I just came across this website and have been reading some of the posts. I am excited and nervous to get started. I plan on reading all of the how-to posts and tutorials, in the meantime any help would be greatly appreciated. We have about $3700 in credit card debt, $18,000 in student loans and $1000 in medical bills. We also have a mortgage and an old bankruptcy (2003). Right now we are very behind in our bills. I have been seriously considering working with CCCS, but would prefer to work with creditors directly, if they will cooperate. I just got off the phone with a collection agent for WAMU. She was friendly and offered a settlement but said that they could not reage the account. I am willing to settle on my accounts, if that is best (we can pay all the credit cards with our tax refund) but my goal is to get out of debt and fix our credit at the same time. So where is the best place to start? I have every intention of paying all of our accounts, but I feel very overwhelmed with the current situation. Any advice?
Start by looking at your total budget, and try to control your costs so you make progress against your debt. The return on investment in diverting cost savings into paying down your debt is at the highest marginal interest rate of your debt. That could be 29% APR or higher, on an after-tax (cash in your pocket) basis! How much do you make a month? How much does it cost you to live a month, based only on necessities? Include all utilities, rent, insurance, groceries, essential travel (commuting to job or school) etc. Add up discretionary expenses separately: cable TV, eating out, entertainment, magazine subscriptions, trips, etc, to consider cutting. How much are your monthly payments toward debt? Do your taxes and get that refund on its way. Do them yourself if you can, and do NOT take one of those refund loans at outrageous rates. You went to college to get smart, so now is the time to use what you paid for. Besides, to get your finances under control, you will want to know what they are, and just doing taxes is simple in comparision. Getting a significant tax refund back implies you may be overwithheld. If instead you had been able to apply that cash stream directly to your bills, you might not be in this situation. Check your withholding. You may need to increase your allowances to reduce your withholding, and you may need to project your expected income thru the end of the year to estimate what your tax liability is. You want your refund to be close to $0, since giving that free loan to the government is costing you at your highest interest rate, even as your credit gets screwed up. You are in no position to be so "generous".
The best place to start is with the original creditors. Offer to pay them in full within a set period of time, say 18 months if they will agree to reinstate the card once you have paid it down below the credit limits on the card. If they refuse (some will, some won't). In order to make that work you will have to do some serious budgeting. The ones that won't accept your offer will just have to be dealt with later on down the road which will free up more cash to pay the ones that will accept. If even one will accept your offer you are well ahead of the credit repair process. Even after they have been turned over to 3rd party debt collectors you can still call them up and repeat their offer. At that time they will claim they can't do business with you because they have turned it over to a collector. Tell them their debt collector is simply not doing the job because you have never heard from them. Tell them that accepting your offer and getting paid all that they claim you owe is better than getting nothing which is what is happening now. Keep it up and keep on telling them that you have heard nothing from the debt collector and a bird in the hand is better than a bird in the bushes. In the meantime, forget about credit repair because fixing your credit is going to do you no good at all when you get sued. It probably isn't a matter of "if" but rather "when". Start learning how to deal with the lawyers now and then you won't come up with a "deer in the headlights" look on your face when the lawsuits start. Keep away from dangerous teachers who will try to tell you that you don't owe the money because ??????? Your remedy is in the law and yes, there is a web site out there by that name but it teaches nonsense arguments. Learn that if someone cites a case and gives a link to it but it isn't an actual court link then you can't rely on it. If someone tells you that a court ruled something or other you should ignore it and look the case up and read it for yourself. The actual court opinion is what you want, not what somebody thinks it said. Learn federal rules of procedure, federal rules of evidence, Rules of procedure for your state and your local court as well as rules of evidence for both. You don't have to memorize them, just be well familiar with them. Go spend a morning or two in court just sitting there listening. You will learn a lot. Learn to use your local law library. Try to use one at a university that has a law school if at all possible.
If any of your credit card accounts are less late than the others, you might want to try to bring and keep it current, to use as a starting point for reestablishing credit once you get thru this period.
