Early in 2008, I had a sudden turn of events. I had to quit my job due to health problems and lost half of my household income when my ex and I split up. I had just bought a new car and signed on to what would have been smart loans to transition into a more comfortable state but 4 to 5 months had passed and I still couldn’t find a job, my savings were depleted and I was close to losing my apartment and my automobile!
My financial situation spun out of control! Suddenly accounts that have been established for years were closed and some of my newer obligations got charged off, almost immediately! Finally, I was able to secure a job, but I’ve only been able to salvage a few of my major accounts.
Now I have law offices and creditors calling me non-stop; threatening to sue and treating me like a criminal! There is still about $10,000 worth of debt obligations unaccounted for. I took a cash job and am paying out almost 90% of my monthly income, but it still is not enough to get out of this mess.
How do I confront my financial crisis at this point? What are my options and what would be the least damaging route of these options?
Of course looking at the situation from the outside is a lot different from living it. First, let’s just agree that your situation is what it is. While it makes you feel bad, from the collector point of view you are just another of thousands and thousands on the books that has to be scared into paying.
The collectors are trying to make you feel bad because they know that you are more likely to pay out of fear. It’s just an effective collection tool to use. Creditors and collectors can’t judge you. They really don’t know you. But they can effectively push your buttons and make you live in fear, shame, and doubt. Sounds like they are doing a good job of that with you.
In order to give you some breathing room and peace of mind, I previously wrote How to Hide From Debt Collection, the Debt Collector, and Creditors. This won’t make your debt vanish but if you follow this advice it will significantly diminish the day-to-day pressure you may be feeling from the collectors. By reducing the pressure you’ll begin to feel more stable again and be better able to deal with life.
So, you ask, “How do I confront my financial crisis at this point?” The best answer is head-on. I would suggest that you consider the debt snowball method of eliminating these debts and pay off the smallest balance first. You can read my step-by-step Debt Snowball guide here.
If you are not exactly sure who you owe, get a copy of your consolidated credit report and it will show you all your outstanding accounts.
If a creditor sues you or you can no longer cope with the situation, bankruptcy always remains a legal and viable solution that would eliminate your debt and stop the collectors cold. But before you do that, consider the approach above. It will work.