Ask The Get Out of Debt Experts Getting Out of Debt How To Get Out Of Debt

Our Credit Scores Suck, We Have No Savings, and We Are in Collections. – Tara

“Dear Steve,

My credit score is 580, my husband’s is 608. We are both in our early 30’s and we have a son. We have a combined debt of $31,000 which includes students loans, credit cards, and debt collections. We pay the bills on time but are struggling and have made a couple of late payments. We have no savings except for my 401K. A well placed emergency will place us into disaster. Recently, a lawyer for a collection agency has contacted me, saying I owe $10,000 on a four year old debt that was orginally $6,154. I fear wage garnishment and a lien being put on a car that we still owe payments on. We have only been late on a couple of cards but always manage to bring them back to good standing but we are struggling. We can only make minium payments. We work full time and bring in about $3,000 a month.

Tara”

Dear Tara,

I’d love to tell you that your situation was unusual or unique, but many have found themselves in the same spot. Let me first tell you that while the situation may feel like it is closing in around you, there is hope, there is help.

Basically you are in a treading water situation. You will not be able to break this cycle unless you intervene, increase your income, reduce your expenses or a combination of the last two.

The fastest and least expensive way out of this situation is to consider bankruptcy. Let’s start with the basics.

I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.

Then use the free How to Get Out of Debt Calculator to review your options.

See also  DEBT COLLECTOR BLUNDERS? GET A RECORDING!

After that, come back here and comment about what seems to make the most sense and let’s discuss that.

Does that sound like a reasonable approach?

After you’ve done some homework here and a bit of soul searching I’d like to discuss the next step with you.

Bottom line, we need to intervene in the situation and allow you to take what you learned from the experience and do better moving forward. Bankruptcy may allow you to build your emergency fund, avoid garnishment and suit, and most of all to provide a safer environment for your son. And don’t be too worried about your credit. Right now it’s not great and it’s stupid easy to rebuild. Just read this.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

13 Comments

  • David Robert, I looked up the phone number you gave me and it goes to a “forensic mortgage audit” company. How odd…..

    I plan on being upfront about everything. We have nothing to lose but something to gain from this. At the very least, I can find out how we can stop the collector from taking me to court.

    • Tara, you are welcome to call me at the number I provided anytime. As I said, any time I spend with you will be Pro-Bono, meaning, I will not charge you a dime. Yes, I own a Forensic Auditing Company, not sure why you would think that is odd, however you do NOT need an audit, what you need is an understanding of debt collection laws so you empower yourself and not be lead to or tricked by the debt collectors. I also work very closely with an X-Banker of 9 years. He has turned his life away from Banking and has been helping struggling homeowners for 14+ years. If you are not comfortable calling me I totally understand. Again, I have helped many people like you get through situations like your in, I have NEVER charged them a dime and I NEVER will. 

      Namaste,
      David 

    • Tara, what state do you live in? Let’s see where you stand relative to the Statute of Limitations for this debt.

      Based on it being four years old, it’s quite likely that the original creditor has sold the account to a debt purchaser. However, there are some creditors who never sell their paper and retain ownership. So let’s sort out exactly who you are dealing with and where you stand in the process. Please let us know what state you live in, who the law firm is, and what “client” they are attempting to collect on behalf of.

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