Re: Re: Re: Re: Re: Drowning in debt. Please help! Thanks for the advice. If you look at the itemized expenses I mentioned above, there really is no budget for entertainment or clothing. I buy clothing once or twice a year when there are deep discounts. My sole possessions are a computer and a cheap stereo system. My parents have just bought me a used car, which I need because the winter is long and for when I am on call. As for trying to do balance transfers, I haven't received any offers even when my situation was somewhat better over the past 2 years. I'm going to try to work it out with the creditors and if that fails, I will resort to filing bankruptcy.
Re: Re: Re: Re: Re: Drowning in debt. Please help! That's some great advice. The ability to tough it out varies from person to person, but your plan is definitely a good one if he can pull it off. My main thing was to help him in avoiding bankruptcy, which he doesn't want to do, anyway. I was pretty much told straight up a few years ago that I was headed toward BK, but my wife and I managed to pull ourselves out of the mess we were in. We still have a large portion of the debt from that time, but at least we aren't nearly as distressed. That's also a good idea about balance transfers. At the very least, he could transfer part of one of the larger ones to a lower-rate card.
Re: Re: Re: Re: Re: Re: Drowning in debt. Please help! Well, I think Stress DOES want to avoid bankruptcy, he/she just isn't sure if it's worth the sacrifices of having an annoying roommate, only flying home once a year, etc. And I've gotta say, I can't blame Stress for that. The training he/she is going through is taxing enough that most people wouldn't be willing to take on more. I just wanted to put the idea out there as an option. Only Stress can decide what's best for Stress.
Re: Re: Re: Re: Drowning in debt. Please help! clc and struggler: You both are overlooking two very important factors: (1) Legally, there will not be TWO "defaulted accounts" -- a debt may only LEGALLY be reported ONCE. If the SAME debt is listed TWICE, once by an OC and once by a CA, then somebody is in violation of the FCRA (hint: it's the one who doesn't OWN the account). (2) Struggler: you said that he should "remain in good standing with the OTHER accounts". The problem is, however, that ALL the other credit card companies can and will raise his interest rates on THEIR card, based on the derogatory information being reported by the CC company that he has chosen to NOT pay. Read your credit card agreements -- they can and will raise your rates based on the status of your accounts with OTHER creditors. jshimmer
Re: Re: Re: Re: Re: Drowning in debt. Please help! Actually, I'm not overlooking that at all. I thought it could only be reported by one or the other, but I wasn't sure. This is very true, but.... he's already paying from 20-24% on all four of them. Let's face it; there's nothing to stop them from jacking up the rates on him when he least expects it, anyway. That's part of the insanity of CC companies in the first place. They don't really need any rhyme, reason, or excuse to put the wood to a customer.
Re: Re: Re: Re: Re: Drowning in debt. Please help! I agree. If you don't have access to a credit union, see if you can apply for some cards with low BT rates. SillyLilly has the right idea--highest rate goes first. ALWAYS the highest rate. So if you BT some and then somehow get some extra money, that goes on the highest rate AT THAT TIME. Did you check to see if there's a credit union affiliated with your school or hospital? There are some out there that have pretty lax requirements for membership. In fact, if you search on Pentagon Federal Credit Union, you'll find a post by someone who got a 3.9% for life of transfer. They aren't offering that any more, but I'm sure there's one less than you're paying. That post had a link to join another organization for $20 which qualified you for credit union membership. I'm sorry I don't have time to look it up right now, but I have to run to a meeting. ANY extra money that you get, pay on that highest rate card. Can you get a student loan for additional money and use it to pay off some of the CC debt?? I'm also opposed to BK. I posted a while back about how I got stuck with about $77K of CC debt in a divorce and have almost paid it off. My credit was trashed for a while, but I just got a 4.24% car loan. So it is possible to make a comeback.
Re: Re: Re: Re: Re: Drowning in debt. Please help! Stress, You sound like a candidate for Chapter 7. Yeah, it will be on your credit, but there are plenty of things you can do to overcome that. I was in a similar situation and had to file for BK. Don't fall into the trap of Chapter 13, if you are going to file, get rid of it all and start over. It's honorable to want to repay what you owe, however you are dealing with dishonorable companies with dishonest practices. It sounds like you've tried to work things out with them, to no avail. Don't worry, they're making plenty of money. Do what is best for you. This is just my humble opinion, there are people on here who have seen/done more than I, but I do know what it's like to not be able to sleep at night.
Re: Re: Re: Re: Drowning in debt. Please help! Stress, The credit card companies will only negotiate so far. Your credit will be ruined and there is no guarantee they will re-age or any of that. and..if you pay 3, and default 1. the other 3 are going to review your credit and close your accounts anyway. You are the prime candidate for ch 13 bk. Keep reading these boards....credit cards DO sue and garnish wages. BK offers you protection. You are young and when the ch 13 is all done you will have a clean slate. 3 years to pay $60k...think about it...it would take a lifetime to pay that debt down on your own. Good Luck !!
Re: Re: Re: Re: Drowning in debt. Please help! Dr. Stress, I have posted this subject on a new thread. I stand by that post. clc
Re: Re: Re: Re: Drowning in debt. Please help! I've applied for balance transfers and have been turned down each time. No one wants to work with me because my debt to income ratio is astronomical. I'll look into joining a credit union, somewhere, somehow. It's definitely an attractive option. As for limiting my spending, it's as far as I can go. My job is stressful enough as it is so I don't want to have to deal with a roommate. I have had some rather annoying, and sometimes crazy, ones in the past. Also, I definitely need to fly home to visit my family several times a year. These are the things that are helping me maintain my sanity. If these credit card companies will work with me through some type of hardship repayment plan, I think I will be ok. 2 years from now, I will be able to moonlight (additional part-time work) and can easily afford the monthly payments. The trick is to get some breathing room between now and then.
Re: Re: Re: Re: Drowning in debt. Please help! Here is my two shingles: Scenario 1: Pay nothing, because for the moment, you don't have any assets and are judgment proof The problem with scenario one, as I see, is your future job/income potential. In about 4 years, your income will soar, and if your creditors know this, they will fight to not let you out their sights. In other words, you are judgment worthy. Also, judgments can be renewed, given your future occupation, I wouldn't go for this strategy. Scenario 2: File BK 13---do payment arrangement, stop the absurd interest. Problem as I see, you are just going to be adding more stress to an already stressful situation. Even if you work a bk 13 plan with the best of intentions, given your current struggle, you may not be able to keep up with the payments. Also, you are STILL trashing your credit. Scenario 3: BT or try to get your interest lower Problem: With credit scores in the 500 range, I don't think your going to find any cards going under 20% interest rates. Doesn't seem do-able. You would have to pick your scores up, at least to the high 600's (**maybe mid 600's). I'm guessing utilization is a big problem, which doesn't seems fixable. I mean if you had the $$$$ now, you would pay them off! Scenario 4 Bk 7 Problem: Seems like an issue of morality/embarrassment to you. It's your own choice, seems the best move IMHO. You can wipe your unsecured debt out and MOVE ON and stop stressing over what you can't afford to pay for the time being. Also, the second after filing, you can start to rebuild your credit and very likely be able to buy a house in the next four years. Many people have filed bk here and successfully rebuilt their credit in a few years, Dan S. for example.
My 2 cents this is where you need to go... www.mycesi.org they cut my interest rate from about 29% to 6% and worked out an affordable payment plan. You DO NOT have to pay them. It is an OPTION... great program... they do it all for you. Sign up all the credit cards you want... remember the accounts will be closed while you are in the program... good luck opening them up ... thats the hard part with low scores... I have been trying to get my MBNA open for awhile and it hasn't happened... I even got letters back 2 times from Planetfeed from a VP and the answer was still no. They want to wait till my gold option loan is paid off and then they will reconsider... I have been in the plan for 2 years and it has saved me a TON of interest. I recommend this.. Put all but 1 card on it and pay the minimum on the mycesi until you pay down the balance on the card you have... Good luck..
Re: My 2 cents mongrol, was this agency able to negotiate a lower balance on these debts or did they remain the same? How much did they reduce your monthly payments? If you don't mind some personal questions...how long did it take you to pay off the debt? Which credit card company did you owe? And approximately how much did you owe? I have been told by many individuals that this is equivalent to Ch13 bankruptcy but is even worse on your credit ratings. So far, most people have advocated BK...and I really wish to avoid this path.
Re: My 2 cents One thing I want to be very clear about: the reason I strongly recommend NOT going the bankruptcy route is because Stress is heading toward a really nice income in a few years. Now, if he were in a dead-end factory job with no room for advancement and no raise in sight, then I could see BK as an option. Stress, I just don't want to have you looking back in a few years when your income soars and regretting taking the BK route. Sure, it's a quick fix, but who needs that on their credit? Just my opinion.
Re: My 2 cents I don't make much money, and the loan was for 3700 dollars initially. with all the late charges, it went to over 4100. They negotiated a payment from 140 to 100 and an interest rate reduction to 6% from 29% This was through MBNA and was a gold option loan. Don't ever be late on this, they jack up the interest big time. I have been on the payment plan for about 2 years and I am down to 1300 bucks. I am also paying one of my wifes collections off at 10 bucks a month through them. Kay Jewelers can kiss my ass... I recommend this program whole heartedly... it is great and will save your credit. MBNA reports as account closed and paid as agreed. Allthough in the notes it says I was 90 days late. Just call them and ask for consultation... its free. Thats what they are there for. I have not been scammed at all and they do not report that I am in a payment plan either... which is a HUGE benefit Good luck
Re: My 2 cents mongrol, was this agency able to negotiate a lower balance on these debts or did they remain the same? balances remained the same How much did they reduce your monthly payments?about 40 dollars If you don't mind some personal questions...how long did it take you to pay off the debt? still owe on the debt.. about 1300 bucks almost there!! Which credit card company did you owe? MBNA And approximately how much did you owe? over 4000 I have been told by many individuals that this is equivalent to Ch13 bankruptcy but is even worse on your credit ratings. NOT TRUE So far, most people have advocated BK...and I really wish to avoid this path. DON"T DO BK... If you can, work it out with the creditors... you have high balances.. you don't want 6 creditcards like I have with 250 to 1500 dollar balances... See if you can work out a payment plan with them before they go into collections. One trick would be to pay the minimum on each and over pay the one with the highest interest. This will help in the long run. Sounds like you just need to buy time and this would work without killing your rating. I realize that you are straped for cash, but it can't be as bad as me. Forget the coffee, cigs, all extra's and work on the money problems... a 2nd job might be tough with school, believe me I would, but I work full time, have a family, and I am going to graduate school for my MBA. Pay cash for everything possible and resist the urge... Have a big garage sale or list your stuff that you bought on ebay. Get money back in somehow and pay the balances down... You have options.. hopefully this helps
Re: My 2 cents This sounds like an OK credit counseling service. There are a few that are truly nonprofit and there to help you. CCCS is one, but many people use that term to cover any credit counseling service. Many of them (Ameridebt comes immediately to mind) aren't really nonprofits and charge you exorbitant fees themselves. While credit counseling may leave a mark on your credit, it may be easier to remove. The other reason to avoid BK (which I'm sure you are aware of) is that in some cases you must declare FOREVER that you at one time filed BK. You have more than just your credit at stake here, as you well know. You are going into a field that requires licensing and regulation, and in those cases a BK may hurt you even more than the credit implications. So, if you can't come up with a better solution, I'd say try credit counseling. Even if it's not paid off by the time you're out of school, you will have gotten the payments and interest lowered. You'll be increasing your debt less during these next three years than if you keep these 20+% rates. And, as you said, in a few years you'll have the money. Then you can make big payments and pay it off. In the meantime, you'll have several years with no lates, and that should help your score.
Re: Re: Re: Re: Drowning in debt. Please help! Stress I don't want to give any financial advise because I filed a chapter 7 12/2002 and today I have a new car with a car note $100 less than the car I gave back in the bk and 3 credit cards. But my concern for you is how do you save money for a house when all you are making is going back out the door...consider the bk7 or bk13 or at least a debt consolidation program. I can get a house next year at the same interest rate as a person who didn't file a bk. Remeber this also the amount of debt you have effectives the amount of mortgage you can afford, don't want to get stuck in a $40,000 home lol.
Re: Re: Re: Re: Drowning in debt. Please help! Stress, I have explained in detail your financial straits. I have presented all the numbers in another thread. But if you still want to go to a credit counseling service here is advice and information from the Federal Trade Commission: The Claims Debt negotiation firms may claim they're nonprofit. They also may claim that they can arrange for your unsecured debt â?? typically, credit card debt â?? to be paid off for anywhere from 10 to 50 percent of the balance owed. For example, if you owe $10,000 on a credit card, a debt negotiation firm may claim it can arrange for you to pay off the debt with a lesser amount, say $4,000. The firms often pitch their services as an alternative to bankruptcy. They may claim that using their services will have little or no negative impact on your ability to get credit in the future, or that any negative information can be removed from your credit report when you complete the debt negotiation program. The firms usually tell you to stop making payments to your creditors, and instead, send your payments to the debt negotiation company. The firms may promise to hold your funds in a special account and pay the creditors on your behalf. The Truth Just because a debt negotiation company describes itself as a "nonprofit" organization, there's no guarantee that the services they offer are legitimate. There also is no guarantee that a creditor will accept partial payment of a legitimate debt. In fact, if you stop making payments on a credit card, late fees and interest usually are added to the debt each month. If you exceed your credit limit, additional fees and charges also can be added. All this can quickly cause a consumer's original debt to double or triple. What's more, most debt negotiation companies charge consumers substantial fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee of a percentage of the money you've supposedly saved. While creditors have no obligation to agree to negotiate the amount a consumer owes, they have a legal obligation to provide accurate information to the credit reporting agencies, including your failure to make monthly payments. That can result in a negative entry on your credit report. And in certain situations, creditors may have the right to sue you to recover the money you owe. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home. Finally, the Internal Revenue Service may consider any amount of forgiven debt to be taxable income. Tip-offs to Rip-offs Steer clear of companies that: guarantee they can remove your unsecured debt promise that unsecured debts can be paid off with pennies on the dollar claim that using their system will let you avoid bankruptcy require substantial monthly service fees demand payment of a percentage of savings tell you to stop making payments to or communicating with your creditors require you to make monthly payments to them, rather than with your creditor claim that creditors never sue consumers for non-payment of unsecured debt promise that using their system will have no negative impact on your credit report claim that they can remove accurate negative information from your credit report. If you decide to work with a debt negotiation company, be sure to check it out with your state Attorney General, local consumer protection agency, and the Better Business Bureau. They can tell you if any consumer complaints are on file about the firm you're considering doing business with. Also, ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is. Here is another interesting article on CCSs http://www.businessweek.com/magazine/content/01_44/b3755094.htm So your three options are to borrow more money to pay for money that is already borrowed. Go to a credit counseling service. File a BK 7 and discharge it all. If you made it through med school I am sure you have the beth cells to figure out what is best for you and your future. clc
Re: Re: Re: Re: Drowning in debt. Please help! just so you know www.mycesi.org is NOT a debt consolidation place... you pay the full balance that you owe, but they do negotiate a better interest rate for them... I wish I could do a print screen of my mbna account for ya so you could see my interest rate...
