NB: The following is not legal advice. I'm not an attorney. If you need legal advice, see an attorney.
TNK wrote:ok, so i cant make my minimum payments on my credit accts. and such.
Is it the interest that's killing you, but you'd be able to make the payments if the interest were lower? If so, consider credit counseling. Legitimate non-profit agencies can work out deals with your creditors to lower the interest on your accounts and lower your payments. Some creditors will even waive prior late fees and offer a way to get your accounts looking current on your credit report. But if you go this route, do it before it's too late. Late fees will add up. Penalty interest rates can totally render you unable to ever pay off your debts.
One good place to find reputable credit counselors is the
National Foundation for Credit Counseling.
Another one that I know of you can work with online is
Hummingbird Credit Counseling. Although they're mainly set up to do credit counseling and debtor education bankruptcy certifications, the "before bankruptcy" link under "Bankruptcy Certifications" should take you to where you can form a debt management plan. If you go that route, call them up and ask them if they'll work with you if you're not wanting to file a bankruptcy.
The Federal Trade Commission has some
advice about choosing a credit counselor.
TNK wrote:its not a big enough amount to file bankruptcy, its not worth it.
Sometimes, surprisingly enough, it's better than it seems - especially if there's absolutely *no* way you can become current given your situation and are not judgment-proof* for as long as the statute of limitations lasts from the time you completely stop paying.
Anyway, if you talk to a credit counselor, try to get them to negotiate down your principal to 60%. They've got incentive to do so under the new bankruptcy law...because if you end up filing bankruptcy, their claims can be reduced if they unreasonably refuse to negotiate with you. Here's what the Bankruptcy Code says about it:
11 USC ยง 502(k):
(1) The court, on the motion of the debtor and after a hearing, may reduce a claim filed under this section based in whole on an unsecured consumer debt by not more than 20 percent of the claim, if--
--->(A) the claim was filed by a creditor who unreasonably refused to negotiate a reasonable alternative repayment schedule proposed on behalf of the debtor by an approved nonprofit budget and credit counseling agency described in section 111;
--->(B) the offer of the debtor under subparagraph (A)--
------>(i) was made at least 60 days before the date of the filing of the petition; and
------>(ii) provided for payment of at least 60 percent of the amount of the debt over a period not to exceed the repayment period of the loan, or a reasonable extension thereof; and
--->(C) no part of the debt under the alternative repayment schedule is nondischargeable.
(2) The debtor shall have the burden of proving, by clear and convincing evidence, that--
--->(A) the creditor unreasonably refused to consider the debtor's proposal; and
--->(B) the proposed alternative repayment schedule was made prior to expiration of the 60-day period specified in paragraph (1)(B)(i).
There really is no benefit if you end up filing a Chapter 7 and having it discharged anyway. But if you end up filing a Chapter 13** and have to pay a portion of your claims, this will decrease the amount you have to pay by 20% if your creditors unreasonably refuse to negotiate. I think, though, that negotiation through a credit counselor like this is worth it, since the reduction of principal can help you get back on track with your payments. I don't know how big of a hit that would put on your credit report, though. A credit counselor could probably tell you...though a lot of them still are unaware of this negotiation option.
Note, though, that for this option to work, your credit counselor *must* be approved by the U.S. Trustee to do bankruptcy certifications, even if you don't end up filing for bankruptcy. Check
this list on the U.S. Trustee website for the approved agencies.
TNK wrote:i just called a number i got off the radio, and they're program sounds alrigth, but what you do is stop making payments to your credit acct. co. and make small paymetns to these guys, in a few months, when the credit co. sends your ass to collections, then this co. steps in and bargains with them to pay off the debt for less.... it takes 24, 30, or 36 months.... my payments would be around 140 a month.. which i can easily afford... but i dunno if i wanna cause that much damage to my credit rating.....
That will definitely damage your credit rating. Not only that, but a lot of these debt negotiation agencies (that's what they are) are dubious...some just take your money and don't end up doing the negotiation. Check out
that link I put up above from the FTC (<-- repeat) and read up about what it says under "Debt Negotiation Programs".
TNK wrote:ive tried to consolidate thru the local banks with an insecure loan but i cant get approved...... does anyone know of a good option that i can get rolling ASAP i missed almost all my payments for this month and im REALLY stressing.......
That never goes over well because if you're already in the situation you're in, you don't look good to banks. If you actually had property to secure the loan with, they'd probably talk to you. But you really shouldn't go that route. If you end up in the same situation you're already in, your property could be repossessed and sold for a way below market price. You'd be better off selling the property and paying down the debt rather than pledging it as collateral for a new debt. Plus, if you go bankrupt, unsecured debts are totally wiped out, but your collateral is still liable for your secured debts.
For more info on credit, check out
The FTC's web site on credit. You can access the articles I linked to above plus more. The "For Consumers" section is a great one.
Selling stuff is good to get you back on track if your situation is temporary. But once you run out of stuff to sell, if you haven't made a good dent in those debts, you might just be back in your same situation. Consider all this info for the long term, so you end up paying off your debts eventually, rather than being stuck in a cycle of debt.
TNK wrote:i knwo i brought this on myself
One more thing: whatever you do, do *not* beat yourself up about this! The effects of that are the one thing that you do *not* need right now! Easier said than done, I know. I've been there and done that. But the last thing you need right now is depression. I can tell you from experience that it's pretty hard to keep up your current lifestyle, let alone trying to reform yourself, when shame over your situation consumes you and ends up leading to deep depression. Plus, the therapy necessary to try to pull you out of it is an added expense.
If you end up feeling pretty bad about this to the point you want to cry, sulk, or worse - hurt yourself, talk to someone about it. Get a big hug from someone and cry over their shoulder if that's what you feel like doing! Get your energy level higher than it is now so that you'll be able to carry yourself through this - and realize you'll be a stronger man once you do!
Reply to someone else - A note on student loans***: These are not dischargeable in bankruptcy, unless you prove that repaying them causes undue hardship. That is incredibly hard to prove. There are alternative routes to discharge. If you end up being totally disabled and unable to work, you can get the loans discharged without a bankruptcy. Also, there are civil service programs and programs where you can become a school teacher that offer partial or full forgiveness of your student loan just for fulfilling your duties under those programs.
If discharge or forgiveness isn't an option, student loan creditors are the best ones to work with when it comes to repayment. If you stay in school at least half time, you don't have to pay at all, and you may be able to get more student loans if you've been making satisfactory progress toward a degree. You can get a deferment or forebearance**** for financial hardship if the lender is willing. Also, you might be able to go on an income-contingent repayment plan that can lower your payments.
Talk to your student loan creditor if you're in repayment and can't pay. Work it out now before you go into default...because that's the worst state to be in and could jeopardize your eligibility for future student aid.
---
* judgment-proof: when you have no wages that can be garnished (unemployed or you make <= 30 * minimum wage every week), no money in the bank, and no property that can have a judgment lien attached to it (usually just real property)
** Or Chapter 11 if your debts exceed the Chapter 13 debt ceiling ($307,675 noncontingent, liquidated, unsecured debts, $922,975 noncontingent, liquidated, secured debts)...though you've probably got a business or are a millionaire if you're in that situation!
*** At least federal ones or ones guaranteed by the federal government. Private student loan creditors operate under vastly different rules and are not nearly as generous as a federal student loan creditor.
**** Deferment is good because the government will pay your interest on subsidized loans. Forebearance is where you don't have to pay, but you're still charged interest, which adds to your loan balance.
HELL deliver pizzas at night!!!!
Just figured i'd throw it out there..
besides, the minimum payment is under 100 bux a month... you gotta be able to put that much together... dont worry about paying the interest for a few months...big deal... get your finances in order on your own... you can have your account frozen if you call the bank and explain you cant make the payment... one of my buddies racked up close to 20k in credit bills, and now just pays it off to the bank every month in small bits; its a lot better than ruining your credit