money on my monthly loans payments.

If I defer my loans until I get another job how will that effect my credit score?

C”

Dear C,

Do you know my good friends A and B?

See my answer to Pam Asks “Does a Deferred Student Loan Lower Your Credit Score” for additional information.

Bottom line, a deferment still lets interest build up but does not put the loan into default. So a deferment would be better than not in lean times.

Big hug.

Steve

Source: C Wants to Defer Student Loans Without Hurting the Credit Report

Stop Debt Collectors - 100 Pages of Good Advice

GetOutOfDebt.org - Steve Rhode — Wed, 19 Nov 2008 17:01:08 +0000

I didn’t tell Gerri Detweiler that I was going to purchase her book and secretly read it. I knew she would have sent me a free copy if I had asked but I didn’t want our friendship to cloud my review of her new book “Stop Debt Collectors: How to Protect Your Rights and Resolve Your Debts”.

The book can be downloaded right away, which is a real plus for those facing difficult debt collectors and looking for good solutions on how to deal with them.

Sadly, consumer attorney John Ventura, who helped write this book, passed away recently. He’ll never know how many people used his good information to stop bad debt collectors.

While there are many good and honest debt collectors out there, all it takes is a few really bad ones to abuse consumers and that creates a bad name for all debt collectors. If you are being hassled by one of those bad debt collectors than all of the techniques and tips that are laid out in this e-book are what you need.

You can download the book, like I did, at StopDebtCollectors.com.

Excerpts From “Stop Debt Collectors”

I thought you would be most interested in reading excerpts from the section that contained an interview with a debt collector. It is always interesting to get an opportunity to see what life is like from the other side of the debt collection process.

Will a bank let a consumer settle a debt that he or she is having trouble paying?

It depends on the bank. Most banks have written guidelines that apply to debt settlement. For example, at one of the banks I worked for we had to put past due accounts into “buckets” and
the buckets determined what we would do with a particular debt. For example, a debt that was one month past due would go into Bucket #1, which meant that we would not settle that debt. A debt that was two months past due would go into Bucket #2 and we would be willing to negotiate a little with the consumer who owed it. However, with the approval of a manager, we could settle a debt that was in Bucket #3 for 90% of what a consumer owed on it, and we could settle debts that were in Bucket #4 for 80% of what was owed assuming we got the approval of the bank’s Vice President. Usually, once a debt was about six months past due, we would settle it if the consumer paid 60% of what was due.

As you can see, the older the debt, the less money a consumer had to pay in order to settle it. However, consumers who wanted to settle their debts had to be able to convince us that they were financially distressed. In fact, the bank that I worked for required us to use a formula to help determine just how financially distressed a consumer really was. We would plug a consumer’s information into the formula. Also, the consumer was required to provide us with certain documentation to help prove the state of his or her finances.

In my experience, most banks will write off a debt once it’s six months old unless the consumer who owes the money has worked out a payment arrangement with the bank and is sticking with it. There is an old myth that as long as you pay something on a past due debt, a bank won’t put you in default; however, that’s just not true.

What if a consumer talks with a debt collector who just won’t negotiate?

If a consumer gets no where with the first debt collector he or she talks with, then the consumer should call back and try to talk with another one, who may be more open to negotiating. If the second debt collector won’t negotiate, the consumer should call back again, and so on. Although this approach doesn’t work every time, it’s worth a try.

Also, when you want to settle a debt for less, it’s a good idea to try to do that near the end of the month. That’s because at the end of the month, debt collectors are concerned about meeting their monthly commission goals and if they haven’t met them, they are apt to be more willing to work with you in order to achieve them.

How do debt collectors view letters from consumers telling them to stop contacting them?

When debt collectors receive letters from consumers telling the collectors to stop contacting them about a debt, the collectors are legally obligated to respect the consumers’ requests. However, debt collectors can contact those consumers one more time to confirm that they will abide by the consumers’ requests and to let consumers know about any actions they intend to take in order to collect the money owed, like bringing a lawsuit, for example. Sometimes consumers decide to work with debt collectors after learning about what they intend to do next.

NOTE: You can find sample letters you can send to stop collection company contact, on page 79.

What else should consumers know about debt collectors?

Consumers should realize that only about 10 – 20% of debt collectors are hardcore people who enjoy destroying people’s lives. The rest are just doing their jobs, making only about $20,000 a year, and not feeling especially proud about how they earn their living. Also, because many of them are struggling financially themselves, debt collectors don’t want to hear consumers go on and on about their financial problems, especially if the consumers are telling them sob stories about how they just lost a six-figure salary job or had their boat repossessed.

Consumers should also understand that debt collection is a pretty ruthless business and that debt collection agencies put a lot of pressure on debt collectors to produce results. The agencies know that if the collectors don’t get the job done, their creditor clients will use a different debt collection agency next time.

When consumers are contacted by debt collectors, they should be polite and positive, and should try to sound cooperative. It won’t do any good for consumers to fight and argue with collectors, especially considering that debt collectors can always sue consumers for the money owed. So whenever possible, consumers should demonstrate that they really want to resolve the debt that the debt collector is trying to collect.

Don’t forget, you can download the book, like I did, at StopDebtCollectors.com.

Source: Stop Debt Collectors - 100 Pages of Good Advice

Jasmina Wants a Debt Consolidation Loan After Paying For Four Funerals

GetOutOfDebt.org - Steve Rhode — Wed, 19 Nov 2008 15:25:28 +0000

Jasmina wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

“Dear Steve,

I have $46,000 in debt. Three are personal loans and four are credit cards (reason: in last two years I had four deaths in my family, funeral expenses). I don’t have any late payments and all my accounts are current.

Is there anyone who offer consolidation loan for so high amount of debt for nonhomeowners. Also, all of these debts are on my and my husband name. Annual income $72.000.

If I can put them all in one I can save a money in 6 months for a downpayment to buy a house. Right now we pay for rent $650. I am from Bosnia and live here for eight years only, so I don’t know a lot about this and any advice will be helpfull. Thank you

Sincerely,

Jasmina,
Saint Louis

“

Dear Jasmina,

I’m so sorry that you’ve had to deal with so much loss, both emotionally and financially. Your situation and story is sad, but sadly not all that uncommon.

I understand your desire for a debt consolidation loan. It is the solution that many think about when trying to get out of debt. The honest reality and chances of you finding a reputable lender to give you an unsecured debt consolidation loan are slim to none.

Especially in this economic climate, lenders are more nervous and skittish than usual. They went from being really loose to now, really tight and stingy with their money.

The only guaranteed debt consolidation loan out there would be to claim a massive number of tax exemptions on your withholding, you’ll get more in your paycheck that you can use to pay down debt and then at the end of the year you’ll owe the IRS money for all the taxes you didn’t pay. If you’ve never had a defaulted repayment plan with the IRS or a current payment plan now, they’ll let you pay the tax back over time at a low interest rate.

I’m not sure how reasonable that approach is since you’d now owe the IRS, that can’t be discharged in a bankruptcy, instead of unsecured creditors, that could. But as I sit here and think about this approach I can’t help but chuckle that for many people it is a low cost way to consolidate debt and pay it off, with some risks. I’m not sure why I never thought of this before. Thank you.

Even if you don’t get the free debt consolidation loan from the IRS, you can still start to payoff your debt with what money you have by following the debt snowball approach.

The only other options would be to explore a debt management program that will allow you to make one monthly payment, but it is not a loan, and it can impact your credit report.

Big hug.

Steve

Source: Jasmina Wants a Debt Consolidation Loan After Paying For Four Funerals

Valerie And Her Vanishing American Express Card Business Account

GetOutOfDebt.org - Steve Rhode — Wed, 19 Nov 2008 15:03:28 +0000

Valerie wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

“Dear Steve,

I had an American Express business account. I ran it up to $2000 when my husband was in the hospital for 4 months and couldn’t pay it all at once. I finally paid it off in about 2-3 months. When I paid it off completely, they cancelled my card. They said the reason was that my “other” credit was bad. I called and pleaded with them; to no avail. They told me to reapply…….Yeah, right!

Is Amex going bankrupt or something. This was the only credit card I had and am sorry that it’s gone. I heard that a lot of credit card companies are doing this. It was a real “credit card” anyway. I had to pay off the entire balance every month.

Valerie”

Dear Valerie,

Basically, they took their ball and went home. American Express is a very unusual creditor, they really don’t play nice. And they never forget.

Your situation has less to do with you personally than it does with the rising default rates of Amex account holders. Really all AXP is doing here is trimming accounts they no longer wish to have as customers. You’ve been dumped. American Express is not alone in this culling of customers wave. Many other creditors are kicking customers to the curb as well.

American Express, the fourth-largest U.S. credit card issuer, offered more credit to more customers even as the housing crisis began last year, and is paying the price as delinquencies rise.

Adding to its difficulties, its main sources of funding have grown more expensive as secured and unsecured bond markets have shut down. Analyst Whitney, however, said her primary concern about American Express was consumer credit losses, and not funding.

“Our concerns for American Express and other consumer lending-related stocks continue to be worse-than-expected credit losses,” she said in a note to clients.

It is possible that your credit score and credit report could have taken a hit over all of this but you won’t know till you get a copy of your consolidated credit report and take a look. The comments by American Express make me concerned that there is other bad information reported about you on your credit report that needs your attention. The last thing you want to see on your credit report is a note from American Express saying “Account closed by creditor.”

At this point, you will be leaving home without it, for a long, long time. I know breaking up is hard to do but it is time to move on. There are plenty of other companies that would like to give you credit so I suggest that you use this link to find a credit card that will be the best fit for you. There is no worry, even if you have bad credit or fair credit, a credit card offer is still available and waiting for you.

Now that your only credit card company dumped you it is more important than ever that you get another credit card and pay it on time to get new good credit flowing into your credit report.

It’s time to pack up all the old memories from Amex, put the in a box and shove it in the attic. They are not coming back.

Big hug.

Steve

Source: Valerie And Her Vanishing American Express Card Business Account

Get Out of Debt - Free Help

Somali Pirates Are a Good Credit Risk. Maybe They Need An American Express Card?

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One Million Free Airline Tickets

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