Hi. I was researching Dept relief companies and their validity and discovered your sight . I really appreciate what you are doing. It is a big, bad scary financial world out there.
My husband has been unemployed for 2 years. Got downsized right before the economy tanked and hasn’t been able to find full time work. We left The Big City one year ago and moved to the midwest and cut our expenses to LESS than 1/3 of what it cost to live in on the coast.
We have 6 kids. Are currently on food stamps/medicare.
We haven’t used our credit cards in the entire year since our move. Literally living hand to mouth each month with the part time job/s my husband has been able to find.
I’ve had some work, but with the kids I haven’t been able to bring in anything significant enough (although I was able to pay our rent for a bit last year by doing babysitting – which hasn’t been working out since 🙁
We panicked that first year and tried several (scam) businesses and drove our credit cards up to $84,000. In addition to that we have about 24,000 in student loans.
We own our cars and are renting our house ($850 month). We just were informed on Friday that the company my husband has been working for is closing down immediately.
We had EXCELLENT credit and had been able to pay minimum monthly payments through this past month (we missed Nov and now Dec). But now we are totally broke. The only creditor I still paid is the student loan.
Now the credit cards are calling.
I spoke to Dave Ramsey back in Oct.- he said to wait 3-6 months of not paying the credit cards and then settle. He didn’t seem to think I needed bankruptcy, and I didn’t know to ask him about going through the NFCC. I made an appointment with one company for tomorrow (Tues). Now I see on your sight that even these non profit places are not so straight forward.
My fear is “getting sued” by the credit card companies as well as having a clear way of getting out of this mess without getting “taken” again.
Thank you so much!
Your Question 1) Is it realistic and preferable to deal directly with the credit card companies myself? Is that better than bankruptcy? I called a few of my credit card companies prior to not paying my minimums and they couldn’t work anything out that I could do in my budget.
Is there anything else besides bankruptcy?
Is bankruptcy necessary in my situation?
Wow! Dave Ramsey gave you horrible advice. The only thing that did by waiting was allowing you to lose months of your life stuck in the mud. And some people wonder why I don’t talk about Dave. Here is the bottom line. Dave has a personal problem with bankruptcy. Ironically it was bankruptcy that saved Dave. See Dave Ramsey – Bankruptcy Bigot or Personal Finance Saint?
But bankruptcy is a legal and sanctioned solution for debt problems. Debt settlement is not. If you are prepared for a shock, read The Truth About The Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy.
While you have been current on your debts, I have to ask, at what cost? You are living hand to mouth, barely getting by, not able to save, and not able to create a safe financial environment for you and your kids.
Now let’s imagine how different your life would have been if you found me earlier and had gone bankrupt months ago. Instead of just making minimum payments, you would have been able to use that money to save and build an emergency fund.
Honestly, when I weigh the options, bankruptcy is the best course of action and here is why.
- There is no expectation that your income will stabilize to a point where you can agree to a monthly payment on your debts over a long period of time and have money to save to build an emergency fund.
- Your student loans are not dischargeable in bankruptcy or in a debt settlement program.
- If you decide to stop paying your debts and go the debt settlement route you can and will be sued. Collectors will call you, friends, and family and the pressure will be enormous.
- You don’t need more pressure at a time when life is stressful enough to get by.
- Nothing says that because you go bankrupt that you can’t repay your debt if you want to after your bankruptcy.
- The sooner you go bankrupt the quicker we can work to rebuild your credit,
- Debt settlement and bankruptcy will both hurt your credit and remain on your credit for essentially the same period of time.
- If you settle your debts you can be liable for a huge tax bill for the forgiven debt. You would then owe the IRS.
Deborah, I urge you to click here to find a local bankruptcy attorney you like. Make an appointment to go in and chat about what bankruptcy would mean for you. Don’t feel like you need to make a decision that day, just go home and think about what you learned.
So why is bankruptcy better in your situation.
- You will get immediate legal protection from your creditors.
- Debt collectors may no longer contact you or call anyone else.
- You can not be sued for your debts.
- You will not make any more payments towards the debts.
- The debt will be forgiven with no tax liability.
- You will get an opportunity at a fresh start right now, not four years from now.