URGENT QUESTION!
Valerie
“Dear Steve,
I cried all through writing the question. Situation is that we’ve always paid our credit card bills and always been on time and lately our credit score keeps getting worse and worse. Our mortgage/taxes/insurance costs $3000.00 per month so I don’t want to default on that. Yes, we have remortgaged too many times. Presently, I’m making more-than-minimum payments on all (maybe 20?? credit cards) We only buy groceries, gas and Christmas on our cards now. We are both working 40+ hour weeks and are 54 and 55.
We are getting tired and old and feel, like we’re not running as fast as the treadmill is rolling. We would gladly sign up to pay off all of our cards and NEVER use them again, but right now, we need them just to buy our normal daily supplies so that we can pay our bills with our paychecks.
We feel like we are fighting a losing battle. If we stop swimming for one second, we will drown. Is there any credit card consolidating things that are legitimate.? None of them ever wanted to help my daughters until they were already several months overdue.
I don’t want to make things any worse. Electric bills and oil bills are the only things that are getting paid out of pocket and oh yes, doctor office co-pays. I could go on for days. I just need some relief and don’t know where to turn. Also, we have life insurance payments that are falling behing which means that those will close soon and then we will not be able to leave anything to each other, which will mean that the house will go; as it won’t be paid off till we are 80 something! HELP! Any good ideas?
We’ve really lived a good life and now I feel like some kind of bum!
Valerie”
Dear Valerie,
As an outsider I probably have a different point of view since I’m not right in the middle of what feels like a crumbling life. So let me offer some observations and suggestions.
All debt problems can be resolved in one way or another. Now that might not mean that you can wave a wand and get everything you want, but we can put a plan in place to allow you to move past the fear and pain you are experiencing now.
What I ‘hear’ when I read your question is someone who is slowly drowning under growing debt. Unless you’ve had a reduction in income, I would bet that your debt has been growing, slowly, over time. You debt has finally reached that level where you are forced to deal with it. Imagine it like this, it is a lot like a room that is filling slowly with water. You don’t begin to really panic until your head is bumping against the ceiling and the air pocket is getting smaller and smaller. That is when you freak out because you are convinced you are going to drown.
The best way to attack this situation is to prioritize your obligations first, so let’s see what we can get to fit within your family income. Whatever does not fit, will have to be dealt with.
So let’s first pay housing, utilities, food, life insurance, medical insurance, transportation expenses, etc. and factor in $100 a month to put into a boring old savings account for emergencies. And when I say to save the money each month, I mean it. Save! You’ve got to put your safety and security first. Nobody else will and if you just let your creditors continue to take from you, you will be homeless and older, with less chance to save.
Now, once you prioritize your expenses I bet you will find that you don’t have enough leftover to make minimum payments on your credit cards. How can I be so sure about this? Well the clue was when you said you had been using the credit cards to pay for “normal daily supplies” and that your credit score had been getting worse and worse. Your credit score is sinking because you are becoming a higher and higher credit risk with escalating debt and maybe a missed payment here or there.
And while you had the best of intention in paying a bit extra each month, it might have helped emotionally but it really only sinks you more. You send $20 to the card but have to charge $20 to get by. I’m not blaming you, just pointing it out. There is no reason to waste a perfectly good mistake if we can learn from it.
Is credit counseling or debt management legitimate you asked. Well, it is legal but it is not the best approach is you are slipping under the strong riptide of overwhelming debt. It is better to turn to credit counseling if you are behind now due to some event that just put you behind and now you need to get caught up. That’s not your situation. Yours was not a one time event. It is a recurring monthly event.
Sadly I think we need a more formal intervention here and you need to seriously consider bankruptcy. There is a way that you can go bankrupt, in a Chapter 13 bankruptcy, where you can keep your house, so don’t worry about that.
Just about now your heart is beating fast and those old feeling of being a bum or a failure are racing through your mind. Those feeling are not reality. They are emotional thoughts in response to a difficult situation and those feelings are normal, just not logical.
We have all been conditioned over all our lives to repay our debts, honor our promises, and make at least the minimum payments. If we don’t then we are supposed to fear what will happen to our credit report and credit score. We are supposed to feel like a loser for being in collections and we don’t want the debt collector calling us and judging us.
So to avoid all those feelings and emotions we keep doing what we think is expected of us. We make the minimum payments by any means possible and we hope that things will get better tomorrow. But that does not mean that is the right thing to do.
Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.
Valerie, if you stay on your current path you will increase you stress and your chances of being ill or dying from this debt stress. You’ll die without life insurance that you dropped to make the credit card payments and the remaining spouse will not be able to afford the house and they will lose it. And guess what, the credit cards are not going to get paid anyway.
Let me ask you this. Do you have a greater responsibility to yourself to fix the past or fix the future so it is safer? The right answer is, the future. We can regret choices and decisions we’ve made in the past but that does not change where we are going to rest our head tomorrow, how we can going to stay warm or cool, and what we are going to eat.
So Valerie, if you are not prepared to honestly face a bankruptcy attorney and consider bankruptcy, then click here for debt management information. You can go on a debt management plan if you like, try it for a few months and see if you are able to afford it and get ahead. Then, if you discover that you are still sinking, you can go see the bankruptcy attorney for a free bankruptcy consultation and hold your head high knowing that you tried everything before filing bankruptcy. Some would criticize me for saying that. They would feel that I was encouraging you to throw good money after bad in a credit counseling program but I don’t look at it like that. If you go into a credit counseling program and fail, then you’ve simply made an investment in knowing that it’s not going to work for you. You won’t be able to look back with regret and knowing that has some value to everybody.
If you decide to try the debt management route I would still urge you to click here to get a free bankruptcy consultation so you can be more informed about what bankruptcy really means for you without assumptions and emotional fear. Only once you have fully explored both options will you be able to make a good informed decision that is right for you.
Valerie, don’t cry. There is not one logical reason for you to live in fear of your debt from this point forward. Now is the time to take action, implement it and make every day from this point forward, safer.
I’m sending you an extra big hug.
Steve
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