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

I Was Injured and Can’t Work. – Bill

Steve Rhode — Thu, 29 Mar 2012 15:01:17 +0000

“Dear Steve,

I was the only one working when I seriously injured my back and had to stop working and file for disability. We moved out of our home and in with family for free while my wife looked for a job. At the time I left my job I had 3 auto loans and 4 open credit cards and 1 Past due credit card I was paying off. I had all of my open credit cards for 10 years without ever having a late payment and had always paid my car loans on time as well. After leaving my job it took my wife 8 weeks to find a job and another 2 weeks to get a check. With very little savings and a 2 year old to care for I paid on all my credit cards as long as I could and luckily sold 1 of my vehicles for payoff amount and refinanced the other 2 in together so I would not lose my vehicles.

Now all 4 of my credit cards have turned me over to collections as well as the past due one I was making payments on. I am drawing $884 a month in disability and I know they cannot garnish my wages but what if they sue me.I really do not have the money to pay on these accounts considering a income of $884 for a family of three . We also live in government apartments,are on food stamps and my son is on medicaid. My wife is a stay at home mom due to my injuries I am unable to care for my child.

If my wife goes to work part time could they hold her responsible for my debts? if she was just a cardholder on my account could they hold her responsible? My son draws $251 a month from my disability, can they use his income in addition with mine to make the household income more or would his be excluded? If the creditor has summoned me to court and I have not signed for anything due to wrong address, would they win the case automatically? Family we were living with has lake home, does not check mail very often but checked mail today and found notice dated february 27th for me to come to sherriff’s office and pick up important documents within 5 days of notice. Would the creditor still be able to be awarded their case if I was unaware of court date?

Bill”

The Answer:

Dear Bill,

Wow, sorry to hear about your string of misfortune.

I can answer your questions generally but for specific legal advice you’d need to talk to a lawyer in your state. I am not a lawyer, just a guy trying to help.

If your income is all from disability or public benefits generally a creditor cannot garnish that money unless you owe the U.S. government, but they can still sue you, win, and get a judgment. That judgment may be attempted to be collected on for a number of years depending on where you live.

If your wife gets a job and earns money she should deposit that money is a separate bank account from your disability payments. We don’t want their to be any confusion about what funds are exempt or non-exempt from garnishment.

If you are sued and ignore the court date you are just about guaranteed to lose. Not showing up does not stop anything.

As far as your wife being responsible for some of the debts it really depends if she was a joint account holder or just an authorized signer. As a joint account holder she would be individually liable for the entire debt as well as you.

Since there is little expectation your life is going to return to the previous income stream you had before you were injured, you may want to think about contacting a local free bankruptcy clinic, that you can find here, and talk to them about possibly discharging your debt and getting a legal fresh start.

At the very least it would stop all the suits and years of possible action on these debts and let you focus on getting better and recovering. It would also eliminate your worry about if your wife’s income may be garnished.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

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’m a Retired Disabled Veteran And Student Loan Collectors Are Coming After Me. – Francis

Steve Rhode — Sun, 11 Dec 2011 18:03:05 +0000

From How to Get Out of Debt

“Dear Steve,

I am 67 years old and disabiled. I went back to college and graduated 1991. Because of various problems and surgeries, I was put on permanent disability, and was unable to pay back student loan. After a LOT of correspondense back and forth between the collection agencies and the Veteran’s Administration, I was told the loan was discharged back in 2004. I received a call the other day saying they are trying to close up loose ends and needed a letter from my doctor stating that I am permanently disabled, and they would send me a form to take to my doctor. THAT is not what I got in the mail. I got a collection agency letter stating I owe $36,000 for that student loan, and to send a check with my SS number on it.

How do I resolve this? I doubt the validity of this letter because they ask for my social security number on the check I am SUPPOSED to send them. This loan was discharged in 2004, and now they are coming after me again? I guess my question is….what do I do about this. Thanks !!!!

Francis”

The Answer:

Dear Francis,

This may be an easy problem to resolve.

First, I need to know if these are private student loans or government backed loans.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

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.

Financial Hardship Installment Loan. – Tracy

Steve Rhode — Sun, 04 Dec 2011 16:39:09 +0000

From How to Get Out of Debt

“Dear Steve,

I became disabled in 1993, and opened a bank account, purchased lfe insurance with Union Fidelity and 17 years later, with an immaculate payment record, and 750 credit record, the process for an unauthwith Unionorized draft on my bank, has crippled me, as I have not been able to work, and for two months my direct deposit did not happen (procedure for identity theft) but the bills came. The worst being a credit card ‘line of credit’ for 15000 which disapeared literally from the computer, and when the branch manager said not to worry, it reufaced with a 1000/min payment in collection and no life insurance, NSF hell. Filed with the OCC, spent a year tring to get someont to understand that I only needed around 2000 to get back to where I was financially, so I can pay off the 5 payday loan companies I juggled for a year to survive (gold and platinum) member and my 340 over flow on my checking that I always pay and reuse to stay afloat. So I’m sure I would not fail in making a payment of around 200-250/monthly like I

used to. I can’t get the help though., of course debt to income ratio and 605 (just got unlocked and in process of cleaning due to some form of identity theft of my ss#and the unauthorized draft) Am I stuck forever juggling and sweating bullets every month, or is there optional installment loan for persons like myself to get a second chance due to a financial hardship

Tracy”

The Answer:

Dear Tracy,

The short answer is there is not such a loan product. Even the unsecured lenders out there like LendingClub.com and Prosper.com that are more lenient have an approval process that is credit score based.

I know it might be water under the bridge but when you discovered the unauthorized withdrawal did you happen to notify your bank quickly? There are protections from liability for such discoveries. Read What to Do About Unauthorized Withdrawals from a Bank Account.

So am I right in assuming that your only income is disability related income and that you have little in the way of assets?

There are other ways of dealing with this situation other than yet another loan. You may want to use the free How to Get Out of Debt Calculator to review your options.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

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.

Are Their Free Grants I Can Use to Go Back to School? – Gayle

Steve Rhode — Fri, 11 Nov 2011 16:37:40 +0000

From How to Get Out of Debt

“Dear Steve,

This may be a difficult question to answer. After a series of potentially fatal illnesses & complications, I found myself on Social Security Disability at 45 years of age. Besides my pride being bruised (I had drawn a salary since I was 14 years old & often held down 2 jobs) I also had to discontinue my education which I was plugging through slowly but surely. I was getting student loans.

After I became ill & my income drastically reduced, I had to give up the new home I had purchased 5 yrs previously, & at the time, could not continue with my education.

Since I’m on Disability, I am hoping to use this time to continue my education with the ultimate goal to get back to work. At this time, I would probably need to stick with onine courses.

I truly want to use my time in a positive way & Then find a job that will accommodate my disability but allow me to be a productive citizen. Unfortunatelly, I had to default on my student loans because my disability income simply didn’t leave me with the income to pay them. From what I understand, the loans have been placed in an uncollectable status.

Is there any way to continue my education with grants I wouldn’t be able to pay back? Or pay back if I’m successful in getting my degree? Or am I just out of luck?

Any advice is very much appreciated. Thanks so much.

Gayle”

The Answer:

Dear Gayle,

The answer is there are probably some free grants and scholarships you can use to offset tuition. The best place to start this investigation would be with the financial aid office at the school you are thinking of attending.

They will have access to resources you can use to try to track down relevant grant opportunities. in addition you may want to run through the educational grants available through Benefits.gov.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

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’m a Disabled Air Force Veteran and Can’t Afford My Car. – Deborah

Mitch Goldstein — Tue, 08 Nov 2011 19:30:52 +0000

From How to Get Out of Debt

“Dear Mitch,

Used car. I started out July 2007 paying over 30% interest. Car is Mazda RX-8, 2004. I signed a contract for 7 years with some bank to pay $440.00 a month for 7 years. Now car payment is in collections since April or May of 2011. I’m retired disabled Air Force Veteran. I’m living on limited income now. When I signed for the vehicle, I was retired but employed. I am now considered unemployable, on Section 8 & limited income. The car is unoperable & the car was hit & I did not report the damage to insurance at the time. I no longer have insurance on car. Car has been sitting since March 2001. It will cost me over $5000.00 to fix. I owe the collection agency close to $15,000. I want to keep the car & fix it.

What can I do to keep the car? I feel I’ve paid way to much for this car already. Would I be able to SIF (Settlement In Full)? Or should I file bankruptcy again. Last bankruptcy discharge papers was April 2001.

Deborah”

The Answer:

Dear Deborah,

Why do you want to keep vehicle that doesn’t work, is almost 8 years old, that will cost over $5,000 to fix and that you owe over $15,000 to pay off? You cannot send them a check marked paid in full in the hopes of getting the lien resolved. You can contact the lender to see if they are willing to settle for much less, but I doubt you will be able to get the debt down low enough. Chapter 13 bankruptcy will do that, but based on your situation, it doesn’t sound like you have the money left to fund a plan AND I do not recommend Chapter 13 just to save a car.

There will be other cars. The money that you spent on it is gone. Do not make it worse by throwing more money at it.

Consult with a bankruptcy attorney to find out if any of your property or income can be seized by a collections suit (this stage happens after a judgment is granted). If not, let the car go and don’t worry about it. If you are collection proof, you have nothing to gain from a bankruptcy at this point. Sometimes doing nothing is the right option. Just do it after guidance and not as a way of ignoring the problem.

Mitchell Goldstein is an attorney licensed in Virginia. His practice focus is consumer bankruptcy, mortgage and debt defense and technology issues. He is a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA) and National Association of Consumer Attorneys (NACA). His goal is to educate people with solid advice and give guidance to consumers to help them made decisions that impact their financial well-being. His website is www.morethanbankruptcy.com

Legal Disclaimer: This is for educational purposes only. It is not to be relied upon as legal advice. It also does not create an attorney-client relationship. No such relationship is formed with attorney without a written agreement.

Disabled, Maxed Out, and Want Good Credit. – Kathy

Steve Rhode — Tue, 27 Sep 2011 15:20:01 +0000

From How to Get Out of Debt

“Dear Steve,

Credit cards are maxed out and living expenses keep going up. I am current on all bills. I use to work 2 jobs and had plans to be debt free by Sept. 2011, became disabled a little over 2 yrs ago and now am on a fixed income. I don’t want to harm my credit any more than I already have. I will need to purchase an inexpensive car in the near future. My credit is very poor at this time. Any suggestions? I will very much appreciate any advice you have.

Thanks,

Kathy”

The Answer:

Dear Kathy,

Thank you so much for writing me and asking for help.

It sounds to me as if you’ve found yourself in a situation where you are forced to make ends meet using credit to bridge the gap. That has resulted in you being maxed out. It is what it is.

The bigger underlying issue here is it seems you have little disposable income to meet your regular obligations and then pay additional back to your creditors each month, especially with increasing living expenses.

To improve your credit you’d need to reduce the balances on your cards down to below 35% of the credit limit and pay your bills on time. If we want to bring your credit score up we need a good healthy report of recent credit account activity to do that.

And while you want to bring your score up and buy an inexpensive car, just based on what you shared, I’m not sure I really see that happening. It seems unlikely that with your medical condition, fixed income, and rising living expenses that you will be able to dig yourself out of the financial hole you are in with maxed out credit. Ultimately you will most likely have to consider bankruptcy to eliminate your unmanageable debt or limp along.

Do you have any assets to speak of like loads of cash in the bank or real estate equity? If you do then that creates a different solution. If you don’t, then one of the solutions here is going to sound odd, but it would be to do nothing and let collectors come after you. They would not be able to garnish your income but would probably sue you and win.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

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 Am a Caregiver to My Quadriplegic Husband and We are Maxed Out. – Linda

Steve Rhode — Sun, 11 Sep 2011 20:10:19 +0000

From How to Get Out of Debt

“Dear Steve,

I am a caregiver to my quadriplegic husband since 2006.The credit cartds are at their limit,I didn`t help any by going overboard at x-mas.Also if something is or says medical it is expensive,and medicaid and medicare only cover so much. So I spend a lot on things for his care and put it on the credit cards. Also his transportation is expensive, we don`t have a van for him. Our tax lady does try to get us good refunds for things but it depends on amt all year.

How can I figure out a payment plan for the bills without cutting his necessities,one plan said to cut these, it is really getting hard to figure out.I have put the credit cards up and am trying to stay away from the sites I was buying things from. I just try to find something to keep us sane. It is hard for people to understand. He has ssi,and a small pension, I get paid by the state to care for him but it doesn`t pay really great,but it helps. So how can I figure this out?

Linda”

The Answer:

Dear Linda,

Well we have a number of issues going on here. Let me try to tackle them one-by-one.

Tax Refund

I’m a bit concerned that you are getting some “good tax refunds.” What that tells me is you are paying too much in tax each month and could make better use of that money on a monthly basis than waiting till once a year to get it. I’d contact your tax lady and talk to her about getting your withholdings adjusted so you can break-even each year instead of getting the big refund.

Additional Benefits

There may be some additional benefits you qualify for to assist you with his care. I’d start at Benefits.gov to explore all that is available. You may also want to spend some time on Disability.gov to find out more about free or low cost transportation alternatives.

Your Debt

At this point it is probably an unreasonable expect ion for you to be able to afford to repay your debt. That would require you to meet your minimum payments and also pay more on top of that to dig out of this hole. And since you were using the credit to help make ends meet, that’s most likely impossible.

I would suggest you start the journey to deal with the debt by reading How to Get Out of Debt. The Honest and Unvarnished Truth.

Your Spending

You mentioned something very important. You said, “trying to stay away from the sites I was buying things from.” To me that sounds like you may have been using shopping as a stress reliever or way to escape. I’m not criticizing you for that. It is what it is.

Moving forward it’s not going to be possible to keep up those activities. Rather than simply doing without, why don’t we focus on building better spending awareness so you can handle money consciously, rather than trying to medicate yourself with spending. I’d suggest you download a free copy of my book The Path to Happiness and Wealth and get yourself in a position to better handle your spending.

Bottom Line

We can deal with the past debt with bankruptcy to clean the slate, and that’s an obvious approach. You can click here to find a local bankruptcy attorney and talk to them for free.

But more importantly what we need to do is get your current life to fit within your current income without the debt.

Do you think you can make ends meet if you did not have the current debt?

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

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’m Disabled, On SSI, and Capital One is Suing Me. – Patrisha

Steve Rhode — Wed, 24 Aug 2011 15:02:52 +0000

From How to Get Out of Debt

“Dear Steve,

Capital one is sueing me for a dept. They want $880 which is the intrest rate, i don’t owe that. My minnim was $500. I go to trial September 15th i was with capitalone for almost 2 years, i just didn’t have enought to pay them, when i signed up i put down i am disabled and recieve SSI I wrote there lawyers and ask for all trascations were i paid and were i paid over, i have not heared from them.

The lawyers send me some thing to sign i did not. Due to the fact it’s untrue what they had in a buch of papers. One women was very hateful, told me to get a job, i have bad anxietys, One man said if i pay $5.00 he would drop the high intrest rate, i send a money order and ’bout 2 weeks later it stated thank me for my payment, but the intrest rate still applied, i called and the women said it was not exceptable, so i stoped, thats why i am going to trial.

I have been saving as much as i can (resipts

Ps.. i don't have a fax, nor an attachment.

Patrisha"

The Answer:

Dear Patrisha,

It sounds like you did have a Capital One card with a $500 credit limit and for whatever reason you have been unable to pay off the balance or make the monthly minimum payments on that card. Is that correct?

Additionally, you have no income or assets other than the SSI income you receive, correct?

Please post your answer in the comments section below.

Big Hug!

@GetOutOfDebtGuy

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.

Permanently Disabled and Needing 401k Cash. – Alan

Steve Rhode — Wed, 03 Aug 2011 21:07:35 +0000

From How to Get Out of Debt

“Dear Steve,

I am 50 yrs old and on permanate dissability. i make 1,300 a month from ss and 1,089 a month from an insurance policy through my last employer. i have a morgage for a mobil home of $250. the park space sewer trash ect. payment of $850. a month and a brand new car payment of $320. for the next six years. with insurance and living expences also i am paying back $190.00 amonth for a loan on my 401k.

i am having trouble making ends meet. can i get out of paying this loan back my 401k has $23,000.00 minus the $9,000 i borrowed three years ago. Can i withdraw the rest? I am barley sqeeking by each month and my park rent goes up 3 percent every year so does gas groceries ect. but my pay stays the same please help

sorry i got carried awy and ask question in background section if this is not acceptable i will try another day

Alan”

The Answer:

Dear Alan,

You can certainly talk to your 401(k) plan servicer and see if there is any plan that allows you to stop the loan payment or withdraw the rest due to your medical condition.

But the bigger concern is that the $190 payment is the difference between sinking and swimming. It seems like your budget is pretty close to the edge and regardless of the loan payment, all it will take is one big unexpected expense and you will be in a word of financial hurt.

Talk to your 401(k) service and then post an update in the comments section below.

Big Hug!

@GetOutOfDebtGuy

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.

LHDR – Legal Helpers Debt Resolution Says Creditors Can’t Touch Our Disability Checks. – Jean

Steve Rhode — Fri, 29 Jul 2011 19:25:15 +0000

From How to Get Out of Debt

“Dear Steve,

We had a credit card debt of $30,000. I signed up with LHDR and they are suppose to help me by negotiating with our CC companies. We have paid off 1 CC since signing on with them. We have gotten several letters that we would be sued. The attorney said we didn’t have anything to worry about because they can’t touch our disability checks. My husband and I both are disabled and have no other income.

Can the credit card companies put a lien on our house and property? They said they were going to when we got a certified letter from one of the credit card companies. I am hoping the same will apply to putting a lien on our property as it is for garnishing our check.

Thank you,

Jean”

The Answer:

Dear Jean,

If you have no assets and live solely on disability checks, why ion the world would Legal Helpers Debt Resolution sign you up as a client in the first place?

If the attorney says they can’t touch you then what are you paying them fees for?

If you have equity in your home or property the creditors could go after it.

Please tell me more about your situation by updating me in the comments section below.

Big Hug!

@GetOutOfDebtGuy

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.

It’s Been 25 Years and I Want the Old Student Loans Discharged. – Jennie

Lewis Roberts — Sat, 14 May 2011 15:35:01 +0000

From How to Get Out of Debt

“Dear Lewis,

Husband filed bankruptcy in 1985, released in early 1986 with two bank student loans of 2500.00 each. judge signed the final decree. my husband was 100% disabled at the time.now 25 years later ecmc is trying to collect 23,000.00 for those loans which they didn’t even possess until 2007.sued them the same judge who signed off then now won’t say they were included, he didmissed with prejudice

is this legal? was told we couldn’t apeal his decision , now what do we do before they try and garnish wages?

Jennie”

The Answer:

Dear Jennie,

Please see my post just recently regarding the history of student loan dischargeability.

In 1976, government student loans became non-dischargeable not until 5 years had elapsed from the beginning of the repayment period.

There is not enough information from your post to determine any sort of payment history, deferments, or lack of payments leading up to the bankruptcy filing in 1985.

You also state he was disabled at the time. But based on the tense you used, I am assuming he is not 100% disabled now?

But to be clear, getting student loans discharged based on disability is near impossible.

Also, being able to appeal a 1985 decision now is impossible. Too much time has lapsed.

There is the possibility of trying to get an administrative discharge of the student loans. Please see the following site for more information.

My name is Lewis Roberts and I’m an attorney licensed in Florida and Georgia. My practice focus is consumer bankruptcy, real estate issues/closings, and mortgages. I also have Florida real estate broker and mortgage broker licenses. I am a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA), National Association of Consumer Attorneys (NACA), and a graduate of Max Gardner’s Bankruptcy Boot Camp. I enjoy helping people with decisions that impact their financial well-being.

If you have a bankruptcy question you’d like to ask just use the online form.

I Am Living on Social Security Benefits, Filed Bankruptcy and American Express is Coming After Me. – Buddy

Jeremy Golden — Fri, 15 Apr 2011 16:15:33 +0000

From How to Get Out of Debt

“Dear Jeremy,

I am disabled with no job for 5 years now, and living on limited S.S. Disability benefits which is not even enough to pay my monthly mortgage. I (only me, my wife is out of the country) filed Ch.7 bankcruptcy almost 4 months ago and still awaiting for the discharge which is hopefully happening very soon. One of the creditors, American Express, who did not appear at my Creditors Meeting, files through their collection agency, an adversary summons – complain to determine dischargeability of my debt to them. The account belongs to my wife who has been away for 1.5 years with no assurance if she ever comes back to US. I am the one who uses this account which now has around a disputed amount of $10,000.

Buddy”

The Answer:

Dear Buddy,

I commend you for making it this far on your own in a bankruptcy. That is no small feat. As you know it is a highly technical procedure with many traps for the unwary.

This move by American Express, however, will require that you consult with an attorney in your area for assistance. You do not want to ignore the filing by American Express. And you need someone to look at the actual documents that were filed before they could advise you on how to respond.

Call your county’s bar association and ask them for a referral to a Legal Aid organization. If that doesn’t work see if a local bankruptcy attorney would represent you for a reduced fee or pro bono if all that is needed is to file a response to American Express. Explain to them that you are already 4 months along in your Chapter 7. I wish you luck and hope your discharge happens soon as well.

Jeremy Golden, Esq. is one of the resident debt experts here at GetOutOfDebt.org that helps people for free. Jeremy is a consumer rights attorney licensed to practice in California. He represents individuals in cases against debt collectors for violations of the FDCPA. He also focuses on defending people in collection cases who have been sued by their creditors or debt- buyers. In the last five years he has won at trial or obtained a dismissal in over 200 collection cases. Recently he was voted one of San Diego’s Top Attorneys in the field of Consumer Law by SDMetro Magazine. His website is goldencardona.com

If you have a debt collector question you’d like to ask just use the online form.

How Can I Get My Husband Out of Debt Without His Cooperation? – Caren

Steve Rhode — Thu, 10 Mar 2011 22:02:37 +0000

From How to Get Out of Debt

“Dear Steve,

Using credit cards for necessities. Have not used credit cards for 3 years but still paying them off. We have never been rich. Living in our current home we have managed to get our heating under some control but still over what we can afford.

Now electric is out of control because of extreme over (30%) increases. We have not had a 2nd car in over 8 years. Now I’m disabled (the doctors say if I return to any work I will be paralyzed in a few years as my cervical spine has 5 degenerating discs. My health is not great, but we do have good insurance. We now have a home that is not worth what we refinanced it for to get our most pressing credit cards paid off. We now have $6,000 in credit card debt; home mortgage 60,000 (2 loans). This may not seem like much but we are treading on thin ice. Nothing seems to work, but I’ll try again. My husband does not help in this. I handle all the bills. We have never had a “modern, lovely” home. It i s big but it is in need of a lot of work. We don’t have expensive things. We have never had a very large expensive car. We did away with cable, satellite. Our only entertainments are the internet and Netflix.

1. Is it a copyright infringement to rewrite your book for just my husband and I. It does not fit our situation. Our income should be enough to live on but things keep happening–increasing utilities cost. Our debt may only be 6,000 in credit cards; 7,000 car and 3.2% loan; 50,000 in student loans which are deferred because I cannot work and my name is only on them.

2. Will they make my husband pay the loans? We do intend to pay the loans–actually my daughter was going to pay it but she had to return to school as she could not get a job in this job market–she would take almost any legal and moral job.

3. How can I put a plan in motion without my husband’s cooperation. I take care of all the bills, but I have chronic, clinical depression and some financial habits and mental problems. Sometimes I freeze even when I have the money to pay a bill. As you can see our situation is not as bad as you describe in your book–it has been worse believe me, one bankruptcy, almost one legal problem that could have put me in jail; but we took care of all that.

4. Your budgeting categories do not fit our reality–no alimony, children at home, no fancy anything. I do get a little confused and tried to find. My focus is deteriorating with a TIA. I known I need to work on a budget but how do I deal with what my husband spends? We are currently getting help from the our church. Our hope and my goal is to be able to live within our means, debt free. But every time I feel I’m getting there something happens–oil prices for our heat hit almost $4 gallon (that’s $1200 for one tank which last a week during winter); We were able to miraculously put in a coal stove which has required only 3 tons of coal for the winter and 3 tanks of oil this winter. How do i deal with these things. This year electricity increased 50%; gasoline goes up steadily; but if we are careful and out of debt we can do it. But I do feel alone. Please, is there any hope if my husband does not join me?–he’s a good man and doesn’t spend money outlandishly; we’ve been married 45 years.

Caren”

The Answer:

Dear Caren,

I’m sorry to hear of the hurdles and obstacles in front of you. Your medical condition makes me wonder if we need to start thinking more long-term and winding up the debt so you can focus on doing better instead of worrying about this mess.

It also sounds like your home is too big for you and just more than you can afford to properly take care of, repairs and all, on the current income. Rather than just focus on the financial stress at hand this is probably the time to think bigger picture.

Not only is your home in need of repairs you can’t afford, but it sounds as if the utilities are pushing your budget to the limits as well.

Your situation is a good news, bad news type of thing. The bad news is that without some larger intervention in your situation you are probably not going to be able to budget your way out of this mess.

The good news is there are solutions.

The first thing I would do is find a local bankruptcy attorney and go talk to them. You may consider handing the house back to the bank, downsize your living arrangements to something more affordable and less of a utility drain.

You can click here to find a local bankruptcy attorney and if you’d like a second opinion about your situation or a personal consultation by another debt coach, please feel free to contact Damon Day.

Using this financial do-over you can shed all the debt you can’t manage moving forward. In light of you deteriorating health this is a prudent path to follow in order to set yourself up on a safer financial footing.

When looking for ways to increase the quality of like the two choices are to increase income or reduce expenses. Your situation certainly sounds as if increasing income is not a logical path to follow. So that leaves us with discharging the debt legally to end the unmanageable debt and prevent collection calls and future suits over the debt.

Second it sounds as if you are permanently disabled. If so, you might be able to get your student loans discharged instead of just leaving them in limbo. If you are totally or permanently disabled you may be able to get the full value of your student loans discharged.

Once we get the major regrouping done and get you headed off into a better future, then we can worry about budgeting and tracking. Until we deal with the bigger issues, budgeting will be as effective as wearing a band-aid while standing in front of a speeding train.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

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.

Disabled Former Cop in Student Loan Story Gets Her Debt Forgiven

Steve Rhode — Wed, 02 Mar 2011 23:35:32 +0000

From How to Get Out of Debt

by Sasha Chavkin, ProPublica

The Department of Education has finally forgiven the student debt of disabled former police officer Tina Brooks–who we featured in our Feb. 13 story [1] about the government’s broken program for forgiving the federal student loans of borrowers who become seriously disabled.

Brooks, who fractured her spine when she fell 15 feet down a steep rock quarry while training for bicycle patrol, had spent six years battling to persuade the Education Department that she was too disabled to work again. The department had repeatedly denied her applications for loan forgiveness, and more than $4,000 in interest had accrued on her debt, even though Social Security had found that she was fully disabled in 2006. (See our Interactive Timeline [2] showing Brooks’ struggles to cancel her loans.)

“I feel like this giant weight has been taken off my shoulders,” Brooks said. “Six years of filling out the forms and hoping it was the right thing and cringing every time I would hear I needed more information and had to go crawling back to my doctor.”

Our investigation–a joint effort with the Center for Public Integrity and the Chronicle of Higher Education [3]–found that although borrowers who develop severe and lasting disabilities are legally entitled to get federal student loans forgiven, the process for deciding who is eligible is dysfunctional, opaque and duplicates similar reviews conducted by other federal agencies. Many borrowers have been denied for unclear reasons, and many others have simply given up.

Following our story, the Education Department pledged to overhaul [4] the program and said it will propose new regulations this summer to make the system work better for disabled borrowers.

For Brooks, the approval of her loan discharge application comes just before the deferments she had received for economic hardship were scheduled to run out. She said she didn’t know how she would have paid the $47,500 that she owed on her loans and had been preparing for another struggle with Education Department bureaucracy when she found out last weekend that her debt had been forgiven.

“No more fighting. No more battling that windmill,” Brooks said. “I am so relieved.”

Disabled and Hoping the Department of Education Will Help With Your Student Loan. Read This.

Steve Rhode — Mon, 14 Feb 2011 23:10:48 +0000

From How to Get Out of Debt

By Sasha Chavkin, Cezary Podkul, Jeannette Neumann, and Ben Protess

This article is a collaboration among ProPublica and the Center for Public Integrity, which are independent nonprofit investigative newsrooms; and the Stabile Center for Investigative Journalism, at Columbia University.

It was co-published with the Chronicle of Higher Education.

Tina Brooks can’t sit or stand for more than half an hour before the pain in her lower back becomes intolerable. She suffers severe headaches and memory loss, and she has lost most of the vision in her left eye. Five doctors and a judge from the Social Security Administration have all determined that she is fully disabled and unable to work.

A former police officer and mother of two, Brooks fractured a vertebra in her back, damaged three others in her neck, and suffered a concussion when she fell 15 feet down a steep rock quarry while training for bicycle patrol. But even though Social Security approved her disability claim, she has been mired for more than five years in an unsuccessful struggle to persuade the Department of Education to accept that she is too disabled to work again — and to forgive the $43,000 that she borrowed in federal student loans.

“I’m a cop, and I know how to fill out paperwork,” Brooks says. “But when you’re trying to comply with people and they’re not telling you the rules, I might as well beat my head on the wall.”

Under federal law, borrowers who develop severe and lasting disabilities after taking out federal student loans are entitled to have their debts forgiven. The system was meant to be compassionate: to spare former students who become disabled from a lifetime of ruined credit, garnished benefits, and spiraling debt. But an investigation by ProPublica and the Center for Public Integrity has found that the process of discharging the loans of disabled borrowers is broken.

These borrowers, whose ailments often make it hard for them to navigate a complex bureaucracy, confront a byzantine system that has resulted in many applicants’ being rejected for unclear reasons, and has led many others to simply give up. Despite demands for improvement from Congress, the courts, and its own internal watchdog, the Education Department has repeatedly failed to heed basic recommendations for fixing the process.

An unpublished internal report by the federal student-aid ombudsman in 2009, obtained through a public-records request, urged the Education Department to resolve “fundamental deficiencies” in the disability discharge process. It proposed changes to address the problems of “no written medical standards for determining disability,” “no formal appeals process” for denials, and “undue burden and costs” on borrowers, who must obtain required medical forms from their doctors at their own time and expense. The ombudsman has twice recommended that the department consider scrapping its review altogether — and instead contract the decisions out to the Social Security Administration or other agencies with “mature and proven processes” for evaluating disability.

None of these recommendations has been followed.

The department has been more responsive to reforms ordered by Congress and the courts, but applicants have seen little change. Congress passed a law in 2008 creating an expedited loan-discharge process for veterans and easing the standard for discharge, from a full disability that is either indefinite or terminal to, instead, five years of full disability. In 2009 a federal court in Missouri found that the program’s communication with borrowers was so poor that it was unconstitutional, violating applicants’ due-process rights.

In 2010 the department put into effect changes including the facilitated process for veterans and the relaxed discharge standard ordered by Congress, along with a new online system for handling submissions that allows borrowers to check their application status on the Web. It also provides more informative correspondence and a more detailed application form for borrowers, steps proposed by the ombudsman and an internal department task force.

“We know that there have been problems and shortcomings with the system and the process for some time,” says a department spokesman, Justin Hamilton. “We have been working to remedy those, including the development and implementation of a new system to better serve the needs of this community.”

But advocates who work with student borrowers say they have yet to see those reforms reflected in the experiences of their clients.

“They’ve made some improvements now, to their credit, but I think the actual, on-the-ground practice of getting information to borrowers is still the same,” says Deanne Loonin, an attorney with the National Consumer Law Center and director of its Student Loan Borrower Assistance Program. “We’re still seeing the same kind of problems we’ve seen for a long time.”

Rejections Untallied

It is unclear how many borrowers seeking loan discharges are needlessly turned away, mostly because the department has released only limited data on the program. The statistics it provided show that from 2007 to 2009, the department received 174,718 such applications. About 45,000 were rejected or remained unresolved, but the data did not distinguish between the two.

The department did not provide reasons for its denials, or track how many borrowers were rejected during other stages of the lengthy assessment process.

For instance, borrowers are often rejected during an initial review by private lenders and nonprofit guarantors that are subsidized by the government. Those rejections are neither monitored nor subject to appeal within the department, despite recommendations by the ombudsman to either make the reviews more accountable or eliminate them altogether.

More than three-quarters of outstanding student debt is held by the federal government, according to statistics compiled by Mark Kantrowitz, an author and consultant on student financial aid. In the strict world of student loans, even bankruptcy is usually not sufficient reason for debts to be forgiven, and most private loans cannot be discharged for disability regardless of a borrower’s condition.

The Education Department says it has to set its own high bar for debt discharge — and not accept disability findings from Social Security — because of the tough standard set out for it by Congress. Other agencies can always cut off benefits if a patient recovers, it says, while the decision to discharge a loan is permanent.

The department also says that it must be vigilant in protecting taxpayer dollars against fraudulent applications to cancel loans. Until 2000 the department accepted discharges made by government-subsidized lenders. It added its own review only after an audit found that some borrowers were earning wages again after receiving disability discharges.

But experts say the current system often fails to provide disabled borrowers with the relief they are legally entitled to receive.

“It certainly would be a more ethical method, and it would also be more efficient to have the student-loan discharges rely on Social Security Administration determinations instead of having a separate duplicative process,” Kantrowitz says. The disability review by Social Security details the conditions that are eligible, explains how those conditions should be documented, includes a formal process for appeal, and pays for applicants to undergo evaluations by doctors.

Policewoman’s Frustration

Tina Brooks’s accident occurred during police training for bicycle patrol in January 2000, when she fell from her bicycle on an off-road course and tumbled 15 feet down the walls of a rock quarry. Despite years of physical therapy and a spinal-fusion operation, the back pain that resulted from her injuries got so bad that she couldn’t sit, stand, or walk for more than a few minutes at a time.

In 2004 her doctors told her that her condition was permanent. She applied to Social Security for disability benefits, and in 2006 a Social Security judge ruled that she was fully disabled. Brooks thought she was done proving her disability to the government.

But canceling her student debt turned out to be far harder.

Her application to discharge her student debt had been approved by the lender and the guarantor in 2005. But soon after her disability approval from Social Security, Brooks received a letter saying that she needed to resume her payments on her student debt. It came from Affiliated Computer Services (ACS), a contractor hired by the Education Department to provide customer service and manage information for programs including the disability discharge review.

It turned out that the Education Department had rejected Brooks’s application — but she had not received notice when the decision was made, and she had not been provided with a reason for the denial.

(Findings by the Government Accountability Office and meeting minutes from the Education Department show that officials repeatedly criticized ACS’s performance. In 2010 the department hired a new contractor, Nelnet, to handle disability discharges. ACS says borrowers received “a consistently high level of service” during its tenure. Nelnet says its communications and application processes are “intuitive, clear, compliant, and up to the department’s high standards.”)

In July 2007, on the advice of a customer service agent from the department, Brooks submitted her entire application again. This time, when she repeatedly contacted the department about her application, it told her that she had not provided enough information. Because the program has no written medical standards, no one could tell her what information she needed to provide.

“It’s so frustrating to not understand what they’re looking for,” Brooks says. “It’s like taking a college exam and it’s blank, but you have to fill in the answers.”

She turned to the federal student-aid ombudsman for help but was told that the department wouldn’t change its decision. “Current regulations do not provide for appeal of decision made by the Department,” the ombudsman wrote to her in August 2008.

So far, Brooks has been able to receive temporary deferments on her payments on the basis of economic hardship, through a separate process that is unrelated to the disability review. But the deferments are scheduled to run out this year, and she says she has no way of paying off her loans. More than $4,000 in interest has accrued during the years Brooks has struggled with the department, swelling her debt to $47,500. Citing legal obligations to protect borrowers’ privacy, the department declines to comment on her case.

Anxious to avoid default, Brooks applied again in December 2010 to discharge her debt. Her application is under review, and she has been advised to expect a decision shortly.

Brooks says that she hasn’t seen any improvements in the program, but that she has to keep on trying: “I don’t have any other choice.”

Disability Payments Garnished

An unpublished 2008 report by the federal student aid ombudsman gave a sense of just how common such failures of communication and bureaucratic obstacles are.

The report analyzed 106 borrower complaints related to disability discharge and found that in 36 percent of those cases, borrowers’ discharge applications had been rejected not because of any questions about their condition, but because their doctors had not adequately responded to requests for additional documentation.

Yet the borrowers were not told that. Instead, they received letters saying only that they were being denied because of “medical review failure.” In 23 percent of the cases reviewed in the report, the borrower had already been determined by Social Security to be disabled.

In some cases, borrowers see even their Social Security disability benefits garnished by the federal government to pay down their student loans.

Scott Creighton, a former carpenter and draftsman living in Tampa, Fla., was declared disabled by Social Security in September 2009. Three years before, he had suffered a pulmonary embolism — a blood clot traveled from his leg to block the main artery of his lung — that left him unable to work a full day or repay his federal student loans.

“The claimant has the following severe impairments: deep vein thrombosis, chronic obstructive pulmonary disease, and depression,” ruled Social Security Judge Christopher Messina. “Considering the claimant’s age, education, work experience, and residual functional capacity, there are no jobs that exist in significant numbers in the national economy that the claimant can perform.”

The Education Department is still collecting on Creighton’s student loans. Soon after the judge’s decision, Creighton began receiving calls from Enterprise Recovery Systems, a debt collector acting on behalf of the department. On the advice of a customer service agent, he requested a disability discharge of his debt and sent Enterprise his medical records and the Social Security judge’s decision.

In November 2009, Creighton received a rejection letter from Enterprise. It said he had failed to prove that his condition had not existed when he took out his loans, even though he obtained the last of his federal loans in 1993, more than a decade before the embolism.

Enterprise told Creighton he could apply to the Education Department to forgive his loans if he would never be able to work again. But although his condition is permanent, he still hopes to work one day. Enterprise never mentioned the law easing the standard for discharge to five years of disability, Creighton says, and he decided not to submit such an application to the department.

So, for almost a year, the Education Department has been garnishing 15 percent of Creighton’s monthly disability checks from Social Security to pay off his student loans. The department takes $170 out of his monthly benefit of $1,135, reducing it to $965.

“One hundred and seventy dollars may not seem like a lot, but I make less than a thousand a month on fixed income,” Creighton says. “That has a huge effect on me.”

Interactive timeline: Calls for Reform and One Borrower2019s Struggle

Disabled on Fixed Incomes With Bills. – Alice

Steve Rhode — Fri, 12 Nov 2010 01:56:03 +0000

From How to Get Out of Debt

We are both disabled and have fixed incomes,& SEVERAL medical bills. When they call about payments they insist that we pay minimum $25.00 for each bill,when I tell them I am on a fixed income they don’t care, they still insist that $25.00 is the least amount that they will take as payment each month until the balance is paid in full. Is this legal? Between deductibles, medications and extras I just don’t know what to do.

Thank you.

Alice

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@GetOutOfDebtGuy

How Do I Prove I’m Disabled to Get My Student Loans Wiped Out? – Christina

Steve Rhode — Tue, 09 Nov 2010 01:47:24 +0000

From How to Get Out of Debt

I went to school for nursing, i have been out of school for 12 years i have 25,000+ with intrest and fees because i had to fight for disability for over 4 years.

I was awarded my disability after seeing a “goverment appointed” Dr. but my own Dr tell them that i should be working 8 hours a day while standing 2-3 hours a day. I am in pain just sitting at a computer for 2-3 hours a day.. through the whole day not for that straight. I live on pain killers, to make it through the day. if i stand for a hour i am so stiff that i can not move for the rest of the day. How can i get the goverment to understand that my DR is crazy and the other dr who gave the determination physical was correct. ( i do not know the name of the Dr who i saw when it was my ssdi appt.)

Is there a way to get the determination physical, and can i use that for a discharge for student loans. ( i am quickly drownding because of the almost 200 a month that they are taking from em each month)

Christina

Click here to help people to get out of debt.

This reader question was submitted for site members to answer.

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

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@GetOutOfDebtGuy

I’m Disabled. My Husband Left Me With All the Credit Cards in My Name. – Jenell

Steve Rhode — Thu, 28 Oct 2010 15:04:53 +0000

From How to Get Out of Debt

My X-HUSBAND HAS LEFT ME AND ALSO LEFT ME WITH ALL OUR CREDIT CARDS WHICH I WAS NOT SO SMART ABOUT NOT PUTTING IN MY NAME. I AM ON DISABILITY AND RECEIVE A VERY SMALL PAYMENT FROM THEM NOT ANYWHERE ANY WAY CLOSE TO PAYING FOR THEM AND ME LIVING TOO

I NEED TO KNOW OF A GOOD COMPANY OR SOMETHING THAT CAN HELP ME WITH THIS PROBLEM .SOMEONE I CAN GET FREE SERVICES FROM IF POSSIBLE.OR ANY SUGGESTION YOU HAVE IN SOLVING THIS MATTER. I AM AT THE END OF MY ROPE AND JUST ABOUT READY TO DO SOMETHING DESPERATE i AM REALLY SCARED AND NEED SOME ADVICE.PLEASE HELP ME Thank you jenell

Click here to help people to get out of debt.

This reader question was submitted for site members to answer.

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

If you have a credit or debt question you’d like to ask just use the online form.

@GetOutOfDebtGuy

My Husband is Disabled and I’m Not Sure What to Do. – Athena

Steve Rhode — Sat, 23 Oct 2010 20:48:11 +0000

From How to Get Out of Debt

“Dear Steve,

My husband ,42,became disablied this spring, and just won his disability last month. So far all the doctors, including local univerity hospital, have been unable to diagnous the nuerolgial problem, but guess it will continue to get worse until he is unable to talk and move. He can still do many thing now, but cannot walk unaided, or type well. Use to earn about $100K. We have two girls, 9 and 13. I have been a stay at home mom for 9 years. We live on an acre, with a mortgage of $165,00, house tax value about $280,000. The girls have been in private school, and we own a motorhome, owing $78,000 on it,. It blue books at $75,000 but we don’t think we could sell it for that.

We are at a sudden crisis, as his very generous ex-boss paid him full wages and benefits before the social security money came in, and p romised us the difference after the benefit came. Now he is unable to give us any more. So we are forced to find a Plan B. We pulled $20K out of his 401K to pay for medical bills and a major remodel to accomate my husband downstairs in his wheelchair. We only have $40K left. I do not have any money in a 401K. With only the disabilty money we are almost $1500 a month short of what we usually spend.

How do we decide what to sell and how to downsize? Should I go back to work and leave my husband at home (I don’t feel safe doing that), and with my skills my income couldn’t cover all current expenses. My husband wants to sell the house and move the family into the RV, touring the country and spending his last few good years together, homeschooling. Another idea is to sell both house and RV, and move the family into a mobile-park, buying the mobile-home with the equily.

Thank you for your time.

Athena”

The Answer:

Dear Athena,

I actually like your husband’s plan. If his time is limited and his condition will grow worse it does not seem like being able to travel and spend more quality time with you guys is a bad idea. Actually sounds like something I’d do.

The key here is that no matter what you do you will need to be able to live within the disability income now coming in. Taking more money from investments to pay for things is a dead end road.

You’ll also need to think ahead about what will happen if or when the time comes that he needs to settle down in a place without wheels. How will you care for your family then?

But for now, enjoy your travels, your time together and cherish those wonderful memories you will create. Take lots of pictures!

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.

Back When I Was Good at Making God Behave I Was Making Good Money – Julie

Steve Rhode — Wed, 29 Sep 2010 20:40:18 +0000

From How to Get Out of Debt

“Dear Steve,

Back when I was good at making God behave I was a pharmaceutical salesperson making over $90,000 a year. I had no credit card debt and purchased a home that I could easily afford. I also had $150,000 in my 401k and was and was starting to put money in a Roth IRA.

I got married and had a reverse pre nup that my husband requested to protect my assets as my husband owed money to the IRS. I was 37 and anxious to start a family. I got pregnant and had a stillborn son.

I went back to work and got pregnant again and had another son born 13 weeks premature. He had a horrible stay in the hospital and has severe brain damage. He is multiply impaired and I am going to dedicate my life to his care.

While all this was happening my husband had taken out credit cards with high limits in my name that we were living off of. I signed all the applications. My husband “does deals” and has done very well in the past. I knew when I married him we would be up and down and I thought I could handle
him not having a steady paycheck. He got one deal closed where he made $400,00 that he refused to pay off our credit card bills saying we needed to save the money.

We bought tvs, washing machine and dryer all on credit. Those have defaulted. We have $60,00 in credit card debts and I now have 3 mortgages on my home. The 3rd mortgage was a home repair loan and it has expired.

I never once paid late but I now have a credit score of 420 and they won’t refinance. They have told me to take the $40,00 that I owe to another bank to refinance. They are now sending me letters about being in default.

I am 1 month behind on my first mortgage and they have reported me late the past 2 months. Because I took $50,000 out of my 401k a couple of years ago I now owe the IRS $8,000. I am currently paying them $400,00 per month. I have worked out deals with my creditors where they waived late fees and gave me low intrest rates. I have been paying as agreed for over 1 year.

My credit score is still so low (420) that I don’t see that it is helping me. They said my credit report would show closed by customer paying as agreed. The balances are barely moving at all and now that I am paying the IRS I have no extra money. I cannot afford to pay my credit cards like I have been.

I currently receive $3000 a month from social security because I am disabled from depression. I also get $1500 a month from Cigna because I get long term disability from Pfizer. I was already on my knees from having a child die and then one that is disabled.

My husband keeps saying he is going to get us out and not to worry but I have learned that it is up to me. The house and the credit cards are in my name. To make matters worse I have two story house and my son has cerebrel palsy and can’t turn over at 3 much less walk up stairs. I will eventually have to get a one story house or continue to carry him up the stairs. I have such severe depression from the turn my life has taken that to add on the financial burden is just too much,

Going back to work wouldn’t help because I would lose the long term disability and social security will pay you for 9 months while you see if you can go back to work but any school that could take my son would be thousands due to his level of care. I don’t trust anyone to take care of him like me. He is 3 years old and 20 pounds and can’t tell me if someone doesn’t treat him right.

Help me. I have never been in such a fiery trial in all my life. Peopel that judge people for taking bankruptcy should hope lightening doesn’t strike them. I did everything right and life just happened to me.

Julie”

The Answer:

Dear Julie,

Wow, that’s a lot to go through.

I’m not clear after reading your story a couple of times, did you already file bankruptcy?

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

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 Have No Income and My Disabled Sister is Living in My House. – Steven

Steve Rhode — Wed, 22 Sep 2010 17:39:19 +0000

From How to Get Out of Debt

“Dear Steve,

I’ve been unemployed since September 12, 2008, the day of Hurricane Ike. I’m about to recieve my final Emergency Unemployment beneft within 2 weeks. I have absolutely no other income, nor job prospects.

I have a home which is rented out to my sister whom is disablef and unable to ever work. Those payments are current, but I have $15,000 dollars in credit card debt and over $3,000 in medical expenses.

My vehicle is current but will not be able to make my July’s payment or insurance and thereafter. The remainder balance is just over $15k. Umeployment was barely keeping me afloat for the time, but have no ideal what to do.

I cannot get my meds nor qualify for assistance, since I made over the required limit back in 2007. I don’t understand why most agencies want to know what I made 2 years ago to make a decision.

I have no savings, and only $12.52 in my checking acount.

Can I file Chapter 7 and do I need to include my home, which is rented out to my sister. I”m not making any money on it and I did it out of the kindness of my heart so she would have a place for her and the kids.

I feel so ashamed, and mad at the same time. It’s unfair that CEO’s are protecting their pockets and I get the shaft.

Please advise,

Steven”

The Answer:

Dear Steven,

Fairness, you’re looking for fairness in an economic downturn. You will be grossly disappointed if fairness is the yardstick.

As far as specific Texas laws or regulations, you’ll have to speak to a Texas bankruptcy lawyer. Make some local calls and find a local bankruptcy attorney to go and meet with. Most offer a free bankruptcy consultation appointment so it won’t cost you anything.

It is unfortunate that you are down to the last check and just now searching for a solution. When you are up against a wall like you really have few, if any, good choices.

I certainly understand your desire to keep the house for your sister but it is your asset she is living in and that creates a problem. I can’t imagine that the law looks at her presence as anything more than a tenant. But maybe you an the Texas bankruptcy attorney can come up with something clever.

Big Hug!

@GetOutOfDebtGuy

My Husband is Disabled and We Can’t Afford Our Home Business Anymore. – Jennifer

Steve Rhode — Tue, 14 Sep 2010 19:58:56 +0000

From How to Get Out of Debt

“Dear Steve,

My husband is disabled, and we have a home retail business that is suffering tremendously. We have about $35000 in credit card debt due mostly to our business. We have never had a late or missed payment, but we cannot afford the minimum payments on these cards anymore. We have cut everything out of our budget that we possibly can. We are only paying for necessary utilities and food. I also have a student loan that I pay every month, and my husband has a court ordered child support that we cannot afford to pay. We basically are living on his social security disability and have 3 children.

Thank you for taking the time to answer our questions.

My questions are:

1. What would be our best option for handling our inability to pay our debt?

2. We live in Arizona and own our home. No mortgage or liens. Can we lose our home? If so, how do we avoid that?

3. Is there a way to prevent bill collectors from calling our friends and family?

Jennifer”

The Answer:

Dear Jennifer,

It sounds like even though you have not missed a payment or been late that the business has been running negative for quite some time. Up till now it’s just that you managed to hide that by using the cards to make ends meet when they otherwise wouldn’t.

Ultimately what you need to do is to click here to find a local bankruptcy attorney to talk to.

Here are the answers to your questions:

1. What would be our best option for handling our inability to pay our debt?
A. Bankruptcy is the most logical solution since there is no expectation the current income will ever be able to remedy the debt the only real option is bankruptcy.

2. We live in Arizona and own our home. No mortgage or liens. Can we lose our home? If so, how do we avoid that?
A. Discuss this with the bankruptcy attorney when you talk to them.

3. Is there a way to prevent bill collectors from calling our friends and family?
A. Yes, step up and deal with the unmanageable debt. The only reason friends and family are getting calls is because you are potentially not taking creditor calls and have not addressed the problem. After you file bankruptcy the collectors and creditors may not call anymore.

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

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.

My Disabled Husband Wants to Take Money Out of Retirement to Pay Credit Cards. – Stacy

Steve Rhode — Mon, 06 Sep 2010 20:29:58 +0000

From How to Get Out of Debt

“Dear Steve,

My husband is 53-1/2 years old and recently put on permanent disability because of numerous complications from diabetes. He also will be receiving a small pension from his former employer.

We understand that he will not be penalized (10%) for touching his 401K since he is disabled, but will be taxed on whatever he draws. He has an option to withdraw, rollover into another IRA or just leave money until needed. I am his wife and I am 49 years old. I am working and feel my job is stable, but you never know in this economy.

I currently put away 401K at a rate of 18% of my pay of $73,000/year. My employer contributes towards my 401K too. Since my husband is not able to go back to work, we no longer have the two full incomes. We have a large mortgage of $675,000, substantial credit debt of $45,000, a home equity loan of $50,000. We were doing okay while we were both employed, but since the credit card companies have substantially raised interest rates and minimum payments, we are finding it more difficult to stay afloat and save anything.

Some of the credit cards have raised their monthly minimums from $200/month to $500+/month. Because of the increase in interest/minimum payments, we feel that we are going through our small savings quickly and can’t replenish it. All our dollars are spent for mortgage, bills, etc.

My husband is thinking to draw some money to pay off the higher interest/minimum payment cards OR all the credit card debt entirely. Do you recommend this? He feels that we won’t be able to stay afloat at this rate. We have good credit and would like it to stay that way. If we can get rid of the credit cards and put them away, we feel we will be in good shape.

Thank you

Stacy”

The Answer:

Dear Stacy,

Thank you for your question. Your situation is one of change. If all things had stayed the same then the life you had created would not be impacted. But one of the critical cogs changed and now it is an entirely different situation.

As you said, “We were doing okay while we were both employed…” and now you are not. And there is the problem.

You are both relatively still young in todays life expectancy. Your husband could easily be around another 25 years, and years with no income coming in. You’ll have to be able to get by on the money you have saved, the retirement funds, the small pension and some social security. Trust me, it is never enough.

In my opinion I think it is a colossal mistake to tap the retirement funds to service or pay any amount of the credit card debt. Here is why.

Since your husband is no longer earning money, anything he has saved in his retirement funds will have to carry him through the rest of his life. As long as those funds remain in his retirement fund they are protected from the creditors. If he gives up those funds to pay debt the debt may be paid off but he will be significantly poorer and less able to care for himself for the next couple of decades, or more.

You’ve already noticed symptoms of this problem when you say “… we feel that we are going through our small savings quickly and can’t replenish it.” That’s right, because you can’t. Your retirement funds are more precious than water to someone who needs to cross a long hot desert. These are dollars that can’t be replaced but will be needed to prevent you from falling into a less than optimal situation.

So, now for the tough part. This is the fact that you have not wanted to face, but we have to. Your situation has changed. The equation has changed. And no matter how much we want everything to remain as it was, it can’t.

The loss of the income from your husband has changed what you can afford. You now need to adjust your life to be based on your income and the money he receives. That change is going to alter what you can afford to pay and potentially where you live. I don’t know if you can continue to afford it. Everything must be on the table for consideration here.

As part of that change and the changes you MUST make to get your life back in alignment with your current financial state. So what are the options then? Everything. In a perfect world change would not be necessary. But then again, in a perfect world he would not have become disabled and lost his income that was helping to keep your boat afloat.

Unfortunately you have uncovered the prime problem with debt agreements, they are absolute, but life isn’t. When you sign for credit you make a promise to repay, every month, a minimum amount of money in accordance with the terms the creditor stipulated and you agreed to. But life gives us no promises through the term of the loan that it will guarantee us a minimum amount of health, happiness, or anything. And therein lies the problem.

I do have some questions that I’d like for you to answer so I can guide you further. Just post your answers here in the comments section of your question.

Is this credit card debt in both of your names?
I assume the home equity loan is in both of your names. Is that correct?
You owe $725,000 against your house. What is it actually worth? How much equity do you have?
Would you rather make life adjustments or lose retirement funds and remain where you are?
How much does he have in retirement funds that he can touch?
How much money do you have left in savings or an emergency fund?

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 Went Bankrupt in 2005, I am a Disabled Vet, and My Student Loans are Coming Due. – Ben

Steve Rhode — Tue, 22 Jun 2010 21:31:17 +0000

From How to Get Out of Debt

Ben

“Dear Steve,

I am about to turn 30 years old and my financial picture is basically in the dumps. I have a B.S. in accounting and for the moment a good job that pays me less than 95% of the rest of the world makes (less than $30k/yr and not a single benefit). I am a disabled Vet and get approximately $450/month from the VA. Since getting out of the military (due to a pretty bad eye condition) my work history is spotty. I recently learned (through the help of a family member who is a nurse) that I have an extreme case of ADHD. That, coupled with bad eyes, makes it nearly impossible for me to work on a cpu for any length of time.

I’m also having to take off work to drive 90 miles each way to the eye doctor, at least once a month, many times several times a month. I think these 2 things have made holding a job very difficult as no one wants to hire someone who has the issues I have (had several potential employers tell me they don’t like my eye issue, so no job).

Because of my work history, I had to declare Ch. 7 back in 2005. Since then, I started rebuilding my credit and was doing pretty well. I had a decent job, 3 credit cards with decent balances and all were being paid on time every month. Then the economy tanked and I lost my job. I ended up being unemployed for almost 6 months. 2 of the 3 credit cards are now with collection agencies, along with some other bills for a total of approx. $8000. I also lost my car that I had owned for about 6 months. They have yet to auction it off, but I’m guessing that I will owe approx. $20,000 once the final figures arrive.

Oh, I do have about $30,000 in student loans that I have to start paying back in June.

My question is this……….where do I start? Some have said to save $500 first and then pay off the accounts, smallest balance to highest balance. Some have said to save a little bit, but put the majority of extra money towards paying things off. Some have even said to save up 3 months of expenses and then start paying things off…….which to be honest would probably take me at least a year to save up that much.

I hope to have a change in living expenses during the summer, but at the moment I want to get whatever done that is possible. I’m looking at maybe getting married soon and its not fair for me to bring this baggage into the marriage if at all possible. I just don’t know where to start this endeavor of getting debt free.

Ben”

The Answer:

Dear Ben,

First off let me tell you how much I appreciate your effort to serve in the military. It can truly be a sacrifice.

I think what we need to look at here is what reality is for you and then where do we go from there.

The undisputed facts are that you:

have an ongoing ophthalmic condition which impacts your eyesight in some way. You also may have some sort of adult attention deficit disorder which makes it hard to concentrate.
are gainfully employed and as long as you are not living in a major metropolitan area you might be able to get by on what you are earning. Plus you get a monthly VA benefit that supplements your income.
previously had a chapter 7 bankruptcy in 2005.
have student loans are going to begin soon.
are going to be getting married in the near future.

The question about how to best pay off debt is really based upon your personality. For you, when you do start to repay these past debts I would suggest that you pay off the smallest balance debts first. Here’s why.

You’ve given me every reason to believe, with your history, that you will do best with frequent positive reinforcement to begin your debt journey. The best way to get that is to actually eliminate debts that you owe. The joy of having one less creditor to pay next month is a great feeling to have. With the encouragement of knocking off the smallest creditors first, and then only leaving you with one or two long term creditors to pay off, you can then focus on those. This is the debt snowball method of reducing your debt.

Your repayment dollars available is going to be determined by how much is leftover after making your new student loan payment. The student loan payment is going to be a top priority for you. After that I would make at least the minimum payments due on your other debts and then save the rest of your cash in a boring old savings account.

You will need to have cash on hand in case you were to lose your job or for some other unexpected expense. And you statement that it would take a year to save three months of expenses just tells me that you don’t have much cash on hand right now. The more you can save, the better you will be able to face any unexpected expense in the near future. I’d suggest that you at least cram several thousand dollars away first as a start.

Regarding the marriage situation. I think that if you have an open and honest discussion with your girlfriend about where you stand and what life would look like when you combine your income and expenses, that it will help. You also need to have an idea of what, if any, debt she is bringing to the marriage. Better to be open and honest now than surprised and upset latter.

Debt is not a good reason to avoid love and happiness. Hell, it’s like saying she would not want to marry you because you have an eye condition. It just is what it is. It’s a thing, or another condition.

My biggest concern is the bill you are going to get from the car repossession and auction. It is going to be a doozy and if the payment demands become too much for you to cope with, between that and your other debt, there is always a chapter 13 bankruptcy to force a payment plan you can afford. That payment plan would be at 0% interest and would be determined after reviewing your income and expenses, rather than what the creditors might demand from you. By the way, student loans can’t be included in bankruptcy.

Big Hug!

@GetOutOfDebtGuy

My Husband and I Are Both Disabled Seniors With Payday Loans. – Margaret

Steve Rhode — Wed, 16 Jun 2010 16:11:38 +0000

From How to Get Out of Debt

“Dear Steve,

My husband and I are both diabled senior citizens, we also have custody of a great grand daughter,We are on s.s and receive a small amount fro state to care for her. I am really in a bind at this monent, I borrowed fom the pay day loans over several years, and finally it caught up with me, because I coulc no longer keep up with the fees and pay neccessay living expenses. I am now stessed out , what can I do? I know I should not have went there,but I had to try to make ends meet.

Margaret”

The Answer:

Dear Margaret,

It sounds like you should contact the pro bono bankruptcy assistance group in your state and see if you qualify for free bankruptcy help.

Bankruptcy will end all legal obligations for these debts and allow you to move forward. Otherwise you option is to not pay and let them sue you. Without assets they would not be able to collect on it.

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

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.

Thu Wrote Me And Said “I’m Really Struggling, My Husband is Disabled, How Can I Get Out Of Debt?”

Steve Rhode — Sat, 10 Apr 2010 16:38:02 +0000

From How to Get Out of Debt

“Dear Steve,

I’m married, my husband is disabled. I have 3 growing children and a 6 year old disabled child. My payroll checks go straight to bills. I use the credit card for foods and miscellaneous household items. I’m really struggling.

I go to work in deep depression and stressful almost everyday.

How do I get out of my debt? I’m not the type of person that always go shopping or buying stuffs that I don’t need. Please give me some advice that can help me go through this tough situation.

Thanks,
Thu”

Dear Thu,

First, let me offer you a big bear hug and give you my virtual shoulder to lean on. I’m so sorry that you are living through this right now and I can feel, from your words, how oppressive and stressful it must be.

Your open statement about the “deep depression” you are living with, concerns me. Depression is not conducive to getting out of debt. In fact, living with depression leaves you unable to make long-range plans, unable to follow through, unable to execute comprehensive plans, unable to deal with the hurdles that you face every day.

If at all possible I’d like for you to seek help for your depression first. This might be through talk therapy or medicine or a combination of both. If you can get help for your depression then facing your situation will become easier to deal with. Here is a list of places you can go to get help with depression and some of them may be free for you.

I don’t know what the balance of your bills are right now but I am sure they are growing since you mentioned that you are using the credit cards to pay for food and household items. That is never a good sign. What that tells me is that you can’t afford to live within your current income and that’s a huge problem.

Now is the time to search for benefits that may be available for you. You may be eligible for government benefits and you can search here for those.

Unless you are able to increase your income or reduce your expenses, then getting help with medical, assistance, housing and food benefits will be critical to you.

While bankruptcy is an option to eliminate your bills, if you can’t live within your income now, discharging your bills in bankruptcy isn’t going to help you to make it from day-to-day, that is unless the money you are paying on your bills now would help to bridge your cash valley you have right now.

If you want to learn more about bankruptcy, speak to a bankruptcy attorney and ask for a free bankruptcy review.

I think the best your solution will lie in a three step approach:

Treatment for your depression.
Discovering benefits you are eligible for.
Bankruptcy

Big Hug!

@GetOutOfDebtGuy

I’m Bipolar, Disabled and In Debt. – Christinia

Steve Rhode — Tue, 09 Mar 2010 21:14:56 +0000

From How to Get Out of Debt

“Dear Steve,

Declared disabled by Mental Illness a few years ago. Have nearly 20,000 in credit card debt. Currently vollecting ssd and working a menial pt job. Cards were opened before breakdown when i had a good job. Can not work like that any longer. All my pt job money and SSD extra go to paying this debt. Did stupid things like bought daughter a used car and just paid her bills all from in & out of bipolar. Can I at least get it cut down. i am nearly 57 yrs old and don not need a good credit scaore any longer I will never own a house or buy a car. i will be paying this down until I die. It adds to my depression and anxiety.

Can I get debt cut down? I have been paying at least minimum , never missed. It is slowly killing me. I took trip to alaska to say ggodbye to son going back to iraq and see grandkids in 2008…..I try not to use cards anymore. they cut my credit down and raised by interest rates. I am so sad and tired . Can I do anything?

Christina”

The Answer:

Dear Christina,

Some might tell you since you are in a position where creditors can’t seemingly garnish your income to just do nothing, but not me. Seeing how this debt is behind you now I’d rather see you address it by talking to a local bankruptcy attorney. Here’s why. There is no part of your life that is going to be served in a positive way by you dealing with debt which there is no expectation you are going to be able to repay. Collection activity and lawsuits at this point will only serve to aggravate you and your mental health but not result in satisfactory outcome for your creditors.

Because of your financial condition and your disability you may be eligible for free legal help to file bankruptcy, click here for to find a free bankruptcy attorney.

Once you go bankrupt and close the door on this old debt you can then focus on moving forward, living within your benefits and taking care of yourself for a better tomorrow.

Big Hug!

@GetOutOfDebtGuy

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 Want to Lower Our Payments Without Bankruptcy. – Tina

Steve Rhode — Mon, 01 Mar 2010 16:36:14 +0000

From How to Get Out of Debt

“Dear Steve,

My husband became disabled in 2007. We have struggled to keep ours bills payed ever since. He draws a social security check and I work two jobs, but it is still hard to get by.

We have a 12 year old son. We owe $5751 for a four wheeler. We have been paying on it for two years and have only got $1000 paid. When we bought it, the company put it on a card of some type.

We live in a single wide 1973 mobile home. I had to borrow money against it, to pay help pay our bills. We owe $4,4656 on it. I believe it my be on the land instead of the trailer. I have a credit card that I owe $1,143 on. We also have a truck payment of $344 dollars a month. We still owe $13,607 on it. We were making it fine until he became disabled.

If you have any ideas how I might lower my monthly payments without bankruptcy, I would appreciate it. I don’t mind it taking longer to pay off my debts. I just want to be able to make my payments without having to worry about it.

Tina”

The Answer:

Dear Tina,

So sorry to hear about your struggles.

The only way to lower bills without bankruptcy is to either renegotiate the terms of the loan, which isn’t going to happen, with your types of debts, or wrap them into a new loan. I suggest looking at LendingClub.com for an unsecured fixed rate debt consolidation loan.

Outside of that bankruptcy is your best option. It is a legal solution that provides you with the most consumer protection from creditors. Click here to find a local bankruptcy attorney and at least talk to them about it to discover what it would do for you in your specific situation.

Big Hug!

@GetOutOfDebtGuy

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 Am Mentally and Physically Disabled and Can’t Pay My Student Loans or Bills. – Callie

Steve Rhode — Tue, 15 Dec 2009 14:50:00 +0000

From How to Get Out of Debt

“Dear Steve,

I am currently disabled due to both mental and physical ailments. These problems have been exacerbated by chronic unemployment (and therefore poor medical treatment) over the past six years. Now, I couldn’t even work if anyone did offer me a job.

I receive state assistance because I am medically unable to work. I get $339 a month. I am effectively homeless; I couch surf. I accrued $45,000 in debt in student loans in addition to about $9000 balance on a car loan (the car is upside-down and soon to be repossessed), at least $10,000 in credit card debt (all purchases made while unemployed or low-income), and a few thousand in medical bills. I have made mistakes, but I have also been gainfully employed and did not foresee this particular situation which has left me unable to work.

I have dual nationality with the US and another country, and I have relatives that I do not know that well but have offered to let me stay in their house abroad rent-free. I have a friend who has offered to buy me a plane ticket to get there. I have almost no money and I have no assets. I am applying for SSI, but it’s a slow process. I hate being a burden on people, but my options are limited.

What is the worst that can happen if I leave the country without declaring bankruptcy? My friend is pushing me to leave the country ASAP and I won’t have time to declare, and I don’t have the money to hire a lawyer.

My friend is really pushing me and won’t help with a bankruptcy lawyer, but will help with the plane ticket. I know that there’s little or nothing I can do about my student loans, but I also know that while I am on disability that there’s not much anyone can do about suing me because I am collection proof. Will I be making a mistake if I leave the country and just wait for the statute of limitations to end? Also, I will most likely continue disability if I get approved for SSI, which will make it difficult to hide, but I do not plan on returning to the US.

Callie”

The Answer:

Dear Callie,

In my humble opinion I think your friend is doing you a disservice by trying to ‘smuggle’ you out of the country quickly. It is far, far better for you to step-up and face the issues properly with bankruptcy to terminate the debt than leaving it a mess to recycle for years to come. The statute of limitations does not stop collections. That can continue on indefinitely, even overseas.

Since you are permanently disabled there are programs that will allow for the discharge of government backed student loans. Student loans can’t be discharged in bankruptcy but the Total and Permanent Disability (TPD) option is a real possibility for you.

But all of these things are a process and will take some time. At the end of that process you will have far more freedom and less stress and could then go and enjoy your home country more.

Since there is no expectation that you will remain outside of the U.S. forever, it is wise to deal with all of this stuff now.

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.

My Husband is Disabled, the Medical Bills are Growing, and I Feel Like a Low-life for Considering Bankruptcy. – Tracy

Steve Rhode — Thu, 22 Oct 2009 14:01:39 +0000

From How to Get Out of Debt

“Dear Steve,

I work full time and my husband is disabled. We have unsecured debt of approximately $50,000 not including my student loans which are about $10,000. My husbands medical bills and increased cost of living have driven us deeper and deeper into debt over the last few years. I manage to keep all of our bills paid on time but each month have to put necessities on our credit cards.

Most of our cards have lowered our limit to what we owe and we are nearly out of credit at which point things will begin to slip into past due. Now I received a letter from the lender on our large unsecured loan ($31,000) and they are changing our interest rate to a variable from a fixed and this will increase our monthly minimum due but will not increase our repayment term. This will sink us.

I feel like a complete lowlife for considering bankruptcy, but I don’t know what else to do. Our annual income between us is only about $40,000 and with all of the medical costs and high cost of electric/gas/groceries/etc we are sinking fast. Is Chapter 7 the best solution?

Each month I have to charge necessities to make ends meet due to high medical costs for my disabled husband and our huge credit card/loan debt, is bankruptcy the right solution?

Tracy”

The Answer:

Dear Tracy,

In short, yes, bankruptcy is an appropriate solution for you to consider in this situation.

Let’s step back and take a look at your situation. The most important issues here are variables you have no power or control over. You can’t will your husband to be better or for his medical care requirements to be different. You also can wish or will the creditors to change how they have sought to deal with your debt.

I seriously doubt that you set yourself off on an intentional path to reach this point. You can blame yourself all you want but I’ve been helping people for so many years and seen so many different situations that I known deep down that bad debt happens to good people all the time.

So let’s talk about bankruptcy for a moment. Bankruptcy is the law. it is a legal process sanctioned by our country and government as a way to allow people to have a fresh start when buried below a landfill of debt they can never service.

I’m not saying that going bankrupt should not give you pause. Nor should you go bankrupt and think its a party. But everyone but you has factored your potential bankruptcy into the process. Your creditors priced the credit they extended to you based on risk and guess what part of that risk included, that’s right, bankruptcy. Your creditors know that lending is a risky game and they are big boys and girls.

So let’s look at why you might not want to go bankrupt. You think that only losers and low-lifes go bankrupt. Well that’s just not true. In fact, I find it terribly ironic that large corporations are praised for going bankrupt to reorganize their finances but consumers are made to feel like shit.

All of those negative feelings circling your head are self-judgments. The only reason your creditors or debt collectors will call you names is to manipulate you to pay, not judge you. Those folks don’t have two seconds a day to judge other people. Besides, the people calling, it’s not their money. They are being paid to do a job, collect.

I would argue with you that at this stage you have a greater responsibility to create an immediate and safer future for you and your husband then keep pouring money down a drain trying to repair the past.

My advice would be for you to absorb what I’ve said, find a local bankruptcy attorney you like, make an appointment to go in and talk face-to-face and then contemplate if bankruptcy is right 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.

My Husband Walked Out on Me and Left Me Disabled and in Debt. – Maggie

Steve Rhode — Wed, 30 Sep 2009 11:23:13 +0000

From How to Get Out of Debt

“Dear Steve,

Divorced, disable on Social Security, 61 yrs. old. My husband walked out on me in 2005 after taking every dime of security I had worked for all my life. I have a refurbished trailor I purchased by mortgaged property I received after my mother’s death in 2003.

I had two credit cards at the time of my husbands departure and purchased mostly groceries and personal items on them. Nothing of resale value. I tried to make payments to the credit cards and when the ecomony dropped and groceries, gas, life went up my SS was no longer enough to keep up the min. payments.

I called the card companies and tried to get them to work with me by stopping interest, late payments and other charges so that I could pay them off. They both said there was nothing they could do. When I stopped paying they continued to add interest and other charges until I was over the credit limit. All of a sudden I was being called and duned by people I did not even know. When I checked my credit report sept 19, 09 it is a nightmare. I do not know who anyone is. The two original credit cards were from Washington Mutal Bank and HSBC NV.

I now have HSBC NV on my credit report as owing $3,576 with “status” being Transferred, closed. $3,576 written off.

CACH LLC as owing $3,576

Similiar sitution on other account. I also owe 2 or 3 thousand in medical bills.

I was served with a Civil Summons this morning with plaintiff being CACH, LLC not only wanting the $3,576 but also at 8% interest until paid and attorney fees.

The summons is dated on 9/24/09. Please help me stop this madness.

I am emotionally and physically challenged with a myriad of health problems. I can not take much more

Thank you

Maggie”

The Answer:

Dear Maggie,

I’m so sorry that you’ve had to live through this mess. I am sure the daily struggle you face in having this hanging over you is severe.

There are a number of issues going on here. I was most concerned by your statement that when you looked at your credit report that you did not “know who anyone is.”

I’m worried that you may have been a victim of identity theft, maybe someone else has used your name to obtain credit you are simply unaware of.

Since you have no real assets to speak of, nothing of tremendous value, then it is unlikely that even if a judgment is obtain against you for old debt that it can be collected on since your public benefits can’t be garnished.

The judgment can’t impact your heirs at your death. Debt does not pass on to the remaining family members. However, a creditor could attempt to collect from any funds left from your assets when you pass.

Based on your emotional delicacy, the potential identity theft, the dunning by people you don’t know, your current emotional and health status, and a series of additional bad accounts on your credit report, I think the most prudent path to follow is to seek the protection of bankruptcy. Bankruptcy will also terminate any judgment awarded against you before you file.

By going bankrupt is will clear the decks of all the mess you are dragging forward and finding difficult to deal with. It will eliminate the stress and pressure you are feeling now and let you get back to focusing on feeling better.

You can contact the local free bankruptcy provider, you will have to pay court fees, and see if you are eligible for free services. If you are not eligible for free services, contact a local bankruptcy attorney. And if you can’t afford bankruptcy, ask the heirs you were worried about to pitch in for it. These are people that must care about you since you are worried about them.

By eliminating the stress of the lingering medical problems it will also be helpful to improving your health. The stress of the debt is not beneficial to letting you feel better.

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’m a Disabled Construction Worker in Oklahoma That is Being Chased by Bank of America. – Butch

Steve Rhode — Wed, 24 Jun 2009 18:32:49 +0000

From How to Get Out of Debt

Butch

“Dear Steve,

I live in a “village” located on Lake Tenkiller in Northeast Oklahoma. I am 58 years old and have worked construction (worker, foreman, owner) all of my life. I have been married and divorced three times. After the third divorce I lost my business, my home and all of my money. I was disabled and had been working with a lawyer to be proclaimed “legally” disabled. In the meantime I was doing odd jobs to make it. A family member had given me a 1969 10′ by 40′ mobile home to live in. The only bills I had to pay were the utility, phone, and lot rent bills. Even so, I was having a hard time because I couldn’t do jobs that took much physical labor.

Well, I finally was proclaimed legally disabled and have been getting a disability check for approximately $675 a month. I also receive food stamps amounting to approximately $120 a month. I was able to get by on this by buying and selling things occasionally on the side. I pick up new hot water heaters that Lowe’s have rejected for one reason or another, fix them (usually something simple), and sell them at a reduced rate. I was making it and I was fairly happy.

Then a few years back Bank of America sent me a credit card with a $7000 limit. All I had to do was use it to activate it. I was positive that when I tried to use it it would be turned down. I was wrong. I don’t know why, because my credit was terrible, but “they” let me keep it and within two years I received two more cards from them totaling $15,000!!! I was only going to keep them in case of a real emergency. Well, guess what. My son got into trouble with his business and needed $11,000 immediately. He was going to pay me back within six months and would make the payments every month. Within the six months his business tanked. He was in no position to pay me back.

There, of course, was no way I could pay Bank of America back, and I told them so. I told them everything except I substituted myself for my son. I didn’t want them bothering him. I told them I was on disability (they didn’t know!) and was also working a job on the side which I lost because of the economy. I tried to work something out. I asked them to drop the interest to 0%, for a certain amount of time, and then I would be able to make the payments. They would drop the interest rate, but the monthly payments would still be too much. I talked to them several times to no avail. Now the collection agencies are on me. They have offered to cut the debt in half, but I have to make one lump sum payment. They have hinted they would even settle for less. Of course my credit is shot, so I can’t borrow any money to pay them.

What should I do? Can I use the being disabled in any way?

Should I go bankrupt? The credit card debt is the only debt I have. Seeing how I am 58 years old, am disabled, and have a terrible credit rating (which I will probably have for the rest of my life), should I just change my phone number and ride it out? I wouldn’t feel too bad about not paying them back because of what the banks have done, including the Bank of America, to the average person.

I would appreciate any information or advice you could give me.

Thank you,
Butch ”

The Answer:

Dear Butch,

Well, here you are now. You’ve got two choices. You could hide from your creditors and ride out the storm that could last for years, or you could go bankrupt and close the door on this situation and be done with it without having to look over your shoulder. Bankruptcy would be my vote since hiding is just so much more emotionally exhausting.

You don’t need a lesson or a lecture about what went wrong here. I think you can see it. Just remember, that because someone gives you credit does not mean you can afford it.

Big Hug!

@GetOutOfDebtGuy

I’ve Been Working Since I Was 15 and Made All the Right Financial Moves But Now I’m in Big Trouble. – Marcia

Steve Rhode — Sun, 24 May 2009 21:48:26 +0000

From How to Get Out of Debt

Marcia

“Dear Steve,

I have been working since the age of 15. Every decision I made as a young adult and onward was based on increasing my solvency.

I grew up working class. My parents were an example of how not to wind up. I have a master’s degree and have been working successfully in the tech industry since 1984. I never really liked my job but it paid well and I was able to save money and live well.

Near the height of the real estate boom I purchased a house along with my then partner. The house is not worth what we paid for it today…not to mention the additional monies sunk in by way of a 15,000 dollar home equity loan to upgrade the more than 100 year old house, the seven thousand dollar fence, the thousands in landscaping, etc etc.

An ugly divorce left me holding the bag, so to speak, when the shared home equity loan was left for me to pay alone…I was the one with the excellent credit score and the higher paycheck; I rarely carried a balance on my credit cards and had a nice cushion in my 401k and savings.

Spin forward a year and my savings are gone, the home equity loan was rolled into a zero interest for one year credit debt along with other cards that accrued. I owe over $14,000 to Bank of America, my 401k lost more than half of its value, I have already liquidated my roth ira, I have been late with payments for mortgage and credit cards for the first time in my life.

I had an accident one year ago that caused me to go out on long term disability from my job…I was laid off from that job over four months ago..the disability affects my ability to track my income/debt/payments with the same exactitude as I could before the accident.

If I had studied what I loved or followed a passion rather than working so hard for financial security only to find that I am winding up in the same scary space I have fought to avoid my whole adult life.

I do not want to go into bankruptcy or default or lose my home. I have already lost my excellent credit rating which pains me in and of itself. I took pride in my ability to pay my way through the world. I am now so under water and so in debt I don’t know what to do or where to turn. Bank of America revoked my 0% interest rate due to a one day late payment. I think they have reinstated it but my balance seems to go up not down even though I do not charge anything on the card and have set up auto payments through my bank account for the minimum amount due each month.

I do not have the means to pay this debt off in what is now 6 mos. of the zero percent for one year offer. I am drowning in financial obligations that I cannot meet. One fall, one recession, one life so drastically changed in one year. I am a 54 year old woman.

My credit card debt with Bank of America combined with my mortgage, medical bills, and monthly bills far exceeds my income since an accident caused me to apply for long term disability on my former employer’s (I was laid off in Feb 09) insurance policy. My credit rating has gone from excellent to trash over the past year. Can I get any kind of extension on payments without penalty to the cc company or have any part of my mortgage reduced, even if only the interest rate without paying to refinance? A long grammatically incorrect question for you. thanks.

Marcia”

The Answer:

Dear Marcia,

To be brutally honest, your situation is a classic example of ‘shit happens.’ Bad stuff happens to good people every day, people that don’t deserve the downside of financial problems, people that never did anything wrong. It is not fair and you certainly don’t deserve this mess but it now is what it is.

So let’s move forward.

You mentioned that you think you got the 0% Bank of America loan reinstated but you also said that the balance is going up. That does not add up if you are still making payments on it. Either they are charging you interest or fees, but it can’t be at 0% only with the balance increasing.

If I prioritized your debts I would move the house to the front of the line. But keep in mind that your desire to keep the house does not mean that you can necessarily afford it. For some in similar situations, hanging on to the house is like holding tight to a heavy anchor headed hundreds of feet below water. As much as you don’t want it to pull you under, it just does.

Step 1: In my humble opinion I think the best course of action is for you to contact your mortgage holder and see if they will modify your mortgage at all. It never hurts to ask but don’t be surprised if they say they won’t.

If they will modify it, get that done as fast as possible and then move to step 2. If they won’t modify it go straight to step 2.

Step 2: Without any expectation of getting back to work and replacing lost income I think your best best to reorganize the debt is going to be under the protection of bankruptcy. The reason I suggested a loan mod first, if possible, is to get the mortgage payment lowered before going into a bankruptcy to address the rest of the debts. I would implore you to contact a local bankruptcy attorney right now, call and make an appointment for a free bankruptcy consultation, and go discuss this strategy with them. If you don’t know of a local bankruptcy attorney, click on one of the links to locate one.

Now, because of your pride and deep emotional attachment to your past history of excellent credit, by the time you get down to reading this sentence you are probably hyperventilating and starting to freak out. You’re probably saying to yourself that I don’t have a clue what I’m talking about and there is no way in this world that you would ever consider bankruptcy.

I understand all those emotional responses to the situation. I went through them and so have millions of others. Bankruptcy is not something undertaken by losers, rejects and assholes. It just happens to be the only legally binding debt intervention in America. If there were other approaches that would give you some rights or protections from your creditors in a situation like this, I’d tell you about them.

Do me a huge favor, don’t make a decision to not go talk to the bankruptcy attorney for an emotional reason. Go and talk to them, ask all your questions, and then go home. Don’t make any decision about bankruptcy on the day of your visit. Go home, think about, let what you learned percolate in your head for a few days, and then decide what you want to do.

But no matter what path you choose to follow here, either the downward spiral to protect credit you can’t afford to protect, or bankruptcy, I want you to come back and give me an update about what you decide to do.

Big Hug!

@GetOutOfDebtGuy

My Mother is Disabled and Bedridden in a Nursing Home and Chased by Debt Collectors. – Carolyn

Steve Rhode — Thu, 21 May 2009 14:47:13 +0000

From How to Get Out of Debt

“Dear Steve,

My mom is bedridden and disabled in a nursing home for over 5 years. The credit cards she left behind were notified of her phsycial and finaancial inability to pay these debts over 4 years ago. I was told by her lawyer to ignore all communication about her debts which I have done and now they have tracked me down on my personal cell phone number trying to find her. They continue to try to get her to pay and have taken these claims to court. I am now being told to contact them regarding the subpeona for her to go to court.

I just want them to stop but don’t want them to sift through all of her bank records just to come to the same conclusion I have which is the measly $60 per month left over from her social security check deosn’t pay for anything except to buy her treats weekly and getting her hair done monthly…..everything else must be paid for by me. what should I do? CAll them back or ignore them?

Carolyn”

The Answer:

Dear Carolyn,

I’ve dealt with these situations many times before. Every once in a while you can get a creditor to listen but for the most part, your story is sadly typical.

I assume from what you shared with me that your mother is not expected to get better, has few assets, if any, and survives on social security alone.

Now, 99% of the time I’m all about open communication but if I made the right assumptions above, I would do nothing and ignore the collectors. Let the case run its course and your mother might get sued but there is nothing to collect on. If your mother were to pass away, the creditors could look to her financial estate to try to collect but if there is nothing there they are shit out of luck.

Now you could engage in a cease and desist letter writing campaign but why invest any more time in this? I think the lawyer gave you some good advice. I know it feels like the responsible thing to do is something, but as counterintuitive and crazy as it sounds the best thing you can probably do is nothing. Sad but true.

If you want to know how they got your cell phone number, read How to Hide From Debt Collection, the Debt Collector, and Creditors.

Big Hug!

@GetOutOfDebtGuy

I am Disabled and Worried About Paying My Credit Debt. – Patricia

Steve Rhode — Fri, 17 Apr 2009 21:38:53 +0000

From How to Get Out of Debt

Patricia

“Dear Steve,

I am disabled and worried about paying my credit debt. I’m raising my 8yr.old granddaughter and only get 1,000 a month. My aunt died and is unable to pay funral bill and credit cards that I trusted family to pay and they did not what should I do im losing hope?

My aunt died and lived with me as I took full care of her and because I drew her money out after telling the bank she past they gave me what was left in her acount which was about $800.00 and because social security took the money from the bank they are telling me I need to pay the money back and turned me into credit report. Am I liable for this?

Patricia”

The Answer:

Dear Patricia,

It certainly sounds like you are in a difficult spot. The passing was an emotional hit and a financial one as well. The money that the bank allowed you to take, if direct deposited by the government after the death of your aunt, is money that should go back to the government. I suspect that is what that issue is about.

I don’t know how much debt you have but whatever the number is, it is more than it sounds like you can pay. If you’ve been using the credit cards to help make ends meet then you are going to have to find alternative avenues of assistance. You should not use those cards anymore if there is no expectation that you will be able to repay them.

Bankruptcy is always an option for you to close the door on the old debt. But I think for you to be able to get by from this point forward you should contact your local county social service or welfare department and ask them what public benefits you might be eligible for since you are caring for your granddaughter. Even food stamps, now called SNAP, would be a benefit for you.

Big Hug!

@GetOutOfDebtGuy

My Daughter Has a Student Loan That She Can’t Pay Because of a Medical Condition. – Pat

Steve Rhode — Thu, 02 Apr 2009 06:23:41 +0000

From How to Get Out of Debt

“Dear Steve,

My daughter has a student loan that she could not pay because of her medical condition. She is on assistance from the state and has a one year old daughter she barley makes only less than 300 dollars a month on her part-time job.

She was recently served with papers for a law suit from the University. They want to garnish her wages for 250 a month to settle a 6,000 student loan. She does get child support because the father left state and cannot be located. Is there a way to show the court that she is not physically capable or financially capable of paying the debt. If they garnish her wages she will not be able to provide shelter for herself and child.

What can she provide to the court in the way of a finical statement medical condition statement. She has 28 days to respond from last Monday Feb 2, 2009.

Pat”

I’m Sick and Tired of Being Sick and Tired. – Paul

Steve Rhode — Wed, 01 Apr 2009 07:00:03 +0000

From How to Get Out of Debt

“Dear Steve,

Im sick and tired of being sick and tired need a job desperately cause SSD payments are not enough, Cant buy food,power, water,phone, medicines, etc. other than SSD payment wife works part time only job she can get, were about to loose home, car, sanity etc.

How does a severely physically disabled adult return to woks after having been out of the work force for a great number of years. ? ( used the time to return to school have two degrees. yet still cant find a job.

Paul”

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