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Conversationalist

Re: Getting out of debt

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Message 11 of 59
Don't spend money you don't have or can't pay off immediately. I have my credit card on auto-pay.
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Re: Getting out of debt

1,071 Views
Message 12 of 59
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.)
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Re: Getting out of debt

1,053 Views
Message 13 of 59

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.

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Bronze Conversationalist

Re: Getting out of debt

1,026 Views
Message 14 of 59

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
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Re: Getting out of debt

1,005 Views
Message 15 of 59

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!

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Re: Getting out of debt

989 Views
Message 16 of 59

If you are in debt, resolve within yourself that you are going to find out why.  For instance, are you a hoarding personality?  They're out there. Are you medicating by making purchases? It happens.  If you are in debt because of poor decisions, you MUST decide and resolve that you will not buy that thing unless you actually have uncomitted cash to make the purchase.  

Probably the best way to get out of debt that I know of, besides not getting into debt in the first place, is through a program called Financial Peace University.  There are classes being held all over, so log into Dave Ramsey, or Financial Peace, and you should find a link taking you to where groups are having the thirteen week classes. You must pay the cost of attending, often near $90, but it is very worth it.  You learn so very much and what you learn can be passed on to younger members of your family.  If you stick diligently to the principles of the program, you will find yourself in a much better situation even after just a month.  

If your debt is medical, you may want to speak to the places where you owe money to see if you can work with them to pay your bill over time and possibly get a reduction of your bill.  Owing money is such a struggle! Owing taxes is very scary. I found out that there is a program called "currently not collectible" for a person's very overdue tax base.  Because of my husband's job, we must pay into the IRS our quarterly taxes. So we pay a bit more than we should so that they can claim what would have been the refund. 

Like I said, resolve with yourself that you are not going to keep that monkey on your back!  There are things you can do. Working with a credit advocate is really only necessary if you are in so deep that you can barely subsist.  Otherwise, you spend a good chunk of money for those services and may not learn anything.  So plan to learn techniques and tips for keeping yourself solvent and win the war over debt. Best of luck! 

 

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Re: Getting out of debt

982 Views
Message 17 of 59

I can speak from personal experience about the bankruptcy approach. As stated, it is not easy, but when it is used as a learning experience the benefits are endless. Over 7 years ago, my wife and I filed for chapter 13 and began making the payments without fail. Yes, we went to the required classes and managed for at least four years with no credit usage.

We started rebuilding credit with a credit card from our bank. First I applied and received one. Then so did my wife. Yes, this was while the bankruptcy was still on record and not yet dismissed. We applied and received multiple credit cards since then. It was truly interesting to apply for an Amazon (Chase) card with only a couple of months left before the bankruptcy was removed and it was declined.

The moment that the bankruptcy was removed, my Transunion score increased 39 points and equifax went up 31. Now that the bankruptcy is no longer on record, both credit scores are excellent. My wife's credit scores increased even more, and she is a homemaker. Yes, this was because the credit cards received have been properly managed and wisely used.

If you are committed to it, bankruptcy can work for you. In the class, we heard of people who defaulted on bankruptcy because of spending the payment on televisions and other wants. It was that kind of thinking that put them in the bankruptcy position in the first place.

Whatever you decide to do, keep a close eye on your credit scores. TransUnion and Equifax scores are free on Credit Karma. To stay on track, follow the excellent budgeting advice that has already been given. Some people take a simple "envelope" approach where cash goes in an envelope dedicated to a certain expense category and once it is gone, there is no money left for that expenditure until next month. Others use MS Excel or Intuit Quicken (yes, that is what my wife uses for ours). As I have heard many times, "there are only two legal ways to overcome debt - make more or spend less." An excellent way to spend less, in addition to a strict budget, is to use coupons whenever possible and buy store brands when coupons are not available.

With proper planning and a commitment to the plan, you can get out of debt.

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Treasured Social Butterfly

Re: Getting out of debt

966 Views
Message 18 of 59

You got some great suggestions.  Are you feeling more confident about taking action?

 

 

Life's a Journey, not a Destination" Aerosmith
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Bronze Conversationalist

Re: Getting out of debt

953 Views
Message 19 of 59

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
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Bronze Conversationalist

Re: Getting out of debt

946 Views
Message 20 of 59

Yes I do! The vast amount of debt was accumulated while my late wife was dying from Ovarian Cance Type 3B.  Initial disagnosis & operation was in 2007 resulting in a hysterectomy together with a complete debulking.  From then until her demise 10 September 2010 she was unable to work since she had to undergo chemothereapy 3 weeks of every month, treatment that totally incapacited her.  I couldnt work as I did what I thought husbands are supposed to do by remaning home to care for her.  It is interesting to note that chemo is poison. So poison is being used to kill a disease that is already killing the patient.  It is also interesting to not that when you include your care on a job application employers will say that it is not a job & then dismiss your application for work.  Should you be in your fifties or older no one wants you or if they do then they offer a salary so ridiculous that it doesnt begin to pay the rent & put food on the table. My wife died at age 50.  At 64 I am a cancer survivor having survived thyroid cancer (a pain in the neck) & prostate cancer (a pain in the tuchus)!  My mother died in 1981 at age 65 from systemic cancer & my father from esophageal at age 95 in 2007.  Given my fathers age everyone tells me that I have good genes & should live a long life.  The only thing that I am confused about is whether they are refering to Levis, Lees, Jordache or some other design jeans.

Richard I. Pigott
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