How to Get Out of Debt With the Get Out of Debt Guy » credit card bills

How Do I Pay My Credit Card Bills and Still Have Money for Day-to-Day Expenses? – Maria

Steve Rhode — Tue, 29 Dec 2009 23:11:47 +0000

“Dear Steve,

I am a teacher. I have enough for mortgage and bills but not for credit card payments anymore and I am going crazy with debt. I was paying my minimum payments on credit cards but then was left with no money left over for day to day expenses so I would use the little amount available on the credit cards again.

How do I pay my credit card bills and still have money for day to day expenses?

Maria”

The Answer:

Dear Maria,

One possibility to not being able to pay the day-to-day bills is that you are just so in debt that you’ve reached the end of your financial rope. Otherwise, the answers are not difficult to spot but they are difficult to implement. In order to change the amount of money you have leftover each month you will need to increase your income, reduce your expenses or a combination of both.

If you don’t have a good idea where your money is going you can track it yourself with pen and paper or use a more high-tech approach like Mvelopes, an online service that can really help you.

You’ve actually been in this “insolvent” position for a while now. It’s just that you’ve masked the reality of your situation by using borrowed money to get by.

Outside of adjusting income and/or spending the most logical solutions to consider would be debt management or even bankruptcy. Bankruptcy might seem extreme to you now so try a debt management solution first (click here for debt management information) and see if the consolidated monthly payment using that approach works for you.

Big Hug!

@GetOutOfDebtGuy

We Have Four Kids, My Wife Works Two Days a Week, And I Don’t Know if I Should Pay the Bills? – Scott

Steve Rhode — Sat, 26 Dec 2009 17:51:16 +0000

From How to Get Out of Debt

Scott

“Dear Steve,

$28,000 in debt on credit cards and medical. Wife works 2 days a week and does not bring in a significant portion of income to help. Have 4 children in house (2 of ours, 3 and 1 years old) and 2 step children (my wife’s)).

My oldest step-child is pregnant and due in October. My income covers all bills. Groceries and essentials get put on the credit card. Hence, my debt. Went to a credit counselor yesterday and her advise within 5 minutes of meeting with her was to consider bankruptcy. So, I am in the process of finding an attorney.

I have cc bills due next week. Should I pay them or use the money from my paycheck for groceries and diapers for my two young ones. Is it worth it to keep up on my bills. I am not late on anything or delinquent. I just keep getting deeper and deeper.

Scott”

The Answer:

Dear Scott,

It sounds like your situation is not resolvable with a payment plan if the credit counselor spotted the problem immediately. If you are going bankrupt, no sense sending any more payments on the bills. Plus you’ll also need to save up some money to pay for bankruptcy.

Let the bills go now. It won’t be long before you pay the bankruptcy attorney and the papers are filed. Since you are current, don’t expect any calls from creditors until you become past due. Even then, don’t dodge the calls, just tell them what the plan is and if you have your bankruptcy case number and attorney contact information, give it to them.

Big Hug!

@GetOutOfDebtGuy

Banks in the UK Force The Sale of Homes Over Credit Card Debts

Steve Rhode — Tue, 22 Dec 2009 15:19:46 +0000

From How to Get Out of Debt

Banks and credit card companies are exploiting obscure legal powers to seize the homes of thousands of people who cannot pay their credit card bills.

In some cases, people owing as little as £1,000 have been served with charging orders – the legal instrument enabling a creditor to order the sale of a property.

The practice has emerged days after Yvette Cooper, chief secretary to the Treasury, called on banks to do more to allow people to keep their homes.

According to the Ministry of Justice, 97,026 charging orders were granted by courts in England and Wales last year, a tenfold increase since 2000.

They allow financial institutions to order the sale of a property to pay off unsecured debts on credit cards, personal loans, store cards and car finance. Some will have been used only to threaten the debtor, or to levy a surcharge on the mortgage to recoup the debts.

Nationwide, the building society, and Northern Rock, which was nationalised earlier this year, are among the most aggressive in using the court orders.

Mark Sands, head of insolvency at KPMG, the accountancy firm, said: “The power of a charging order can come as a horrible shock to someone. When they took out the loan or the credit card, they were almost certainly not told that their home was at risk if they failed to keep up with repayments.”

The rate at which the courts have granted charging orders has increased sharply in the past two months, according to Citizens Advice, National Debt-line and the Consumer Credit Counselling Service. Last week a homeowner posted a message on a website saying a credit card company had launched a charging order against him for a debt of £1,000.

From next year banks will be given further arbitrary powers because they will no longer need to secure a county court judgment against a defaulting debtor. They will be able to move directly to seek a charging order after two or three months of missed payments.

Vince Cable, the Liberal Democrat Treasury spokesman, said: “No one should be allowed to lose their home simply because of a credit card debt. More needs to be done by the government to ensure that lenders simply do not act overzealously, and only take possession of properties as a last resort. The fact that banks can now kick people out of their homes for not keeping up with their unsecured debts is very worrying.”

Alex McDermott, social policy officer at Citizens Advice, said the government had presided over a hidden scandal, because homes repossessed in this way did not appear in the official statistics issued by the Council for Mortgage Lenders.

The Consumer Credit Counselling Service said Northern Rock and Nationwide were particularly aggressive.

Northern Rock confirmed it used charging orders where customers had missed payments on unsecured loans, saying: “Any application for a charging order on an unsecured loan is in strict accordance with the Consumer Credit Act.”

Northern Rock and Nationwide declined to discuss how many homes they had forced to be sold.

We Had to Charge Some of Our Daily Expenses to Get By. – Tracey

Steve Rhode — Tue, 31 Mar 2009 07:13:44 +0000

From How to Get Out of Debt

“Dear Steve,

My husband and I have over $65,000 in credit card debt. We have to charge some monthly payments, such as insurance, and all of our daily expenses so that we can pay all of our bills on time.

This, of course, just makes the credit card bills continue to go up. Bankruptcy is not an option because I hold a Government security clearance that is required for my job, and I’ll lose it if I declare bankruptcy.

Do we have any options?

Tracey”

Tanisha Wants to Cash Out 401K To Get Rid Of Debts.

Steve Rhode — Thu, 13 Nov 2008 20:28:20 +0000

From How to Get Out of Debt

Tanisha

“Dear Steve,

I recently recieved $137k into a 401k account from my ex-husband due to a divorce. I’m 35 years old, 2 kids, unemployed stay at home mother for past 8 years. I will receive spousal support until 2012. I no longer own any property or assets and I have $33,000 in credit card debts with interest rates ranging from 10%-18%.

With the stock market the way that is, I feel the need to cash out a portion of my 401k to pay off all debts. I understand that there’s a 20% tax penalty for cashing out and the 10% for early withdrawal is waived due to divorce.

Do you think that I’m making the right decision to cash out the 401k to get rid of the $33k in debts? The monthly credit card payments total approximately $750-$800 per month. If an emergency happens, I feel afraid that I don’t have extra cash around every month due to high credit card bills.

Should I cash out the 401k to get rid of the debts?

Tanisha”

The Answer:

Dear Tanisha,

Normally I am dead set opposed to using retirement money to pay off debts. But in your case, i may be willing to make an exception to that position.

Your situation is a little bit unusual in that you are an unemployed mother. It appears you have no money coming in except for spousal support and then this $137,000 401(k) windfall.

Normally I would suggest not touching the 401k money since it is there for your retirement and will grow to provide savings for you in the future. However, as an unemployed stay-at-home mom there is little chance of you repaying the $33,000 worth of credit card debt without finding a job and going back to work.

By paying off your $800 worth of credit card payments each month it will make it easier to get by on what little income you do have coming in, especially since that money will only continue for four more years.

The best case scenario is that you are able to find gainful full time employment and repay your credit card debt that way. Then you will be able to leave the entire $137,000 in the 401(k) and since the stock market is currently at very low levels, by the time you retire that investment will be worth a lot of money.

Outside of that you could consider bankruptcy, go bankrupt, discharge your credit card debt and leave the entire $137,000 in your retirement account. That would get rid of your debt and protect your 401(k) funds.

I think before you decide what to do you should discuss your options with a bankruptcy attorney. You can ask for a free bankruptcy review and use the session to become better informed about what your options are under bankruptcy to eliminate debt you cannot afford and protect money that is designed to take care of you when you get older. After talking to the bankruptcy lawyer you will truly be able to decide which path is best for you.

Big Hug!

@GetOutOfDebtGuy

The Answer:

Debt collection lawsuits increase in Wisconsin

Steve Rhode — Mon, 27 Oct 2008 15:20:18 +0000

From How to Get Out of Debt

More Wisconsin residents are being sued for failing to pay their credit card bills and other debts.

Court records show the number of lawsuits involving debts of $5,000 or more increased by 49 percent last year. They are on track to jump another 16 percent this year.

In some places, the number is growing even faster.

Waukesha County had more large claim money judgment lawsuits filed by September than in all of last year. Many were for failure to pay credit card debt.

Debt collection lawsuits increase in Wisconsin Chicago Tribune, United States - 4 hours ago Many were for failure to pay credit card debt . But the lawsuits also can include defaults on business, car and college loans. They do not include mortgage …

Click Here for Credit Card Debt Help

Source: Debt collection lawsuits increase in Wisconsin

Pam Is Out Of Cash And Out Of Time

Steve Rhode — Sun, 12 Oct 2008 03:09:34 +0000

From How to Get Out of Debt

“Dear Steve,

I am no longer making ends meet. I have my daughters Sallie Mae $20,000 loan payments starting in one month, I can only afford to put little bits of gas in my car at a time, I have a $5,000 car loan and about $12,000 in credit cards.

I have not bought anything that I did not need only used my credit to make ends meet and now I have no more credit. I’m hanging on to a 700 credit score and wonder if theres any use to even worry about keeping my score since the market is crashing and the FEDS are ruining our economy.

I make $45,000 per year and am a single mom with two daughters Should I stop paying my credit card bills and use that money to live off of?

Pam”

The Answer:

Dear Pam,

Often times the hardest thing to admit that a moment of change has been reached and now is the time for radical or bold action.

From what you so kindly shared with me it is apparent that continuing the path of yesterday will not work for you tomorrow. You have student loan payments getting ready to kick in and you are all ready maxed out.

It does not sound like there is any reasonable expectation that your income is suddenly going to increase and allow you to pay both the student loan and the credit card debt.

I would suggest that you only make payments on the credit cards if you can afford them after all your other expenses. You don’t need to file bankruptcy right now but it is probably in your future if things don’t change.

While you can’t discharge or get rid of the student loan in bankruptcy, you can contact the Department of Education and see about getting on an ICR plan to pay what you can afford. See this previous answer for more information on that.

It is unfortunate that you have found yourself in your current situation but I think most people would recognize that when you are in a situation where you can only put a little bit of gas in your car at a time, that things are pretty severe.

I would not suggest that you enter a debt management or credit counseling program. That is not going to help you as tight as your finances are. The best way out of your current situation is to increase your income or reduce your expenses. And with your budget already trimmed to the bone, getting into the Department of Education ICR plan for the student loans and discharging your credit card debt is probably the best approach at the moment.

It would also be a good time for you to explain the reality of your situation to the kids and ask them how they can help in this difficult time. Maybe your daughter, with the student loan, can contribute some money each month towards the loan.

The reason I think that is important is that it sounds like you are living month-to-month and all it is going to take, even with bankruptcy, will be one unexpected and unaffordable expense and being homeless won’t be that far off.

The thing I’m least worried about is your credit score. Take your eye off your credit score right now and find a way to live within your income without resorting to credit. And every extra dollar you can manage to save, put it in a savings account for unforeseen expenses.

I’m worried about you. Be safe.

Big Hug!

@GetOutOfDebtGuy

The Answer:

Lenora Asks The Squirrel – “What Should I Do About My Debts?”

Steve Rhode — Mon, 31 Mar 2008 16:17:43 +0000

From How to Get Out of Debt

Lenora wrote to me and asked:

Dear Get Out of Debt Squirrel,

What should I do about my debts? I am trying to set up a budget, but even with a budget, I can’t make all my payments. I need help now? I have over $23,000 in credit card bills and I want to get free of all of them. My husband thinks bankruptcy is the answer. But I am not sure God wants one to do that. Help!!!!!!!

My Dear Lenora,

While it feels like the walls are closing in on you and that you are living through desperate times, rest assured there is a way through this mess.

It doesn’t really matter what the number is that you owe. What is important is that there is not enough money coming in to take care of the bills.

As you say, even if you take your expenses down to the bare minimum, you still can’t make it from month to month. That is a clear indication that no amount of catching rain water to flush toilets, washing out Ziploc bags or reusing aluminum foil is going to do the trick.

Your husband has mentioned that maybe you should go bankrupt, and maybe you should. After all it is a legal and valid solution for dealing with overwhelming debt.

You mentioned what would God want you to do and I think it would be a mistake to automatically discount bankruptcy as an option simply because of what you think God might want for you. Think about it, she led you here for a reason and maybe that reason was to read this answer and to talk about bankruptcy?

Your options really come down to a few basic choices:

Do Nothing.
Increase Income and/or Reduce Expenses.
Go Bankrupt
Enter a Reduced Payment Plan.

Lenora, it’s not rocket science, just tough, difficult, emotional and gut wrenching. As a furry squirrel sitting on a distant branch the path you should take seems clear. Here is my plan for you.

Lenora’s Plan of Action to Get Out of Debt

First thing I would suggest if you need immediate relief from debt collectors or collection calls and you are not yet ready to go bankrupt is to enter a reduced Payment Plan where you can consolidate your debts.
I would also suggest that either now or as soon as you are ready you should talk to a bankruptcy lawyer. This doesn’t have to be with the intention of going bankrupt but to educate yourself about the realities of what bankruptcy means to you and your husband.
At some point following the meeting with the bankruptcy lawyer or during the early months of your consolidated debt plan you may decide that you can’t continue to make payments and live in the stress and pressure that you are currently in. You might opt for bankruptcy.

The advantages of this approach are that this does not force you to go bankrupt now if you are not mentally ready for it. And it allows you to make a good faith effort to repay your debt based on what you can afford to pay with professional help in the meantime.

Only you can decide if bankruptcy is right or wrong for you. But I ask you to consider this as you say your evening prayers. Lenora, do you have a greater responsibility to fix the past or attempt to fix the future? If you want to fix the future then it just might make more sense to go bankrupt now, get yourself back into a safe position where you can afford to live, and then if you have extra money leftover, you can always repay your creditor for moral reasons.

Going bankrupt does not mean you can’t still honor your debts. It just gives you legal protection and a fresh start, or you can keep living in the past. The choice is yours.

From a squirrel point of view I always prefer to hunt for as many nuts as I can and save them for the winter to come rather than worry about how many I didn’t have last year.

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How to Get Out of Debt With the Get Out of Debt Guy » credit card bills

How Do I Pay My Credit Card Bills and Still Have Money for Day-to-Day Expenses? – Maria

The Answer:

Other Related Articles to Read

We Have Four Kids, My Wife Works Two Days a Week, And I Don’t Know if I Should Pay the Bills? – Scott

The Answer:

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Banks in the UK Force The Sale of Homes Over Credit Card Debts

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We Had to Charge Some of Our Daily Expenses to Get By. – Tracey

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Tanisha Wants to Cash Out 401K To Get Rid Of Debts.

The Answer:

The Answer:

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Debt collection lawsuits increase in Wisconsin

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Pam Is Out Of Cash And Out Of Time

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Lenora Asks The Squirrel – “What Should I Do About My Debts?”

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