As of 14 months ago I was grossing $100K/yr, now $42K, I have $51K in CC debt, i am not late/delinquent but it is inevitable, I am down to $1100 bal on a broken down car, $355/mo payment has 3 mo left. I have $7500 in 401K, 44 yrs old. Was able easily to cover CC pmts until rate went past 19.9%.
Call NFCC after hearing about “Call to Action”, they could set me up at $250/month less in total payments ($1250/mo in plan), but need me to pay them AND keep my CC current at the same time for about a month, which I cannot do.
My counseling seesions have not yet been based on Call to action, as of 30 June, NFCC computers still not set up to actually offer it yet with no date in sight. I fear bankruptcy because I am tax delinquent and have not filed for some years. I don’t really believe in BK, but in the last 6 months, 2 employers, and 2 landlords have filed and walked away sadly like it was party time for them.
1) Do you have any idea when the NFCC will actually offer the Call to Action Plans they are plugging in the media
2) What is the likelyhood that my tax situation will thwart a BK filing and just end up having me waste the attorney fees
3) My lawer has been pushing my to stop paying my CC’s since last November counseling me to use the $ for his BK filing,I don’t like the idea of the fallout if I do so and the BK does not go through. Your thoughts?
4) If I can nego my rates down to 20%, I can easily afford my debt load, I have tried to call my CC companies to get relief, BofA actually said yes and gave me a better plan than the NFCC did. Are their any tips to help me get better results
5) I will need a car soon, with a discharged BK, I can save $1500 a month towrds one, in your experience, how long does a BK affect the ability to get a car loan and at what % downpayment do car dealers stop considering a BK?
The “Call to Action” debt management plans hyped by Consumer Credit Counseling Service (CCCS) and the National Foundation for Credit Counseling (NFCC) are not much of a reality yet. While the press releases have been sent out and they are talked about in public, the majority of creditors that are claimed to participate are in fact not participating at this time. There is no date at which they will participate.
So let me answer your orderly questions, in order:
1) Nobody really knows. When it comes to credit counseling the creditors call the shots. It is possible that some may never implement the plans even though they claim to participate. I still remain skeptical about these plans.
2) You should be able to sail through bankruptcy with the tax situation. Bankruptcy will not eliminate the taxes.
3) The advice of your lawyer sounds typical. It is a Catch-22 situation. Most people can’t go bankrupt without stopping payments to credit cards so they can get the money to file. The fallout is actually minimal. Those accounts will be shown as delinquent on your credit reports but that will end with your bankruptcy. You may start to get some collection calls once you get three weeks behind, but so what. If creditors do call, just tell them what you are doing. What concerns me most is that you’ve been in this limbo for eight months and still talking about a DMP or bankruptcy. At some point you are going to have to commit to some path.
4) While it is possible to negotiate down some rates, the real question is if the rates will remain low during the time it takes for you to get out of debt. That is unlikely. There is nothing to prevent any creditor from changing the rate again at any time. So let’s say that you repay three years of a five year repayment plan, the rates go up and you can no longer afford the payments. How would you handle that? You can always try to negotiate with your other creditors, but what if they won’t do anything?
5) Bankruptcy will make it a bit harder to get a car but a down payment can help to grease the skids. You might be better off buying a $3,000 vehicle for cash to get around in the meantime. As more time passes your credit score will improve and if you save $1,500 for six to twelve months you will have a substantial down payment to give and by that time you should not have any problem finding a dealer to finance you.