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Getting out of debt

Any suggestions on getting out of 10,000.00 credit card debt. Curently unemployed, picking up side jobs my current heath conditions will allow to survive. I have no retirement,savings, or family that can help So I guess my main question is , Do you have any suggestions on bringing in extra money to get out of debt. Really looking for suggestions from those who have hit bottom financially and found thier way through.  Much gratitude for any wisdom.

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I am sorry you're in this bind.  My suggestion is for you to get in touch with a non-profit credit assistance program in your state.  If you don't know where to go, ask your local Better Business Bureau.  They will help you create a plan to get out of debt and possibly help negotiate a repayment plan that is much more manageable and reduce the interest rate.  But you can start by prioritizing  your debt - the credit with the highest interest rate should get paid down first to keep the snowball from gettting bigger due to interest fees.  Pay minimums on all your bills to keep your credit good - that might save you later. Whatever you have extras, pay towards your debt with the highest interest rate. If all the rates are the same, after minimums, pay off your smallest bill and close the account.  Then move to the next smallest bill.  If you are renting, offer your landlord to do maintenance work, i.e., landscaping, sweeping, painting, whatever is available in exchange for lower rent. Find a job in a restaurant, you can eat for free which will save money on groceries.  I hope these suggestions will give you some ideas.  Good luck!

Contributor

I used Consumers Alliance about 3-4 years ago and got myself out a 10,000.00 dollar debt. Let me tell you, IT WORKED. It took about 3 1/2 years and I do not have any more debt, except for 2 small ones (under 1000 dollars.)
Contributor

List all credit cards by balance/% finance charge from the biggest to the smallest. Pay minimum on all but the smallest balance. Decide a figure per month to put on credit card debt. Put the minimum payment on all but the smallest balance. Put everything else you can afford on the smallest balance first. When that card is paid off, move up to the next one. I did this and got out of $60,000 worth of debt. You get a feeling of getting somewhere when you can scratch that smallest card off your list. Move on to the next....continue until you have NO DEBT left. It takes a good strategy like this to get it done. But it is so rewarding after. But be careful cancelling too many cards at once. The Credit Bureau will tear you up.
Periodic Contributor

Don't spend money you don't have or can't pay off immediately. I have my credit card on auto-pay.

This has a thumbs up to click but no thumbs down. You don't know this persons whole situation and the damage is already done. I owe a lot of money because of my age and condition am limited for work and had to use credit to buy food and medical and auto repairs . Sometimes we have to use the credit but cant make enough to pay more than the minimum and still go without enough food and without some medical care or lack of money. No one needs to here your sarcastic answer, Have some compassion honey
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i have most of my credit card on auto payment and the rest I pay myself. We cancel cable TV but got clear tv pay one time fee for 3 antean it 74.00 and if you want movies go to the Library free there. cancel magzines newspaper and places you need a membership for it all had up. Also remember these doctors they are money hungry people i ever saw so me are really bad. you always can say NO! to them if they want you to have a cat scan MRI $$.
take other transportation than your car like a bus or train. Flying is outrage in prices.
mitzi Havlik
Periodic Contributor

I'm a lawyer who does bankruptcy cases in Massachusetts.  Bankruptcy is one way to get out of the debt, of course, but for many people in debt, their sources of income are "exempt from execution", meaning that, even if they are liable/responsible on a debt, they can't be made to pay that judgment by a Judge because their income stream cannot be taken from them (it's exempt).  In my state, for example, wages up to a certain level are exempt, plus an additional exemption for rent payments, utility payments, etc.  Though individuals can differ (based on how much they pay for rent and the amount of their wages, for example), most people making under $50,000.00/yr. cannot be held in contempt by a Judge for failing to pay a judgment; they're called "judgment-proof".  Unless a bankruptcy is filed, the debt continues to exist and the amount of the judgment will rise, but if income remains low, it will never have to be paid.

Contributor

So, are you saying it's good or bad to file bankruptcy?  I live in Wisconsin. 

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I live in New York State the laws of which governing personal bankruptcy may be &/or are different from those in other states.  I had to declare Chapter 13 because of expenses accumulated while caring for my late wife.  It helped me start a new life.  In the State of New York declaring bankruptcy, whether it be Chapter 7 or 13, absolves you of all your debt with the exceptions of those for governmentaly financed education loans & mortgages.  While it relieves you from having to pay monthly mortgage fees, since the bank has a lien on your property they can foreclose on your property.  I have a mortgage which I pay monthly fees.  As long as you are making monthly payments the bank cannot & will not force a foreclosure.  I am not certain whether it is Federal or State law, but I was told that if you declare bankruptcy once the bank will not take personal items in compensation, however,  if you should declare bankruptcy within a seven year period after your first declaration they can.  While the banks do not like personal bankruptcies as they are making their money from the monthly interest  they are still making money in having to pay lower taxes since the lost amounts are deducted from their gross income to give them their taxable income.  This applies to credit cards & otehr debts with the exceptions of educational loans & mortgages. All states may be &/or are different.  My advice is to seek legal advice in your state. The advice &/or opinions are based solely upon my own experience.

Richard I. Pigott
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Honored Social Butterfly

The best thing I did when I was in your situation, was to go to Consumer Credit Counseling Services.  They're a non-profit and their service is to help people get out of debt.  They consolidated all my credit card debt and some other debts (I don't remember specifically what ones), negotiated payments with my creditors, then collected money from me each month to pay the creditors the agreed upon amount.  They helped me work out a budget that covered  necessities -- utilities, rent, student loan payments, food, medical care, etc. -- and left me with very little left over, but it was worth it.  My employer agreed to allow direct deduction from my paycheck, so there was never any temptation to skip a payment or to go further into debt.  It was several years of living very close to the bone, but well worth it.  I came out debt free, with tools to keep me that way, and with a good credit report.     

Contributor

The best way to pay down credit card debt is to get a consolidation loan. You will have a set term ( such as 5 years) and when the term is up, your debt is gone. If you continue to pay just the minimum payments on the credit card it will take you decades.

Regular Contributor

It makes absolutely no sense whatsoever to tell someone who is buried in credit card debt that they should never have gone into debt in the first place; and it infuriates me that someone would say that. This is an extremely common problem among Americans and it could happen to any one of us. We recently crawled out from under credit card debt with the help of Rocket Loans.

Good luck to you!

Honored Social Butterfly

What are your current living arrangements like? Can you get a roommate? 

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Try to negotiate terms, payments and interest rates with your card company. Most card companies are willing to arbitrate with you about your debt.

 

If you do manage to have your debt cancelled the IRS will consider the entire amount taxable. Its income to the federal government and you’re expected to pay taxes on it. You’ll receive a 1099 C Cancellation of Debt the following year the debt is canceled.

Honored Social Butterfly


@venusv630053 wrote:

Any suggestions on getting out of 10,000.00 credit card debt. Curently unemployed, picking up side jobs my current heath conditions will allow to survive. I have no retirement,savings, or family that can help So I guess my main question is , Do you have any suggestions on bringing in extra money to get out of debt. Really looking for suggestions from those who have hit bottom financially and found thier way through.  Much gratitude for any wisdom.


Call the card company, hopefully it is just one.  Explain the situation.  Ask to set up a payment plan.  If you cannot do that, then is any of the debt secured by merchandise you could return or sell.  If you have no assets it will do the card company no good to sue you.  You don't have much to worry about.  If you have no assets there is no much they can do to you.

 

 

Life's a Journey, not a Destination" Aerosmith
Regular Contributor

Make settlements with as many credit cards as possible as paying some money is better than paying no money at all on each one of them.  Yes, settlements will be on your credit report but it looks much better.  The banks are still going to make money from each settlment since the amount that you do not pay will be reflected as a bad debt business expense on their annual income taxes which is deducted from their gross income giving them their taxable income meaning that they are paying less in taxes.  If you must declare bankruptcy make sure that it is Chapter 13 which elminates all of your debt with the exception of Federal government educational loans.  In either case to reestablish your credit you should get a Secured Credit Card.  With such a card your credit limit is the amount that you pay up front.  For example, say you pay $1000 up front.  That is your credit limit.  Make sure that you dont go over your credit limit & pay your monthly statments either in full or at least half of the total since it takes forever if you just pay the minimum due.  Also, you will have a high interest like 25%.  Stay away from Cash Advances!  Credit cards have two balances being the Purchase Balance & the Cash Advance Balance. Credit card balance interest is accessed once a month.  For example, if your annual interest is 12% in which case your monthly interest is 1% on your Purchase Balance.  Cash Advance Interest is accessed daily.  For example, lets say that your Cash Advance Interest is 18%.  That interest is divided over 365 days resulting in a daily assessment of .05%.  Also, when you make a payment, the minimum due on your Purchase Balance is paid first.  Then the minimum due is paid on Your Cash Advance Balance.  Any remaining amount is applied to your Purchase Balance.

Richard I. Pigott
Contributor

This really helped me.  My husband's terminal medical care and lack of income were the reasons that we incurred nearly $30,000 of debt.

 

Most cc companies would rather get the money, even if it takes time to get it than to write it off.  Each of the four companies I worked with offered a manageable payment and a reasonable time from.  After nearly three years, I was debt-free.

Regular Contributor

There are six matters that I forgot to mention.  There are two types of bankruptcies-Chapter 7 which is where you make payment schedules with all of your creditors; Chapter 13 where the slate is written clean as I stated in my previous response.  Regardless of your choice, be it Chapter 7 or 13, it is still going to show on your credit report.

 

Secondly, when you declare Chapter 13 none of your real property (i.e. furniture, car, clothes, personal items) are taken from you.  You permitted to keep only one vehicle, whether it be a car, SUV, motorcycle, etc.  Therefore, should you have two forms of personal transportation you will have to sell one of them.  You cannot declare Chapter 13 for 7 years following your initial declaration for if you do then your creditor(s) can take any or all of your personal items & real property.

 

Third.  Bankruptcies absolve you from having to pay a mortgage(s) in that you are no longer required to make monthly payments, however, the bank(s) still have a lien(s) on your house(s) meaning that they can force foreclose(s).  That usually takes between 1-3 years before you are required to be out of your home.  Banks then sell the foreclosed property(ies) in a short sale meaning that they settle for what they can get for the property.  That amount is usually a lot less than the real value of the property.  Once a foreclosure action is started it cannot be stopped.

 

Four.  it is highly advisable that if you are unable to keep up with your monthly mortgage payments to nortify your bank(s) IMMEDIATELY meaning today...not tomorrow.  Banks are not in the real estate business.  Thus, every house that they foreclose on they still have to pay property taxes, HOA common charges, etc all of which are liabilities to banks.  Very often banks will settle for owe  an amount that is a lot less than the total amount of your mortage as they dont want to pay for the aforementioned liabilities.  The only institution that I know of who will not settle for a lower amount is Beneficial as the institution is owned by a group of investors.  The lower amount is a one time offer meaning that should you want to pay it you have to pay it IN FULL!  Like the Cash Advance Balances the mortage interest is spread over 365 meaning that interest accumulates daily, so the quicker you pay off the mortgage the lower amount will you have to pay.

 

Five.  Unless I am mistaken you are paying interest ONLY for the first ten years of your mortgage before any of your payments are applied to the principle amount of your mortgage.

 

Six.  Educational loans can be forgiven upon proof recieved from Social Security of a permanent disabiity that prevents you from working in any capacity.  This means that you have been receiving Social Security Disability payments, however, should you return to work then you are liable for the payment in full of any & all educational loans.

 

I declared Chapter 13 in 2015.

 

 

Richard I. Pigott
Periodic Contributor

Hello Richard--

 

A couple of comments to your detailed post about bankruptcy, and to make it clear, I'm reposting your note, with my comments underlined.  Hopefully, here goes:

 

 

There are six matters that I forgot to mention.  There are two types of bankruptcies-Chapter 7 which is where you make payment schedules with all of your creditors; Chapter 13 where the slate is written clean as I stated in my previous response.  Regardless of your choice, be it Chapter 7 or 13, it is still going to show on your credit report. (True, that it will show on your credit report, for up to 10 years.  Chapter 7 is called a "liquidation bankruptcy" and takes about 4 to 5 months, from the date of filing, vs. Chapter 13 which can take three to five years.  In a chapter 7 case, you list all your property, and if it's all exempt under the federal or your state exemption list, you keep it all.  The bankruptcy trustee declares that there is no distribution to your creditors, the property all reverts to you, and a few months later, the court issues a discharge, which means the debt is dead and gone; there is even a "statutory injunction" which imposes damages and attorney's fees on creditors who later file a collection lawsuit.  Chapter 13 (or Chapter 12 for family farmers) is different.  If you're over the median income for your state, you can be pressed into 13 (or choose to file under that section) and then you have to meet two tests to have your plan approved.  The first is the "best effort test" which means that all of your extra income, above certain living expenses and secured debt payments, has to go to your Plan.  The second is the "best interests of creditors test", which means that an unsecured creditor in a chapter 13 plan, must receive as much over the life of the plan as he/she/it would receive under a chapter 7 liquidation.  SO, if all your property would be exempt in chapter 7 (nothing taken and sold to pay creditors), you can propose a plan that pays as little as 1% to that creditor in Chapter 13; this is important, particularly, if much of your plan payment is going to repair a mortgage arrearage over the 3 to 5 years.  Finally, in a chapter 13 case, you get the discharge at the end of the plan payments (three to five years, with the same statutory injunction at the end)).

 

Secondly, when you declare Chapter 13 none of your real property (i.e. furniture, car, clothes, personal items) are taken from you.  You permitted to keep only one vehicle, whether it be a car, SUV, motorcycle, etc.  Therefore, should you have two forms of personal transportation you will have to sell one of them.  You cannot declare Chapter 13 for 7 years following your initial declaration for if you do then your creditor(s) can take any or all of your personal items & real property. (I agree that no property is taken in chapter 13.  However, 11 U.S.C. 522 (m), in a joint filed case (spouses) doubles the exemptions (other than the real estate exemption, in Massachusetts), so a chapter 13 case in Massachusetts could exempt two vehicles (and if there is no equity, either because the loan exceeds the car value or the car is leased, the car wouldn't need to be exempted at all).  Once you've been discharged, you cannot be a chapter 7 debtor for eight years, but the time restrictionfor being a chapter 13 debtor is only four years).

 

Third.  Bankruptcies absolve you from having to pay a mortgage(s) in that you are no longer required to make monthly payments, however, the bank(s) still have a lien(s) on your house(s) meaning that they can force foreclose(s).  That usually takes between 1-3 years before you are required to be out of your home.  Banks then sell the foreclosed property(ies) in a short sale meaning that they settle for what they can get for the property.  That amount is usually a lot less than the real value of the property.  Once a foreclosure action is started it cannot be stopped.  (A bankruptcy discharge gets rid of the note, but the mortgage is still good.  However, Chapter 13 allows a debtor to strip off an undersecured second or third mortgage or a secured judgment (called an Execution on a Judgment, here) and treat that creditor as unsecured and only pais a lesser proportion of their debt.)

 

Four.  it is highly advisable that if you are unable to keep up with your monthly mortgage payments to nortify your bank(s) IMMEDIATELY meaning today...not tomorrow.  Banks are not in the real estate business.  Thus, every house that they foreclose on they still have to pay property taxes, HOA common charges, etc all of which are liabilities to banks.  Very often banks will settle for owe  an amount that is a lot less than the total amount of your mortage as they dont want to pay for the aforementioned liabilities.  The only institution that I know of who will not settle for a lower amount is Beneficial as the institution is owned by a group of investors.  The lower amount is a one time offer meaning that should you want to pay it you have to pay it IN FULL!  Like the Cash Advance Balances the mortage interest is spread over 365 meaning that interest accumulates daily, so the quicker you pay off the mortgage the lower amount will you have to pay. (Chapter 13 requires that a debtor make post-filing mortgage payments directly to the creditor, along with a portion of missed payments to the trustee.  If you miss payments, either to the mortgage holder or the trustee, the case can be dismissed by the court).

 

Five.  Unless I am mistaken you are paying interest ONLY for the first ten years of your mortgage before any of your payments are applied to the principle amount of your mortgage. (I'm unsure of whose mortgage this applies to, but it may be a home equity loan/HELOC which are often written this way.  My recommendation, if a person can do it, is to always pay extra to principal every month, so that the balance declines before that date when principal and interest payments are calculated for the balance of the loan term).

 

Six.  Educational loans can be forgiven upon proof recieved from Social Security of a permanent disabiity that prevents you from working in any capacity.  This means that you have been receiving Social Security Disability payments, however, should you return to work then you are liable for the payment in full of any & all educational loans.  (These types of loans can be forgiven by the U.S. Dept. of Education if their criteria are met, but in a bankruptcy case, the Bankruptcy Court can include an educational loan in the discharge, in what is called an "adversary proceeding", if paying the loan back would be and "undue hardship".  A factor bearing on that determination could be health, age, family factors (e.g. caring for an elderly spouse/parent/disabled child, etc.  This is definitely something that needs the help of a specialist attorney).

 

I declared Chapter 13 in 2015.

 

 

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Freemason,

You make the statement that bankruptcies, as in all, remove a mortgage payment and result in foreclosure. My house was rolled into my chapter 13 and payments were made just like normal. At the end of my bankruptcy, both vehicles were paid off (yes, we rolled two vehicles into our bankruptcy in NC) and credit card debt was no more other than the debt acquired in the last few years. The student loan debt was placed on hold if we chose not to pay it, although it resumes after the bankruptcy was discharged.

The only person who can give you absolute facts about a bankruptcy in your state is an attorney who practices bankruptcy law. I can say that there are good attorneys and bad, everywhere. When we went to court to file our bankruptcy, along with dozens of others, we were asked who our attorney was. After giving his name, a comment was made that it would be done right. That was comforting coming from someone who deals with the bankruptcy attorneys every day.

Regular Contributor

If you continue to make your mortgage payments after having declared bankruptcy then there is nothing that the bank or other lending institution can do as you are still making payments.  If you stop making any payments then they can forclose.  If you choose the former be prepared that every time you call the agent he will preface his comments by stating that as you have declared bankruptcy you are no longer obligated to pay the mortgage, however, the bank still has a lien against your property which means that they can foreclose.

 

I speak only from my experience having declared Chapter 13.  Legal representation will occur when you declare.  Every state is different in their laws.  I live on Long Island, New York

 

 

 

 

 

 

 

 

 

Richard I. Pigott
Periodic Contributor

Hi, Richard--You're right that every state is different on one part of the law regarding bankruptcy, and that refers to exemptions (the stuff, including real estate, that you can keep).  The boring stuff: the federal exemptions are found at 11 U.S.C. (United States Code, searchable online) Sec. 522 (d) and, unless your state disallows you to use the federal list, and provides its own exemptions which you must use, then you can use whichever (your state or the federal list) is better for you.  For example, the federal list has a "wild-card" exemption for half of the $15,000 real estate exemption (so, $7,500) if you don't need that exemption.  So, if you don't own real estate, you can exempt/keep more cash or more equity in a car, etc.  BUT, my state allows a real estate exemption of up to $500,000, so home owners, even with modest equity, should choose the state list.  The exemptions are the only part of bankruptcy law which differs state to state.  The rest of the statute is uniform among the 50 states, Puerto Rico and territories, in terms of the chapters available, the requirements on who can be a debtor, the plans under chapter 13 or chapter 12 (for family farmers).  Worth researching for sure with a specialist attorney.

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Honored Social Butterfly

I didn't want to mention this, but it is the easiest manner to jettison credit card debt: bankruptcy.

 

It isn't free. There are court costs, plus attorney/counselor fees plus who knows what else, and you might not be forgiven 100%. Bankruptcy rightly ruins your credit standing for years to come. That may or may not be a concern. For you to decide.

 

Wishing you very good luck,

Epster

 

 

 

"The key to success is to keep growing in all areas of life - mental, emotional, spiritual, as well as physical." Julius Erving
Contributor

Just getting rid of the current debt will only cause a much bigger debt with no way out later on. Wouldn’t it be better to learn personal Biblical financial freedom FIRST? I’m just asking.

 

Humbly in Christ,

D

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Im confused by your statement.  I was just speaking from a standpoint of simple economics, work experience in credit card customer service for J P Morgan Chase & personal experience in Chapter 13 bankruptcy.  If you are tight on funds & have a credit card balance then you have to reduce your expenditures to only those that are absolutely & positively necessary expenditures.  That means no dinners out, holiday trips, play things for either one of the parents or children,etc.  If the children dont like it then send them to Parris Island where they will learn discipline & respect, both of which are not taught in today's liberal society! When you receive a credit card statement, do not, repeat do not pay the minimum due!  While that will make the banks happy given their monthly interest rate charge you will be paying that balance until you pass on or pass it on to your beneficiaries to be settled by your estate.  Im currently paying off a $2700 credit card bill caused by necessary expenditures that includes auto maintainace. While the bank may ask for a monthly minimum due of about $100 I pay them $1000 or more & limit my credit card usage.  No.  Im not wealthy.  Quite the contrary as the only monthly income I have is my monthly SSDI cheque & a $1500 cheque, the amount of which I cannot change, from a trust fund.  Pratically all of my SSDI cheque pays the monthly mortgage charge.  I therefore have to plan out each & every individual day.

Richard I. Pigott
Honored Social Butterfly


@FREEMASON wrote:

>When you receive a credit card statement, do not, repeat do not pay the minimum due!  While that will make the banks happy given their monthly interest rate charge you will be paying that balance until you pass on or pass it on to your beneficiaries to be settled by your estate. >

 


I noticed the last time I was paying bills online, that the credit card payment defaults to the minimum payment rather than the balance.  Nice try ha!

 

 

Life's a Journey, not a Destination" Aerosmith
Honored Social Butterfly

The best way to get out of debt, is, of course, not to get into debt. One does this by creating and sticking to a budget.

 

That's for when you get yourself out of this current mess.

 

Right this minute I suggest you pull out your credit cards and cut them to shreds. Also close your credit accounts. Disconnect your subscription TV, cancel all newspaper and magazine subscriptions. Ask for a refund on any unused club memberships. (some are prorated) And start living on a cash basis. This way, you quickly get real about your needs and your wants.

 

You gave us nothing to go on in terms of your abilities, so I cannot offer a response relative to work other than to say, yep, you'll need to start making more than you spend. Meanwhile, perhaps a credit counselor can help you work out reduced payments for and or consolidation of your debt. 

 

Sorry I can't point you to a magic solution. You'll get out of debt the opposite way you got into it: one good money decision at a time. Good luck!

 

"The key to success is to keep growing in all areas of life - mental, emotional, spiritual, as well as physical." Julius Erving
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Periodic Contributor

Not at all, sir. It wasn't meant for or about you. I was getting a little tired of being hectored on a subject that had been thoroughly analyzed, already. My sincerest condolences on the loss of your wife. That is a tragedy that can only be assuaged by time. I lost an adult son a few years back--fell off a mountain while climbing in Arizona, and it has been such a struggle to remain on an even keel and enjoy the jokes as I know he would wish me to. I hope you have many friends and family members who offer their love and support.
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Regular Contributor

Someone struggling with health and financial issues does not need your shaming.  Yet you felt it necessary.  

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