Dealing with debt

[slynne]

The advice that you need to change your habits first is sound. Try what I call "extreme austerity" for a bit. Make it a game. I find that makes it easier and even fun at times. How little can I spend? I start looking at EVERYTHING and finding ways to save money. If you have a job where you can pay off this debt in just one year by staying in the job, stay in the job! Try moonlighting and getting a second job which has the advantage of killing your social life and all the opportunities to spend money that comes with an active social life. Learn how to do free stuff with your friends (I plan picnics or go to art openings or stuff like that) The first step is to change your habits about money. Easier said than done, I know. I have done it several times and then reverted back to old habits several times too. I am just not good with money naturally. But I can tell you, it can be done even for those of us who aren’t frugal by nature. It can be learned!

Then, you can start looking at what to do next. Do not look at bankruptcy as a moral failing. It is not. It is business. Your bank would have zero moral issues about defaulting on a loan if it were advantageous for them to do so. Heck, our current president is famous for defaulting on loans! Rich people use morality to get poor people to pay their loans but those rich people somehow seldom seem to apply the same morals to themselves. Get out of that trap and make a business decision. The only question you should ask yourself is if it is financially advantageous to declare bankruptcy or if you would be better served negotiating with your debtors for reduced payments (but yes, this is counted as income at tax time so consider that when making a decision) or if it is better to pay the loan in full somehow if you can. A lot of communities have free debt counseling. If yours does, take advantage of it!

Also don’t worry. If you don’t need a loan or to rent an apt, it doesn’t matter what your credit score is. Yeah some employers check for that but do you want to work for someone like that? The bad credit score is just a number and one only meaningful in certain situations. Also, even with bankruptcy, you can be back with a good score within 10 years or so.

As for me? I am pretty bad with debt. I have a pattern of digging a hole and then climbing out of it. I am climbing out of it now again and have my credit card debt down to $5k which I expect to have paid off by the end of 2017 while also simultaneously saving for a van to live in. That savings is going slowly because I have an aging German car and just had to pay $3k in repairs. That has at least got me thinking about NOT getting one of those Sprinter vans and maybe I need to find a Ford or something. Which is another thing. No matter what you do, as long as you learn from it, you will be ok. You will be ok.

 

[bullfrog]

If you have multiple credit cards you can declare bankruptcy against all but one which you can keep if you continue to pay it off. Before doing anything consult a lawyer and run it by your buddy at work. Be you know the facts because of so many misconceptions and biases out there are many who do it wrong and end up worst off.

 

[WalkaboutTed]

I see that you said that this is not the first time that you've gotten into the debt hole. I'm not one to recommend whether you decide to file bankruptcy or not, that is your dilemma. But if you don't learn to handle your money properly, even with bankruptcy, you'll find yourself in debt again. You gotta keep yourself from falling off the financial security wagon. If you can't seem to get your head wrapped around the situation, there's Debtor's Anonymous. Or go to the library (don't buy any books-start with that) and read about personal money management.
Though, if you do decide bankruptcy is a viable option and can handle yourself afterwards financially, the maxim about not being able to get decent credit for many years is not true at all. I had a no annual fee, traditional credit card one month after my case was discharged and a very low interest car loan three years after discharge. But if you can't handle credit in the first place, don't even go there. I was thrown into my financial hole by the combination of medical disaster, job loss, foreclosure and the 2008 recession. Living high on the hog is not what toppled me into my debt nightmare.
Ted

 

[#1BonBonQueen]

Having debt is not a bad thing, but not paying it off, is, in my opinion anyway.
I believe that if you agree to pay a company/person a certain amount of money every month, you pay that first, before doing anything, like eating out, or buying some extras.
I/we always pay our bills, buy our groceries, save back a portion, then, if there is anything left over, we decide what we can do with that amount of money.
If there is nothing left over, you stay home, and chill until next payday.
Yeah, a pretty boring life, but we don't want to see our names in the paper because we didn't pay our bills and now we have to declare bankruptcy, but that is our mind-set.
Just remember, life is boring, most of the time, it depends on how much you want to do something as to how hard you are willing to work to get to that place. Keep in mind, this is just MY opinion, it is not what everyone should do or anything else, JMHO.
Good Luck and God Bless,
Sharon

 

[bullfrog]

I think we are missing the point here, this is big business taking advantage of human nature and using their influence to make everyone pay them for doing so! We need to make sure systems are in place to prevent them from taking our money! Credit cards are great if your emergency fund is always larger than your credit limit. Medical and other unexpected expenses happen and credit cards are a trap just waiting for some desperate person to be forced into. Big difference between having a dollar in your wallet at the end of the week and none with a sick kid at home with a credit card company telling you to take their money cause they know they will get it back whether you pay it or everybody else when you can not.

 

[gcal]

I think we are missing the point here, this is big business taking advantage of human nature and using their influence to make everyone pay them for doing so!  We need to make sure systems are in place to prevent them from taking our money!  Credit cards are great if your emergency fund is always larger than your credit limit.   Medical and other unexpected expenses happen and credit cards are a trap just waiting for some desperate person to be forced into.  Big difference between having a dollar in your wallet at the end of the week and none with a sick kid at home with a credit card company telling you to take their money cause they know they will get it back whether you pay it or everybody else when you can not.

The systems that need to be in place are maturity, common sense and self discipline. You can't legislate those.

 

[bullfrog]

The main reason I like not using credit cards, living remotely, and this group is because I find those here try to help promote those values while surviving in a country where most without those values make huge sums of money.

 

[Lalizzie]

Interesting discussion. I vandwelled years ago to pay off around eight grand in credit card debt; best damned decision I could have made. I agree that in general welching on one's debt obligations is wrong. BUT, there is such a thing as usury, and there are situations where defaulting on debt might be morally justifiable and legally supported. For example, when a sophisticated banker takes advantage of an unsophisticated person, to the extent that the debtor doesn't even understand the terms they are agreeing to, an argument for default can be made. Sure, one can say the debtor had an obligation to be informed... but the lender too is not without obligations and can/should also be held to account. Trouble is, the big banks have so corrupted the system so as to not be held to account, ever, well then you have the mess we have now. As for dealing with debt, I like Larry Winget's philosophy... to paraphrase, unless blood is involved, don't use debt to purchase things.

 

[bullfrog]

Thanks for the discussion without politics or name calling. I have gotten an education within the eight pages and wish our politicians realized how important education in areas like these are to the country and the people dealing with systems they are hopefully trying to improve. I know it has made me look at debt and how I explain it to those having problems with it differently.

 

[IGBT]

Definitely is corruption in some big banks.   Look at Wells Fargo.  Some employees were fake signing people up for accounts just so they could meet quotas.

Two wrongs don't make a right though.  One should generally try to pay debts if possible but obviously even our president has declared bankruptcy several times.

 

[Canine]

The solution to debt is simple.Don't do it.

 

[Queen]

A friend called and asked if I wanted to go to lunch today, she suggested a place where I have a gift card, but don't enjoy going because it's hit or miss on food quality; I accepted the invite and met her there.  I had one drink and ordered the special, she had four drinks and ordered ala carte including an app, entree, and dessert.   She spent a chunk of lunch being upset about her debt and lack of overall funds... my bill was $22, hers was $58, which she paid on her almost maxed out credit card.

As we talked about debt and money issues she asked me how deep in debt I was, when I said "zero" she couldn't/wouldn't believe me.  It was inconceivable to her that someone could be without debt; pointing out the difference in our outfits seemed to strike a chord with her.  I explained it can be that basic, just don't buy things and you usually won't accumulate debt.  Not everything is in your control, but a $58 dollar lunch certainly is.

BTW, it was a miss day, my lunch was CRAP!  

 

[Queen]

$50 an hour??? I can't imagine making that much money, let alone spending that much!!

 

[Thirsty Boots Nomad]

Off topic; ... but I recently listened to a podcast promoting getting/using multiple cc's to get/accumulate the frequent flyer/bonus points --- the man being interviewed (that has his own blog, "Another pack of peanuts") had just under 200 active credit cards and needed a spread sheet to track fees, renewals, points/miles, etc. --- I can't even imagine having (or keeping track) of that many cards or cc companies approving his new card applications (he has strategies for that too).

 

[VanKitten]

If you have multiple credit cards you can declare bankruptcy against all but one which you can keep if you continue to pay it off.  Before doing anything consult a lawyer and run it by your buddy at work.  Be you know the facts because of so many misconceptions and biases out there are many who do it wrong and end up worst off.

That is simply not true.

When you declare bankruptcy...it is an all or nothing deal.   The only question is what will the trustee require of you to keep which of your assets.  

The day the automatic stay goes into effect, every credit card company will close every account.   In a chapter 13 you might be able to get a secured card right away.depending on if the trustee allows you enough disposable income or not.   In chapter 7.  Every debt is in the pile, and every debt if considered the same.  The exceptions are student loans, tax debt, judgements against you for liability, child support. Which for the most part cannot be discharged

 

[FortyandLifeToGo]

Off topic; ... but I recently listened to a podcast promoting getting/using multiple cc's to get/accumulate the frequent flyer/bonus points --- the man being interviewed (that has his own blog, "Another pack of peanuts") had just under 200 active credit cards and needed a spread sheet to track fees, renewals, points/miles, etc. --- I can't even imagine having (or keeping track) of that many cards or cc companies approving his new card applications (he has strategies for that too).

This is how I live, but with only 23 cards and an excel spreadsheet.

No, I don't recommend it for 99% of the population, but for me...it has worked out great.  

I was in debt and had horrible credit. Via the MyFico forums and 7 years of rebuilding, I've been able to amass more revolving credit than I'll ever need, and probably shouldn't even have...Went from a 500 FICO to 785 (as of this month) FICO. I've not paid for a plane ticket (I do have to pay $5.60 fee each way, which is mandatory for anyone flying on points/miles) in 4 years +/-. My score would be higher, but the number of new accounts (not the actual inquiry itself) has lowered my Average Age of Account to something like 1.3 years, so therefore I've not "had established credit" is one of my scores limiters.

I'm good with credit and finance. I'd be willing to help anyone that has non-medical/student loan (simply because I didn't have any direct experience with these two types of debt) help ie goodwill letters, etc.

It's no guarantee that any of it works, but it has worked for me and a number of other people I know that put in the time/effort.

That being said, aside from federal loan debt, you wait 7 years...it all goes away anyway.

But back to the OP. I love chasing points/miles/statement credits.  So long as you don't use the card for ANYTHING other than what you normally purchase in a months time, and spend no more than you're able to pay-in-full each month, they are a great tool for the responsible.

 

[bonnieE350van]

My experience with debt has been that it DOES NOT go away after 7 years...I continue to get letters from debt collection companies for debt that was incurred as far back as 1998...these are credit cards that I have destroyed,sent back to the initial company and were turned over to collection agencies...one company will sell to another company and the new company will start things all over again...
I now own only one credit card to use for repairs etc. for my van/vehicle only as needed...most times I am able to pay it off within a month or two, however when tranny got tore up it took every bit that was available on the card and it is finally down to the end of those payments...
without that card I would have been living on the street panhandling for sure...as disability only goes so far, as I'm sure some folks here know...

 

[FortyandLifeToGo]

My experience with debt has been that it DOES NOT go away after 7 years...I continue to get letters from debt collection companies for debt that was incurred as far back as 1998...these are credit cards that I have destroyed,sent back to the initial company and were turned over to collection agencies...one company will sell to another company and the new company will start things all over again...
I now own only one credit card to use for repairs etc. for my van/vehicle only as needed...most times I am able to pay it off within a month or two, however when tranny got tore up it took every bit that was available on the card and it is finally down to the end of those payments...
without that card I would have been living on the street panhandling for sure...as disability only goes so far, as I'm sure some folks here know...

They can and often will try and collect old debt, but it is NOT being reported on your credit reports.  Nothing legally stops them (unless you send them a cease and desist letter) from collecting bad debt, only reporting after it's fallen off due to time.

But the moment you start to pay them, they CAN put it back onto your reports and restart the statutory of limitations.

 

[ArtW]

Hum, I do know my credit is pretty decent now, are you saying id I start paying on my old car loan, it'll wreck my credit again?
I need to find out more about this

 

[user 37446]

Hum, I do know my credit is pretty decent now, are you saying id I start paying on my old car loan, it'll wreck my credit again?
I need to find out more about this

I think that you restart the clock if you make 1 cent of payment. Sometimes even just contacting the creditor is a bad idea...
If its been wiped off due to age (and is "wipe-offable" debt) then leave it be...