posted
Please don't take my earlier statement as that all bankruptcy is basically theft. It isn't, if entered into ethically, and it is a chance at restarting one's life.
However, I do know of cases where folks have run up a ton of bills with the full knowledge that they would then declare bankruptcy. My sister in law did this and basically walked away from any idea of obligations.
I just can't stomach that or just simply ignoring the problem and saying, well you can screw up my credit, but hey, that was unsecured debt... your loss. I can't do that, but sheesh, basically 30 percent interest??? How in the crap do they expect anyone to repay a debt?
The fact is, I don't believe they do. Over $800 a month in interest alone, even at $1,000 in payment would trim the principal only the smallest of amounts. And if I made just the minimums? I'd lose ground. Heck, last month, finance charges pushed it over the limit. And I got charged a fee for that!
This is debt slavery. How can it even be legal? Our state once had a legal interest limit of 21%. What happened to that? Now, I can't even find info on what the legal maximum is.
Sorry, just so incredibly frustrated.
Posts: 2848 | Registered: Feb 2003
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posted
Yeah, I can understand that frustration. I never ever made a charge on my credit cards over their limits, but I got charged with over-the-limit fees because of the late fees and interest that they charged.
Also, most credit card companies won't offer to make any deals with you until you're 60 days overdue. You might find that they offer you more options as you keep on talking to them.
The same is not true of collection agencies. I wouldn't even deal with them.
Anyway, get everything in writing. I got a nice deal over the phone that said that I had a year to pay whatever I wanted with no more interest piling up. I didn't get it in writing, and it was as if it had never happened.
Posts: 2880 | Registered: Jun 2004
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posted
Have you been going to the same bank or credit union for a long time?
Maybe it'd be possible to get a loan from them, for a much, much smaller interest rate to pay off the credit card debt. If they even gave you enough to kill off a fourth of the debt, that's a ton of money saved every month in interest payments.
Posts: 21898 | Registered: Nov 2004
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posted
Lyr, we tried. Basically the "I'm so newly graduated that I'm still wearing the suit my Mom got me" loan weenie took a look and laughed us out of the bank. I believe he said something along the lines of "We won't be able to help you and don't bother asking again for two years. What made you think we would give you a loan?"
And we'd been banking with this place for 10+ years. (Wachovia, btw. They also hold one of the credit cards, through MBNA).
Posts: 2848 | Registered: Feb 2003
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posted
Yes. The collection agency will continue to add interest.
There are a couple of things that can happen. A collection agency might be hired by the original creditor to try to collect the debt from you, or the collection agency can buy the debt (sometimes for pennies on the dollar) and try to collect the debt from you at a profit.
Usually, if they fail to collect the debt, they'll sell it to another agency, then that agency will start contacting you. It goes around and around and around. But once you have enough of a debt racked up on one account, there is a possibility of being sued.
First thing you do when you get a new company contacting you is asking them in writing to verify that the debt is yours. (You don't want them to try to collect a debt that isn't yours or that they didn't buy.) There is a lot online about all this...
I hope that you'll be able to get some sort of loan with a manageable payment, so that you can avoid years of not being able to answer the phone without caller ID or bankruptcy. Or that you're able to pay it down with one of the methods suggested by other posters.
Posts: 2880 | Registered: Jun 2004
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I'm really sorry. Chances are that they WILL sue you. They'll start with an "arbitration" using their lawyers (probably Wolfpoff & Abramson) that has questionable legal standing according to the "research" I did. (research=google searches) Basically, if they added the arbitration clause to your contract after you go the card, it shouldn't be binding, but it is. (I'm not sure about that, I'm no lawyer..) Anyway, after that, an "independent" arbitration firm decides against you. Then the firm/bank/whatever will sue you to get a judge to enforce the arbitration ruling. You can try to fight it in court, saying that you never agreed to arbitration, but you'd need a good lawyer.
This has happened to many people by MBNA. They're quite well known for it.
I found that out online, and then that's exactly what happened to me.
quote:Originally posted by Stephan: Well, you already have your house, so your credit rating might not be your top priority. The most they can really do to you in collections is give you bad credit. Since you are already in the hole, ignore the collections agencies, keep sending in as much as you can, and once your situation is in good shape again with a job and all start paying them what they want.
After a certain amount of time passes, giving you bad credit will turn into, as the recent posts have shown, suing you, and then they WILL begin to garnish your wages, it's happened to a few friends of mine who were much less responsible than you with their cards, and whose parents refused to bail them out.
Banktrupcy in the end might be the best choice, though I hope it doesn't come to that.
Posts: 21898 | Registered: Nov 2004
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posted
I put off bankruptcy until I was being sued--they basically took the choice away from me. I couldn't risk my very meager wages being garnished.
And maybe MBNA is being nice so far, but don't count on it continuing. You're just a number to them--a potential source for money. If your account becomes deliquent enough, they will go after you--unless your balance is too low to bother with, but I've heard cases where they went after relatively low balances.
Posts: 2880 | Registered: Jun 2004
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posted
Sopwith, You might want to consider a Chapter 13 bankruptcy. This type of bankruptcy isn't walking away from your debts. Through this type of bankruptcy proceeding you will be required to pay most or even all of your debts, but with much better terms than are offered by your current creditors.
The truth of the matter is that these credit card companies have taken advantage of your misfortune by raising their interest rates to an unreasonable level. Whether its through bankrupcy or loan refinancing or debt consoladation or what ever, you have to find a way to get that interest down. While I think its admirable that you feel an obligation to pay your debts, you shouldn't feel an obligation to pay such high interest rates. If the only way out of these interest rates is a Chapter 13 bankrupcy, do it. You will still be paying off your debts, just under more reasonable terms.
Posts: 12591 | Registered: Jan 2000
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posted
Ahhh.....credit collection agencies can't continue to charge interest as far as I know. Your agreement with the banks is one thing, but the collection agencies BUY the CURRENT debt, terminating your agreement with the banks and assuming a new one.
Check it out to be sure, but no collection agency I have ever heard from (and unfortunatly I have heard from more than one) managed to do that, and if they were allowed to I am sure they would have tried.
Posts: 15082 | Registered: Jul 2001
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posted
Well, upon further research, a new legal judgment recently changed all of that, and some states now allow interest to continue to accrue even if the debt has been "charged-off".
It depends on the original terms and state law. Posts: 15082 | Registered: Jul 2001
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posted
I would consider two things to be the most important.
1) Keep the house at all costs. You have a lot of money invested into it, and it's your house. Don't jeopardize that for the sake of possibly lowered monthly bills.
2) You've already asked here for help, ask a professional. You sound like you have the ability to get rid of this debt if you act now, and get good advice for your specific case.
posted
I understand the need to be responsible for your debt, but keep in mind that bankruptcy was written into law for a reason - to give relief to people who cannot continue under the burden of untenable debt.
It sounds like that's where you are now.
It's not a an easy option to take - as you know the repercussions are serious and long-lasting.
The question is - even after getting back on your feet, how long will it take to clear this debt?
Do you have enough equity in your house that you could sell, clear your debt and rent for a while, while you saved for a new place? If not, would you be better declaring bankruptcy, freeing yourself from all your debt and renting for the period of your insolvency, saving like mad for a few years until you can afford to put down a really big deposit on a new place?
As I said, bankruptcy is there for a reason. Ignore the stigma and the artifical ethical environment perpetuated by the rotten scum who are charging you 30% interest and look at it logically. Write down the pros and cons of every option - ignore what you see as your responsibility to some companies who would take you to the cleaners without blinking and think of your responsibility to yourself and your family.
You only get one life. If debt is making you forever miserable, then you owe it to yourself to look at all the options.
Posts: 2245 | Registered: Nov 1998
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posted
There's really no need for him to rent after bankruptcy. He can keep his house. He doesn't include his house debt with the bankruptcy. He has to disclose it, of course, but he can reaffirm the debt with his mortgage company and continue to pay as usual.
If he declares bankruptcy (chapter 13), it would make very little sense for him to also give up his house and throw money away on a rental. It's unlikely he'd get as good a deal as he has now after bankruptcy--and bankruptcy shouldn't affect his current mortgage if he reaffirms the debt.
Posts: 2880 | Registered: Jun 2004
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quote:Ahhh.....credit collection agencies can't continue to charge interest as far as I know. Your agreement with the banks is one thing, but the collection agencies BUY the CURRENT debt, terminating your agreement with the banks and assuming a new one.
When you buy a debt, you buy the interest stream attached to it. Most loan agreements allow the creditor to do assign the debt without the debtor's permission.
I don't know if collection agencies can continue charging interest or not, but, if they can't, then they didn't buy the debt.
Posts: 26071 | Registered: Oct 2003
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posted
My mother filed bankruptcy with the divorce and all, and she kept her car. Just like katarain is saying, she reaffirmed that debt with the finance company the car loan was through, continued to pay the note and now owns the car free and clear.
I think at this point, you really should consult with a bankruptcy attorney. I respect you and honor you for not wanting to write off your debts, but everyone here is right - the bankruptcy laws are there to protect people like you who have just gotten in a situation they can no longer get out of by themselves.
Posts: 14428 | Registered: Aug 2001
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quote:Ahhh.....credit collection agencies can't continue to charge interest as far as I know. Your agreement with the banks is one thing, but the collection agencies BUY the CURRENT debt, terminating your agreement with the banks and assuming a new one.
When you buy a debt, you buy the interest stream attached to it. Most loan agreements allow the creditor to do assign the debt without the debtor's permission.
I don't know if collection agencies can continue charging interest or not, but, if they can't, then they didn't buy the debt.
A lot of that I cleared up in the next post....it is very location sensitive, as are a lot of laws. Some states are more friendly to the collection agencies than to debtors.
There have been some recent court decisions regarding this that have changed a lot of what had been true for me when I went through my tough times. Posts: 15082 | Registered: Jul 2001
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posted
It's astonishing how many people this happens to. And the reason is the predatory policies and practices of credit card companies, as well as our willingness to go into debt, at times of income downturns.
The one thing I think I can add to the excellent things that people have said before me is this.
Never buy luxuries on credit.
That's the most important principle of personal finances. What counts as a luxury versus true need is something you have to ask yourself and consider honestly before you make each purchase. And it depends on how much you make, and how in debt you are.
Debt is crushing! It smothers the soul! It is horrible! I feel for you. This is a bad situation.
Posts: 6246 | Registered: Aug 2004
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posted
Sopwith, here are a bunch of articles on wisely managing finances and debt, that I have found to be a great resource. They're written for Latter Day Saints, but everything they say is very wise and practical for everyone, and I believe they could be applied equally by people of any or no church.
If you still are looking for a better job, there is the church job links page, which is a compilation of a lot of different job listing places online. There are other job helps too. Again, it's all aimed toward members of the church, so you will have to translate some.
The most important thing that reading those articles does, I think, besides give a lot of good ideas, is put heart in you for the struggle, and give you hope that things can and will get better. That is invaluable!
Good luck with this! I'm so glad you posted to hatrack about it. Posts: 6246 | Registered: Aug 2004
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That is a principle that we've tried very, very hard to uphold and to teach our children. It's hard, with today's society because it seems like everyone is doing it and it looks so easy. Just buy the furniture you want today and you don't have to pay for it for a whole year! So easy to get sucked in and then you do pay the price. (Note, I am not talking about Sopwith's situation here, just talking about how Wes and I got into credit trouble early in our marriage.)
We fought hard to get out of the debt, and vowed never to buy luxuries on credit again. So far, we've held to that. In fact today we don't even own a credit card, we use our debit card for everything. If we can't buy it outright we wait and save until we can.
And it's hard. The materialist monster inside me really, really wants a new tv and new entertainment center. I tell myself that we planned on buying a new entertainment center to fit our new, large great room when we moved into our house and held off because we went over on our construction costs (doesn't everybody?) and decided not to spend the money on it then. That was eight years ago. Part of me says, I've waited eight years I deserve it now. Part of me says the great room would look so much nicer with new furniture.
But then the other part says what's vital about a tv? What about it can we not live without? We have to wait until we have enough cash on hand to buy it all outright. Most of the time that placates the spoiled little girl inside me who stamps her foot and says "I want it now!" Most of the time. Posts: 14428 | Registered: Aug 2001
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posted
Yes! Belle, also I get a whole lot more enjoyment out of things that I've bought outright. The bad thing about buying on credit is that the thing you bought, whatever it may have been, has lost its glow long before you have finished writing those checks. It's just a part of your life, your background, and yet still you pay and pay.
Since I've decided always to save up and pay cash for stuff, I have found that sometimes by the time I have the money, I don't even want the thing anymore. Then I have a bunch of money that's not earmarked, that I can spend on anything at all I want. It's very nice that way.
The hard part about luxuries and necessities is deciding which is which. At first I think, of course, broadband internet is a necessity, but then I realize that I can actually manage on dial-up if I can't afford broadband. Then when I think about it I realize I can go to the public library to get online, for that matter. So everything goes like that. There are stairsteps of expense in each category.
One way to train yourself to save more and spend less is to vow to jump one step down in every major area of your life.
For instance, if you eat out a lot at fancy restaurants, you could go to less expensive restaurants, or if you already only go to the less expensive restaurants, you could eat out only at fast food places. Or if you already do that, you can eat at home and not eat out, or if you already eat at home, you could choose the cheapest food that still gives adequate nutrition, like eating beans and rice and no meat.
For transportation if you drive a nice car and get a new one every 5 years, you can jump down a step and keep your car 10 years, or get a five-year-old used car every 5 years. If you already drive a 20 year old used car, you could try to get by on public transportation instead of keeping a car, which is expensive in insurance and gas and maintenance. Or you could ride a bike, if that's possible in your community.
For utilities, you can conserve water by not watering your lawn, or by taking quicker showers. For electricity you can decide not to run air conditioning, and just open up and use fans.
For entertainment you can rent movies instead of going to the theater, or drop your tv cable and just read more. If you already don't watch tv but you buy your books, you could start using the library instead.
For every area of your life, there are stairsteps of spending. When we get a raise and begin to make more money, it's so easy to jump upward on those staircases. However, when we lose our jobs or have to take lower paying jobs, and when we get hit with unexpected financial burdens, it seems so much harder to jump back down those stairsteps to a humbler level. But it's quite possible and very doable. We just have to train ourselves again to accept those things.
I know this is not much help to Sopwith, in his current situation, but the stairstep idea has been a great one for me. The great thing about all these ideas is that they teach us to be in control of our money, instead of letting our money control us. They teach us how to be free.
Posts: 6246 | Registered: Aug 2004
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quote:And it's hard. The materialist monster inside me really, really wants a new tv and new entertainment center. I tell myself that we planned on buying a new entertainment center to fit our new, large great room when we moved into our house and held off because we went over on our construction costs (doesn't everybody?) and decided not to spend the money on it then. That was eight years ago. Part of me says, I've waited eight years I deserve it now. Part of me says the great room would look so much nicer with new furniture.
This is the discussion I have in my head every time I go into a store, period. Ultimately, I leave without most of the things I want - and it's a good thing, too, or I'd be well into six figure debt, as would most of us, I think.
Posts: 4313 | Registered: Sep 2004
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posted
My wife and I intentionally freak ourselves out about our relatively-manageable level of debt, and work like crazy to pay it off, just because if we don't, we know we'll risk getting ourselves deeper and deeper until we really are in trouble ...
Besides, paying off a debt is very much like giving yourself a raise, and everyone loves raises
Sop, I wish I had some vast knowledge and experience to give you, but I'm barely getting into this whole debt-management game myself. I'm sorry about your situation, and I hope you find a way out.
Posts: 1539 | Registered: Jul 2004
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posted
One of the essential tools to financial management is a regular examination of overall net worth. Few people actually calculate this number, but it's crucial if one wants to buy a house or must fund one's own retirement.
It's really the single most important metric related to finances, although it's by no means a complete picture. In general, it should be increasing, not decreasing, each month.
There are a few traps associated with it:
1.) The biggest is forgetting that it is only a metric, not an end in itself. Tracking net worth is not about trying to get as much as one can, but rather simply being able to evaluate the financial impact of any given decision. Too many people are utterly incapable of doing this with their financial record keeping. Therefore, they can't decide if expenditure X is worth more to them than those opportunities precluded by not saving that money.
2.) Next comes in forgetting that there are times when net worth should decrease. For example, my net worth decreased significantly by going to law school. I will never, unless I am incredibly lucky, make up that difference. I don't care - I'm far happier now than I've ever been. But, the reason I could go to law school and drop out of the earnings game for three years is that I kept rigorous track of my finances, including net worth, for 9 years prior.
3.) Including consumables in one's net worth. By consumable, I mean things that you intend to keep until retail value is zero. "If it's on your ass it's not an asset." Sure, you could sell most of the things in your house for some cash, but you'd have to buy some of it again. House, cash, securities, and other investments are assets. Not clothes, not your car (usually - a collector car might be), not your stereo equipment.
I've used net worth in a technical sense - the sum total of the financial worth of ones assets minus ones debts. I do not believe and am not saying that ones value is related to ones net worth.
Posts: 26071 | Registered: Oct 2003
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posted
To link into some things said there....there comes a time where you SHOULD spend the money on yourself. Not when you can't meet your other financial obligations, of course, but I can't tell you how many times my mom wanted something but didn't buy it because she was worried about debt..and wished later in life that she had.
Not a lot of times, and to be honest my parents are far better off than I hope to be, at least in part because of them being frugal earlier in life.
I remember my mom discussing finances (in general) with me after I got married, and she told me that she would probably never bought the cottage they own now if the decision had been completely up to her...and the boat my dad brought home on mother day (BAD! BAD! BAD! idea guys!) was a great deal, but not what she wanted or needed; yet the cottage is worth a lot more than they paid for it, and our favorite family memories revolve around the cottage in the summers and that boat. They are where they are in life now because of those chances they took, and because they knew that memories are priceless commodities.
There were times starting out where the whole family ate peanut butter sandwiches for dinner, because that was the only thing they had left in the house. Seeing where my parents came from to where they are today just proves that with some good choices anyone can improve their life.
THAT lesson has been priceless. Posts: 15082 | Registered: Jul 2001
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posted
Okay, sorry I haven't updated in a bit. Things have gotten sorta... worse.
First, the good news: I did get a job as a senior customer consultant with a copier/shipping company. Not bad, should make a bit more pay than the last job. Got the offer on a Tuesday, we went out to eat to celebrate.
The next morning, I call my wife at work to talk and she informs me that she's in the process of cleaning out her desk. The owners of the software company came in an announced they were downsizing. They halved their workforce.
Well, things looked mighty bright for a night or so. But, the baby is healthy, the sun keeps on rising and dial-up is cheaper than the cable modem we had.
Baby steps, one right after another. We'll make it.
Posts: 45 | Registered: May 2006
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posted
Sorry, man, I hope it all works out. As you said, most of the really important stuff still is good. Posts: 15082 | Registered: Jul 2001
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I'm sorry. Maybe your wife can find a new job elsewhere, with a coordinating schedule so you won't have to pay for childcare?
Posts: 952 | Registered: Jun 2005
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posted
Well, the good news is that she got a call attempting to recruit her for senior QA work with a major bank. There's a chance she could get and start the new job in a couple of weeks.
On a high note, Babydot is just about to start walking. If we're lucky, we'll both be home to see her first steps.
Tough times, but good times.
Also, I've started listening to the Dave Ramsey radio show. I highly recommend him and his down-to-earth advice.
Posts: 45 | Registered: May 2006
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posted
I'm sorry, Sopwith. Good luck to you and your family, especially on the new job. I'm sorry you're having so much thrown at you at once, but happy that you're still in a place to experience family joy.
Posts: 26071 | Registered: Oct 2003
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posted
Congratulations on your new job, Sopwith. And I'll be holding some good thoughts for your wife picking up a new, better job in the near future.
Good for you in keeping your thoughts positive, looking on the bright side. Big hugs coming your way!
Posts: 5948 | Registered: Jun 2001
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posted
Every time I've lost a job due to downsizing or company transferring ownership, I've wound up in a better paying position. Every single time. I hope your wife finds the same type of success.
Best of luck to you both. (((Sopwith and family)))
Posts: 14428 | Registered: Aug 2001
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posted
I also suggest Dave Ramsey. Check out his website, read his book Total Money Makeover. We are busy rebuilding our emergency fund after having to remove my wisdom teeth. His principles work. Call the CC companies yourself and negotiate. Explain that your only alternative is bankruptcy and you really want to pay them and ask them to work with you. They would rather get some money than none. Avoid bankruptcy at all costs. We've been down that road and it does not improve your credit rating. Having a bankruptcy automatically "qualifies" you for higher interest rates when you do need to obtain credit. I can't wait until ours is off our record. Its been 8 years and we have 2 more years to go. (BTW Chap. 7 stays on for 10 years) Our case was similar. We had a debt counselor tell us there was no way we could possibly pay the debt and to file. We had to live on our CC and pay a lot of Stephen's medical bills with them. Its a tough situation.
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