How to Get Out of Debt With the Get Out of Debt Guy » considering bankruptcy

Diana Is Struggling to Make Credit Card Payments And Afraid

Steve Rhode — Wed, 16 Dec 2009 21:43:42 +0000

Diana

“Dear Steve,

I have approximately $25,000 in credit card debt, drained my savings and struggling to meet my payments. I can pay my mortgage and normal billing but not the cards

I am so confused about wha is available out there and frankly scared that I may not do the right thing with a repuable company. Can you help.

Diana”

The Answer:

Dear Diana,

It is normal to feel scared and afraid but I don’t want you to feel that way anymore. Consider yourself protected from this point on.

I wish you had found me before you started draining your savings account to get by and pay bills. I would have pulled you away from the checkbook, lovingly tossed cold water on you and said, “Diana dearest, what are you doing?”

Savings is there to be used in case of an emergency but not to continue living a life you can’t afford. Unless you can face the underlying issues that are leaving you financial abandoned, then dribbling cash from a savings account will only leave it bone dry and you, without further financial transportation. It is not a solution.

You should give yourself a real pat on the back that you reached a point and found the courage to reach out for help. That’s a huge step. And now that you’ve done that, you are absolutely right, who can you trust?

Now that you are tapped out there are really only a few logical options so let’s talk about them.

One of those options would be to explore entering a debt management program where you would make one monthly payment to the debt management company and they would divide it up amongst your creditors and pay them a new amount that might eliminate interest and fees.

But that’s not really a good solution for you at this point since you really don’t sound like you have the spare cash to be able to pay anything on a continual basis. I surely don’t want to see you enter a payment arrangement in a debt management program just because you are scared of your creditors. If you can’t make all the payments in the debt management program and eliminate your debt over five to seven years then you are throwing good money after bad.

You could immediately run and go bankrupt and discharge, get rid, of all your unsecured debt. Bankruptcy would eliminate the credit card debt but you could probably keep the house and car. I would suggest that if you consider bankruptcy as an option that you contact a bankruptcy attorney and ask for a free bankruptcy review to discuss your specific situation.

Another option, that will sound silly, but it’s not, is to do nothing at this time. You see the reason you have found yourself in this situation is either because your debt suddenly increased or your income dropped.

I suspect it is either a combination of those issues or primarily caused by a reduction in income. If that is truly the case then an option is to ignore the credit card bills that you can’t pay for right now and focus on trying to increase your income or get a second job. You might want to take a look at the America’s Job Bank page I created to help people find jobs.

This is a reasonable course to follow if you don’t want to go bankrupt right now, for your own reasons, and want to take a stab at repairing the situation. You’ll always have bankruptcy to fall back on in case a credit card company sues you or you just can’t increase your income to meet the financial demands.

If you do this the collection calls and letters will continue to come. Don’t let them rattle you, bankruptcy will be your fallback plan in case nothing else works out.

As far as being scared about working with a reputable company, that is less of an issue. Most every bankruptcy lawyer and debt management company does what they say they will do. Just watch out for a company that wants to sell you credit repair services as a solution or says if you pay them they will give you a debt consolidation loan.

While your situation feels dire, the reality is that it is a fairly common scenario that millions and millions of people are facing and suffering in silence with every single day.

If you need more help or advice, don’t hesitate to contact me.

Big Hug!

@GetOutOfDebtGuy

The Answer:

I Need an Honest and Straightforward Answer. – Andra

Steve Rhode — Mon, 23 Nov 2009 21:50:03 +0000

From How to Get Out of Debt

“Dear Steve,

Three years ago my husband and I moved back to Los Angeles for me to pursue my dream of owning my own clothing business (with a partner). We sold our home in 2003 and make 200K. Moved to Colorado bought a bigger house for 380K disliked CO sold it for the same amount, moved to NV bought a house for 390K and sold it in 2005 for the same amount to move to Los Angeles. In which during that time we had excellant credit and many credit cards with high limits.

Starting 2006 we weren’t able to keep up with the credit card debt which made us default on all the cards and eventually now they are in collections about 75K. We just moved back to Las Vegas to live with family because we couldn’t afford living in Los Angeles and not to mention both my husband and I lost our jobs. we have no idea what to do now I think most of the debts are 3 years old no judgments as of yet, just a lot of collection agency calls. We honestly can barely survive on what my husband makes about 3K a month.

What shoud we do? Should I try to negotiate with the creditors (however we can afford so little to pay each month I doubt they will accept the offers. Or file bankruptcy? At a loss trying to find work which has been very difficult in this economy. Would love an honest straightforward answer please. We need to get out of this debt before it ruins us!

Andra”

The Answer:

Dear Andra,

I really can’t see any point in ‘negotiating’ with your creditors. The underlying problem is that you have no financial bedrock at the moment. If you think you could afford to make payments of about $1,500 each month, give it a shot.

The reality is that your life has wildly altered the path it was on when you were incurring this debt. You are faced with two divergent paths. One path would involve years of sacrifice, living a marginal existence and putting your life on hold to try and satisfy the debt you have now.

The other path involves you accepting there is no reasonable expectation you can repay this debt in your current situation. In that case bankruptcy is a legal and logical course to follow.

You are not harmed by finding a local bankruptcy lawyer you like and going to see them to discuss your situation. Out of that appointment you will gain knowledge and with that knowledge you will be able to make an informed decision if bankruptcy is for you.

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!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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.

I’d Like My Farmer Father to Co-Sign for a Loan so I Can Get Out Of Debt. – Chris

Steve Rhode — Tue, 15 Sep 2009 12:42:05 +0000

From How to Get Out of Debt

“Dear Steve,

36 years old. In the last 5 years I have had two extended periods of unemployment. I now make 37,000 a year in a good salaried job which I was hired full-time at 3 months ago. The previous 22 months I was either unemployed or making temp wages and built on my debt. Now I have a massive $80000.00 in credit card debt spread over 3 cards. I have an older car and my only real asset is a life insurance policy who’s cash value is around 19 thousand. I live in an apartment in Chicago with a roommate…our rent is 1000 split two ways. I owe that roommate around $2000 which she will let me pay in small installments. I had been hopeful during the last few years that my father who owns land (a farmer downstate) would co-sign a bank loan with me, allowing me to wipe out my debt and pay off a 5 year bank note. However, he cannot do this now for various reasons.

As of now, I’ve still never missed or been late on a payment (somehow)…though I’ve had to sell items, borrow money, and shuffle money around to do so. Right now I’m coming up short every month, though not a massive amount anymore. But, it’s still short and I’m needing to find money every month.

I am confused as to what to do about my current situation (described above). Should I…

Declare bankruptcy? This is the option most (my father and girlfriend included) are pushing me into. If I declared bankruptcy, wouldn’t they liquidate my life insurance policy? Would I be likely to be Chapter 11 since I have a steady income now?

Would it make more sense to cash in my life insurance policy instead?

Or should I look into debt consolidation?

Chris”

The Answer:

Dear Chris,

I think your father and girlfriend have given you some sensible advice. You have asked some excellent questions about bankruptcy here but the best answers will come from the free bankruptcy consultation appointment you need to schedule with a local bankruptcy attorney. Make some calls and find a local bankruptcy attorney to go meet.

If your father co-signed a loan for you to deal with this, even I would have to fly up there and kick his ass. It is grossly unfair for you to drag others into the mess you are in right now.

You roommate sounds like she was a great help in fronting you the rent but those days need to be over. I need for you to now step up, do the hard thing, and face your problem straight on and resolve it. The only legal tool for you to do that with is going to be bankruptcy.

You are out of assets to sell, out of payments, and more importantly just about out of time.

And oh yes, it would make no sense to cash in your life insurance policy. It’s a drop in the bucket that is not going to solve the entire problem.

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!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

My Debt Snowball, Snowballed. – Janine

Steve Rhode — Thu, 18 Jun 2009 18:06:54 +0000

From How to Get Out of Debt

Janine

“Dear Steve,

I have $90,000 in debt and make $63,000 a year. I did a debt snowball but that snowballed. I can’t seem to get out of debt. My parents were close to losing their home and I gave them most of my money. I have a few things I plan to sell but nowhere near enough to cover any bills. After paying most of my bills, my balance is in the red.

What else can I do to get out of debt? I have applied for part time work and never heard back from anyone. Plus I am not sure that even part time work would help in paying down/off one of my bills.

Janine”

The Answer:

Dear Janine,

It is admirable that you helped out your parents to keep their home. I think you realize that the sacrifice put your own financial life in peril.

You don’t have to do anything. You can let the situation sit and fester and pay what you can afford. You can wait to see if you are sued and if your wages will be garnished. Basically you just sit and wait to see what bad stuff will happen to you. Not a very attractive option, but an option nonetheless.

Or if you don’t see a likely increase in your income and the current situation is too much for you to continue in, there is always bankruptcy.

Bankruptcy is a perfectly legal solution that will let you start over in an otherwise depressing situation with no solution.

So there you are. You can sit in the mess and let it fester and get worse, or you can face bankruptcy and get a fresh start and probably put these issues behind you in four months. What’s it going to be?

Still uncertain, call a local bankruptcy attorney and go in for a free bankruptcy consultation and learn more about bankruptcy and your situation. Ask every question you can think of and then go home and ponder it for a couple of days. There is no need to make a rash decision.

Big Hug!

@GetOutOfDebtGuy

I Have a Loan Through Bank of America and I’m Going to Declare Bankruptcy. – Nick

Steve Rhode — Wed, 18 Feb 2009 16:05:43 +0000

From How to Get Out of Debt

Nick

“Dear Steve,

I have a Loan through Bank of America and the APR IS 15.99%!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!, I am going to declare bankruptcy soon if this isnt lowered.

Can you Lower my APR?

Nick”

The Answer:

Dear Nick,

These days 15.99% isn’t a bad interest rate on a credit card, But you didn’t say what kind of loan this was.

Nick, it isn’t cool to go bankrupt just because you don’t like the interest rate. Is there something else going on here? I’m hoping there is more to the story that you have not told me.

Steve

How to Get Out of Debt With the Get Out of Debt Guy » considering bankruptcy

Diana Is Struggling to Make Credit Card Payments And Afraid

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