How Can I Get My Debt Under Control? – Mark

“Dear Steve,

I am married, no kids, been in my house for 10 years. Recently, taxes on the house have gone up by 100 + a month, I have about 30 K in credit card debt.

I have been researching Dept reduction programs and the like, and they scare the heck out of me with their success rate (less than 20 % ) and with the people sometimes getting sued while in their program. I have called the credit card companies many times to try and get the interest rate reduced, but due to late payments (less than 30 days) and due to the current economic climate, they are unwilling to work with me. On a standard month to month basis, I am just breaking even or paying out more than I am pulling in (The whole robbing Peter to pay Paul theory)

I looked in to the whole bankruptcy (both chapter 7 and 13) and while that might be a solution, that is pretty drastic, ruining your credit for the next 10 years, heck even going down that road, I would have to hire an attorney, and I can even begin to afford that.

With the rising interest rate of these cards, it is getting harder and harder to make ends meet on a monthly basis. And I am scared if I don’t come up with some sort of solution or ideas on how I can get this under control, I am afraid that the house and everything else I have worked for can be put in to jeopardy.

Any tips or advice would be great. I am just looking for some sort ideas to keep me from getting in to more trouble

Thanks,

Mark”

Dear Mark,

No matter which path you elect, if you don’t make at least the agreed upon minimum contractual payments your credit is going to take a hit.

The way you afford a bankruptcy attorney is to stop making the credit card payments and save up the fee. And you said something that is a common belief, but not accurate. Bankruptcy does not trash your credit for ten years. It will remain on your credit report for seven to ten years but you can begin rebuilding your credit immediately after filing bankruptcy.

See also  I've Looked Into Credit Counseling But I'm a Little Scared. - Wendy

You are right to be concerned but the walls have not caved in on you just yet. You still have a little time. You need to use that time by researching your options. I would suggest that rather than making assumptions about bankruptcy that you instead find a local bankruptcy attorney that you like, make a free appointment and go in to talk to them about your specific situation.

I need to get you unglued from the paralysis of analysis and tracking a real solution so you can take action soon to begin to resolve your situation.

I’m really not trying to be a bankruptcy cheerleader here, but there simply is no other solution that gives you any right or legal protection from creditors and stops all collection activity.

Please update me on your progress by The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

Damon Day - Pro Debt Coach

13 thoughts on “How Can I Get My Debt Under Control? – Mark”

  1. Steve

    (Anyone tell you that you are the best!)

    See if I can make set payments over 5 years between 600 and 750 bucks (give or take a little) that would be perfect. (and what little I have left over can go in to a savings account and be used for an emergency. It would suck to have the cards closed, but if they agree to a set amount (let’s say 700 for this example, then that will leave me enough room on a per month basis to pad a bit in a saving account and not have to worry about having a card to rely on)

    See, if it is fixed, i can plan on that and work with that, it is the ones that move around from 400 bucks a month to 510 a month and stuff like that.

    I do plan on keeping my appointment and get eveything on the table and look at everything and go with what is best for what the situation is.

    I’ll keep you updated Steve, Thanks again so much for the tips I am not sure exactly where I would be without the sound tips and info you have provided.

    Reply
  2. Steve,

    Just a small update. (Cause maybe my triles would help someone else as well)

    Set up with the lawyer and they sent me a list of things to bring (Soime of the things seemed a little out ther cause I am talking to them about a Chapter 13 and not a chapter 7, Like a list of assests in the house and a time stamped copy of the house deed?

    So, I am working on that and I have a couple of weeks to go before the appointment.

    But I am still looking at options and things, cause let’s face it, filing Bankrupcy is pretty hard-core. That is a black mark against you for 7 to 10 years.

    What about places like “AAA Fair Credit Foundation” and “Money managment International”? Out of the credit consiling / DMP programs, I am not seeing too much negative things about them (But hey, that is not saying much to say the least).

    Also thinking about what my monthly re-payment would be, and I am figuring anywhere between 650 and 700 bucks a month and eveything will be satisfied within 5 years (60 months). But I am not sure if I propose that or they put it in some fort of excel spreadsheet and say “Pay this much every month”

    And finally, I have to say the wifey is more than pissed that I am even considering this. I broke down the reality of it to her, but alas you know how that can go. She is wanting me to be removed from her accounts and vise versa and talking about putting the cars in her name and stuff like that. Sheesh

    Thanks again Steve!

    Reply
    • Mark,

      I understand your wife’s reaction. Yep, she’s pissed. But removing her name off stuff now is not going to change anything. Asset transfers within two years of bankruptcy are suspect and can be reversed. Best not to do any of that without coordinating it with the lawyer first.

      I know Money Management International and as far as a standard debt management plan goes they certainly have tons of experience and seem to have an efficient process. I’ve never heard of AAA Fair Credit Foundation before. But as a personal rule I tend to avoid companies that begin with AAA or Acme. LOL

      The reason I did not lean more towards a credit counseling solution in my original answer was that you had stated you were already robbing Peter to pay Paul. That tells me that there is no room for you to either save money or build an emergency fund in case you need cash since your cards included in the DMP with MMI will be closed.

      In a DMP, you would make set payments over five or so years. The issue I see is that all it will take is one unexpected event, you without any emergency fund, and the whole plan is scuppered and you land in bankruptcy anyway. But if you are willing to accept that risk then by all means, try the DMP approach first for at least three months.

      The advantage to a Chapter 7 bankruptcy is that it will give you a fresh start, allow you to learn from your mistakes, and have the opportunity to be able to save some cash for the safety and security of your family.

      I think you owe it to yourself, and your wife, to investigate both a debt management program and bankruptcy. Just promise me one thing, you won’t jump to any conclusions until you have your appointment with the lawyer. Only after than appointment will you be fully informed and able to make the best decision possible.

      Steve

      Reply

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