How to Get Out of Debt With the Get Out of Debt Guy » collections

I Left My High School Sweetheart and Now My Credit is Trashed. – Christine

Steve Rhode — Fri, 03 Jun 2011 21:39:57 +0000

I left my high school sweethart four years ago which put me in my own apartment. I had a great job at the time and got laid off about one year later.. I have about six credit cards which are all in collections after the past two years. I do work full time but i don’t make even half of what i was making at the job i got laid off from.

i pay all my own bills rent, internet and electric and groceries.. i don’t have a 401k or anything like that. i cant get a personal loan due to me renting an apartment.

nobody can cosign a loan for me either cause their credit is worse than mine.

but i cant seem to pay any of them at all…

i also see these credit card relief programs but they want a monthly fee for getting them paid off plus a big chunk of money to pay off the card…

please help!!!

Is there anything else that could help me with my situation that i don’t know about???

Christine

I’m currently backed-up on answering questions so I’m posting some of the questions here for you to help answer.

This is your chance to be a hero and help out this person by providing your feedback and answer to the question in the comments section below.

@GetOutOfDebtGuy

What in the World Do I Pay First to Clean Up My Credit Report? – Susan

Steve Rhode — Thu, 15 Jul 2010 16:58:56 +0000

From How to Get Out of Debt

“Dear Steve,

I have a lot of charge offs and medical bill collections, I also have a few good accounts on file.

What in the world do I pay first to clean my report up?

Susan”

The Answer:

Dear Susan,

First, get a copy of your consolidated credit report. This consolidated credit report is the same one I use and I love the easy to read format.

Next, it will be easy to identify the old and outstanding debts on the report. I would suggest that you use the debt snowball approach to pay off those old debts.

Doing that will help to improve your credit score. But you could also purchase the credit score option with the consolidated credit report and it will specifically tell you which debts will improve your score the most when taken care of.

Big Hug!

@GetOutOfDebtGuy

We’re Behind on Bills and Debt Collectors Are Threatening to Sue Us. – Krisstina

Steve Rhode — Mon, 01 Mar 2010 22:40:23 +0000

From How to Get Out of Debt

Krisstina

“Dear Steve,

We’re behind on bills. My husband had to leave his former job when he worked as a delivery driver for a furniture company and his pay became almost non-existant for a few months until he could find another job. We were good enough to stay afloat for a while we were ahead of our mortgage payments and had some in the bank, but our credit cards were put on hold to keep on our essentials.

We kept in contact with them and at first they were supportive, but they’d only put temporary helps, and then became very impatient with our situation. We’ve had a baby since that time and medical bills are piled on top of a car payment, two credit cards, and another credit account. One credit card has gone to collections and we’ve been trying to find a temporary loan to pay the balance until we get taxes back, but no one in our family and friends has any money to loan us.

We don’t qualify for loans anymore. It’s frustrating because we’ve had a high credit score since we were married and just in this last year it’s gone to craps. We’ve looked into everything including selling our home and getting into an apartment, but all the rent prices have gone up to about as much as our mortgage payment is now, especially for a family our size. I don’t know what to do anymore. I’m tired of trying to talk to everyone and they keep sending me to call centers in India, where they are hard to understand and don’t really care.

Is there anyway we can buy a little more time with the collections, they want one week for the money in full, or apparently there will be a lawsuit.

Krisstina”

The Answer:

Dear Krisstina,

The collectors can want what they want but that does not change the fact that you just don’t have it. The worst scenario here is that you promise to pay money that you don’t have and then don’t meet that promise.

The threat of being sued seems really scary. But collectors threaten lawsuits all the time and while it is possible they will sue you it is not likely to happen so fast. Even if you were sued you could nuke the suit by filing bankruptcy so the only thing a lawsuit does is allow you to go before a judge and explain your situation. Lawsuits don’t happen overnight so potentially by the time you got to court you’d have your tax refund in your hand and you’d pay off the debt and the suit would be dismissed.

And while I’m on the subject, if you are getting back a big tax refund it means you are having too much in taxes taken out each pay day. If you cut back your deductions so that you break even at tax time then it will put more money in your pocket each month when you really need it.

I would stand your ground right now and tell the collectors what you can and cannot due. If you are sued or it all get to be too much, click here to file bankruptcy.

Big Hug!

@GetOutOfDebtGuy

What Do You Think Would Be The Best Way to Deal With This Debt? – Harold

Steve Rhode — Tue, 02 Feb 2010 22:43:46 +0000

From How to Get Out of Debt

Harold

“Dear Steve,

I have credit card debt of about $30,000. I was out of work for awhile, I tried the self employment thing for several years but couldn’t get ahead with that. I now have a decent job, the pay is only about $23,000 a year but it is steady and it’s government and five minutes from my house. All the credit cards (4) are in collections I can’t come up with a reasonable payment with them one is taking me to court and the others are shure to follow.

What do you think would be the best way to deal with this.

Harold”

The Answer:

Dear Harold,

I’m glad you found a job, and so close to home!

I was not sure from your question if with the new reduced salary if you have funds available to repay these debts. Based on the level of debt you’d need about $600 a month in a debt management plan to satisfy those creditors.

Your situation seems straightforward but the problem here is if just one creditor successfully sues you and it leads to say a wage garnishment then you would be exposed if a second creditor took you to court.

I would seriously doubt that you have a lot of spare cash available each month. If that is the case then I think that you need to seriously consider bankruptcy. Before you make up your mind if that is or is not a reasonable suggestion I would urge you to call a local bankruptcy attorney or click here to schedule a free bankruptcy consultation.

Even if you go bankrupt you can still repay the debts if you feel you need to. The advantage is that after bankruptcy you can do it based on what you can reasonably afford, at 0% interest, rather than being at the receiving end of yet another creditor demand or lawsuit you can’t meet.

Let me know what you decide to do.

Big Hug!

@GetOutOfDebtGuy

I Have an Account With HSBC And They Don’t Want to Settle. – Arvin

Steve Rhode — Wed, 13 Jan 2010 23:04:16 +0000

From How to Get Out of Debt

Arvin

“Dear Steve,

I opened an account with HSBC in 2004 for $1,600. I have been making my monthly payments even more than the minimum monthly payment required. However, due to my current financial hardship, I was not able to pay monthly. The interest rate is 23.80% and penalties kept adding to my account in the amount of $39.00. The late charges and interest every month totals to $60.38.

I have calculated the payments I made for almost 3 years and the total is much, much more than what I owe. The last statement I received dated September 10, 2008 still showed I owe $1,096.77 from the original $1,600. On October 7, 2008, I wrote a letter to HSBC and explained my predicament, and to request some consideration and offered an amount of $300, which is all I can afford to settle and close my account. I never received any response whether my offer for settlement is acceptable or not.

I finally received a letter on November 13, 2008 from a collection agency. My balance showing is in the amount of $1,220.49. I called the collection agency and explained my request to HSBC but they will not listen to my explanation because accordingly, I signed a contract with HSBC. They are now threatening to bring my case to a small claim court if I do not pay. I cannot afford to pay a lawyer as I am still going to school and working at the same time. Can I get help in my case from any government agency?

Thank you.

Arvin”

The Answer:

Dear Arvin,

I think you just learned a valuable lesson about financial products.

When you opened the loan with HSBC you entered into a legal contract with them to repay the loan. That contract covered the terms and conditions of the deal, including what would happen if you defaulted.

Paying back a debt with interest will always result in payments being more than the original amount, and the more penalty and late fees that get added on top of a jacked up interest rate, the amount repaid will be huge.

I’m not surprised that HSBC would not take a $300 settlement. That’s not enough for them to waste their time with. You’re going to have to get your offer up around $800 probably.

It sounds like your only option is to let the case go to court. Unfortunately, you will probably lose because the lawyers will point to the contract you signed as your agreement to repay. There is no government program for this situation since this is what happens when everyone defaults on a financial contract.

The only legal intervention available is bankruptcy but that will cost more than you owe.

You might have to do what many others have done, get a second job or drop out for a semester to make enough to pay the debt.

It all sounds grossly unfair and sucks. Welcome to financial reality.

Big Hug!

@GetOutOfDebtGuy

I Lived in California and Had a Debt I Did Not Pay. I Now Live in New Jersey. – Monika

Steve Rhode — Fri, 18 Dec 2009 09:49:36 +0000

From How to Get Out of Debt

Monika

“Dear Steve,

I lived in California when I incurred credit card debt of $1300 in 2003. In 2005, I got married and moved to Texas and have been uemployed since then to pursue higher education.

In 2009, I moved to New Jersey and started getting mails and phone calls from a collection agency regarding $1300 debt. I ignored them and now I received a letter saying that I’m getting sued. I am still unemployed and don’t know what to do. My name has been changed since then and my bank account was opened in Texas with new married last name. I got sued under my maiden name.

What is the next step after getting sued by creditor? Can I get sued for debt that was incurred in California while I live in NJ now? What is the statute of limitation?

Monika”

The Answer:

Dear Monika,

If seems that the one point of this situation is that you admit that you did incur a $1,300 debt six years ago and have not made an attempt to repay it.

You said that you don’t know what to do. You should follow these steps.

Being sued is not something to be taken lightly. You should really talk to a lawyer that is licensed in the state you are being sued in for specific legal advice.
You should not disregard any correspondence about this debt, especially from the court if you are sued. If you are sued and you don’t respond to the suit you will lose by default.
If you determine that the suit is valid you have two ways to clear this debt:
- Bankruptcy
- Negotiate a payment plan on it to avoid being sued.

Big Hug!

@GetOutOfDebtGuy

I Owe on a Cell Phone Bill for Downloads That Are Not Mine. – L

Steve Rhode — Wed, 15 Jul 2009 12:32:04 +0000

From How to Get Out of Debt

“Dear Steve,

There is an outstanding cell phone bill from more than 6 years ago that the phone co kept adding download charges to for a phone number that had been terminated by us. We tried to have the situation resolved and even offered to pay only what we knew we owed if they took the other charges off which they would not do. They said those charges were from a third party. We asked them how they could let the third party continue to charge to an account that was no longer active?

We don’t understand how they could keep adding download charges to a phone that was not in service and they knew it wasn’t. They have different collection agencies calling or sending letters for collection. I’m really tired of it but would like to know how long they can legally keep doing that before I can tell them the statue of limitations has run out and it be true.

L”

The Answer:

Dear L,

Regarding the statute of limitations, you really need to ask a lawyer licensed in your state for a specific answer to your question. It differs by state and type of contract.

It does sound grossly unfair and depending on the size of the bill they are chasing you for I think the lawyer route will wind up saving you money and dealing with this situation in an effective and professional manner.

Big Hug!

@GetOutOfDebtGuy

My Daughter Took Out Student Loans. I Couldn’t Co-Sign. Her Grandmother Did. Now She Can’t Pay. – Lorrie

Steve Rhode — Sat, 13 Jun 2009 18:09:07 +0000

From How to Get Out of Debt

Lorrie

“Dear Steve,

Four years ago my daughter decided to go back to school. She took out student loans through Sallie Mae. I tried to co-sign for her but was turned down… my mother was not.

So now we have a problem of course, my daughter has 2 children, no job and the ex-husband doesn’t work either.

My mother (the co-signer) is 80 years old and is on a fixed income. Sallie Mae calls my daughter for pmts but of course she has no money to pay them so the harass my mother.

What can we do about this?

Lorrie”

The Answer:

Dear Lorrie,

Another example of why I hate student loans. People constantly perceive them as good debt, but the majority of people that have student loans never graduated with a degree.

Here is the deal with co-signing, it means you are totally responsible for the debt if the loan goes bad. You 80 year old mother is on the hook for these student loans of her granddaughter.

And to make the matter worse, she can’t break her bondage to these debts without a Chapter 11 bankruptcy, which will be expensive. A regular bankruptcy can’t remove or discharge student loan debt and even the SallieMae site says:

If you’re having serious trouble paying back your debt, bankruptcy is not an easy out. In fact, bankruptcy should be considered an absolute last resort. And, after all your effort, student loans are not normally included in a bankruptcy filing.

Unless you can show that your education loan payment is an “undue hardship” on you, your family, and your dependents, your student loans are ineligible for cancellation (discharge) in bankruptcy.

It is difficult to prove “undue hardship” unless you are physically unable to work and there is no chance of your making money. To discharge your student loans under this special case, you must file a separate motion with the bankruptcy court and present your situation before a judge.

Your daughter, her granddaughter, has placed her in a horrible position by defaulting on her loans. I realize that it is what it is, but it is grossly unfair to your mother. Then again, life’s not fair, is it?

If you want to rescue your mother from this position I think you need to contact a local bankruptcy attorney and go in and explain the situation. The bankruptcy lawyer can give you an estimate of how much a Chapter 11 bankruptcy will cost.

Big Hug!

@GetOutOfDebtGuy

I Have Several Credit Cards That I Haven’t Been Able to Pay On. – David

Steve Rhode — Fri, 13 Feb 2009 16:31:04 +0000

From How to Get Out of Debt

“Dear Steve,

I have several credit cards that I haven’t been able to pay on, I am currently paying on one of them, Im just now starting to get calls from lawyers for collection. My wife and I also have a time share that we havent been able to use let alone afford, we havent made payments on that either.

How can I possibly recover from this mess?

David”

The Answer:

Dear David,

It seems senseless to pay on one credit card and not the others. That certainly does not address the bigger problem of you not being able to meet your obligations. You can’t be selective about paying one over others. It’s like favoring the right wing of a crashing plane. That does not stop the plane from going down.

If you take no action then you will wind up with more aggressive collections and potentially getting sued. You should expect to lose the timeshare as well. And there is certainly nothing that requires you to file for bankruptcy protection, you are allowed to stay on your current path but that doesn’t seem to be working too well for you.

In order to meet your obligations you will either need to increase income, reduce expenses, or a combination of both to allow you to have access to sufficient money each month to meet your obligations. If you had nearly enough money you could then think about a solution like a debt management program.

But as long as the financial altimeter is winding down towards impact with the ground you will either need to be mentally prepared to continue with the collection path or seek protection in bankruptcy. I would suggest that you schedule an appointment with a local bankruptcy attorney, you can click here for a free bankruptcy consultation. Meeting with a bankruptcy attorney does not mean that you will file bankruptcy. Meeting with a bankruptcy attorney simply helps to educate yourself about that option so you can make a better and more informed decision about how you want to proceed.

Big Hug!

@GetOutOfDebtGuy

Why The Debt Collector Works Hard to Manipulate You

Steve Rhode — Tue, 03 Feb 2009 17:37:48 +0000

From How to Get Out of Debt

So you’re a debtor and this is your first time in financial trouble. It is scary, frightening and you are completely stressed out. Some people even kill themselves over the debt.

The last thing you want to see are late notices or get calls from the debt collector. You’re just not that experienced playing the role of the debtor in trouble but be prepared, you’re going to go up against a professional that collects debts for a living.

Debt collectors have national conventions, they belong to professional associations, they even have monthly magazines with articles in them about how to extract money from you.

What convention is there for debtors? None.

A call from a debt collector is not like getting a call from your Uncle Jim. For you, you are having a conversation, but from the collector point of view, they are testing you to determine which approach and tricks will work best on you. While you’re trying to do the right thing, the collector is preparing to play you like a fiddle and may even laugh about it the whole way.

For you, your problem debt is personal. For the collector it is just another day at work. You are worried about what the collector will think about you. The collector is only concerned with how much money they can get out of you. This is not a relationship based on equal needs or goals and if you’re not smart, you will make costly mistakes that can really screw up your life.

The Squeaky Wheel

The debt collector wants to be annoying and irritating. On one hand, some will want to be your friend but experienced collectors know that the squeaky wheel gets the grease. If they can be annoying and abrasive enough you will subconsciously get them paid as soon as possible so they go away.

Typically mortgage lenders are less abrasive than credit card lenders. If you don’t pay your mortgage the lender can take back your house and sell it. But what is the unsecured credit card lender going to take? Nothing. They might sue you but that can be neutralized with bankruptcy and the crdit card lender certainly does not want your old DVD player back.

A recent edition of a debt collector magazine contained the following article:

BE THE SQUEAKY WHEEL: Best practice is vital in today’s climate, where it is important that you keep on top of your debtors to ensure balances are paid off.

The article made it a point to tell collectors they need to:

Become a squeaky wheel – squeaking is annoying – and that means you will always be in their mind to be paid. It will mean you will:

Increase profits and revenue.
Decrease costs.
Improve operational efficiency.
Increase collections.
Minimize risk.

Psychological Tricks

Friendly – The friendly collector may play up a relationship that you think is like one with a really good friend in hopes that you will trust them and want to pay them. Makes sense, but it is no less manipulative than the nasty collector. You have to see this for what it is, a way to try to get you to pay, even when you can’t afford to do that.

Guilt – Guilt is a great motivator. A collector will want you to feel bad and like a loser because you are behind on the bill. They will try to manipulate your feelings of right and wrong to guilt you into making a payment so you don’t feel like a liar or a cheat.

And guilt, like other psychological tricks, is a great tool for a debt collector to use based on the values, beliefs, and morals of a particular person. It has nothing to do with what may be right or wrong but only how you perceive it.

Reality

The reality about the debt collector is that no matter what type of trick they try to use as your friend or your enemy, they are trying to achieve the same end result. They each want to get their hands on your money before the other one does. This is a competition between collectors to see who can suck what little money you might have out of you.

The reality is that debtors, inexperienced in the occupation of owing bad debts, will make critical mistakes which place the debtor, you, further into jeopardy. For example, it is not uncommon for someone to make payments to their credit cards but let their mortgage payments fall behind. They do this because the credit card companies are squeaking the wheel and in the debtors face to get attention. You panic and pay. They win.

The reality is that when someone finds themselves in a difficult financial situation, that really isn’t the time to start allowing a debt collector to counsel or guide you. The debt collector may be friendly but they are not your friend.

If you want to confront your financial situation in the best possible way, you need to put aside your emotional beliefs and look at the reality of your situation. This is often easiest for someone like me to do since I look at the facts, and not your hot buttons.

Often the most logical moves for you to make are also painful, unless you are prepared for what is to come. It is a lot easier for you to tell a debt collector that you can’t send a payment now, and know they are either going to try to friend you or guilt you to make a payment. Being aware that it is coming can save you from making a payment or a payment promise that you can’t afford and that will only lead to the loss of your home or car.

Want to See How Easy This Can Be?

All the squeaky wheel collector has to do is call you often, call you at work, make some calls to a neighbor or two and by then you should be so worked up in a frenzy of panic that you’ll pay to make them go away.

Betty, the friendly collector establishes a rapport with you on the phone. You chat about things you both enjoy and she tells you how she wants to help solve your problem. Soon you look forward to calls from Betty and make a payment promise because you like her and don’t want to let her down.

Both collectors win their contest but what do you win when you are homeless and hungry?

Bottom Line

I’m just saying, think it through before you let the collector manipulate you. You need to work the situation backwards. Instead of starting with what you can send them and live week-to-week, let’s look at the situation based on what you need to keep a roof over your head and food on the table.

Once you total up what it costs you to live a reasonable lifestyle, don’t forget to include putting $100 a month into a savings account. Now, more than ever, you need to make sure you are protecting yourself in case of an emergency. It’s not like you are going to be able to call the collector up and ask for money back because the tire went bad.

Once you know what your basic costs are to get by each month, and save, then you’ll know how much is left over and that’s the only money you can use for debt repayment or maybe even a debt management program. If people are demanding more than that then it is seriously time to think about bankruptcy, even if your emotions are telling you not to. Do this, go and meet with a bankruptcy attorney before you make any decisions. If you want, you can even click here for a free bankruptcy consolidation.

My bottom line is that I want to to make good choices that are realistic and serve to move you forward to resolving your debt problems and leave you in a safer place.

Steve

I Want to Hide From My Creditors – Janet

Steve Rhode — Sat, 03 Jan 2009 17:08:07 +0000

From How to Get Out of Debt

“Dear Steve,

If I don’t pay unsecured creditors like personal and business lines of credit and I disappear as you have described.

What can the creditors do to collect? Do they look for corp bank accounts I might have created?

Janet”

The Answer:

Dear Janet,

If you go back and read the article I wrote, “How to Hide From Debt Collection, the Debt Collector, and Creditors” you will see that the article is full of advice on how to reduce the collections pressure you may be facing but no trick or advice is going to eliminate a legal obligation to fulfill the performance of a contract.

Creditors can avail themselves of all legal means of collection, including suing you which can lead to a lien or wage garnishment. Being sued is a serious matter. If you are going to stop paying on business lines of credit then if I was a creditor I’d go after your business assets.

Let me state clearly again, hiding from your creditors does not change your obligations, it just eliminates the immediate pressure you might be facing.

For help in dealing with the underlying financial problems, please see a debt management company, (click here for debt management information) or a bankruptcy lawyer, (click here for bankruptcy information).

Please don’t misconstrue my advice about hiding from your creditors as a trick or technique to make your debt vanish. It’s not. But it will reduce the collection calls to give you some peace of mind while you figure out how you best want to tackle the underlying debt problem.

Big Hug!

@GetOutOfDebtGuy

Would You Like to Be a Debt Collector?

Steve Rhode — Tue, 28 Oct 2008 17:16:10 +0000

From How to Get Out of Debt

Recruitment Video For Debt Collectors

This recruiting video for a major banks debt collection department is very interesting if you listen closely to the words. I’d suggest that you even consider watching it with your eyes closed.

I think you’ll find the video a very interesting approach to try to put a positive spin on what can be a very difficult profession.

Some highlights:

“Go home feeling like you made a difference”
“Setting up payment schedules to help them get back on track and protect their credit rating.”
“For noting purposes do you mind if I ask how you fell a little behind?” Noting purposes?
“You’ll be tracking and documenting everything you do.”
“Training will be fast paced and intense.”
“If you enjoy interacting with people this may be the job for you.”
“Constantly on the phone taking calls.”
“You should contact consumer credit counseling.”
“You can give me not just bank related information but also give them personal advice.” Really!!

I don’t harbor any ill will against most debt collectors. They are just people trying to earn an income and care for themselves and their families. The tragedy of the debt collection representatives for the major credit card companies and banks is that they are simply implementing the policies and procedures of the bank and don’t have the tools to treat people as individuals.

In this video you will actually hear a collector say to a customer that is offering a 50% debt settlement that he can’t help and when the caller says that he might just as well go bankrupt, the debt collector really doesn’t care.

[flash http://getoutofdebt.org/wp-content/uploads/collections.flv]

If you can’t see the video online, click here.

How to Get Out of Debt With the Get Out of Debt Guy » collections

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