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“Dear Steve,

In my younger years, I had a drug problem so I just didn’t care about all the court fines that were mounting. I’m now 28, two sons and a full time job for 3 years. Although I’m paying $100. a month to the collection company that the court sent these fines to, I’m just getting behind because of the interest being charged.

Is there any way to stop the interest charges and get these fines paid off? Thanks

Jayme”

I asked my friend Mike Killian to answer your question for you. I wanted to make sure you got an answer as quickly as possible as I’m a bit backed up at the moment. I’ll be watching the comments on this question and be around to help if you need me.

Big hug.

Steve

Dear Jayme,

Jayme, first off I laud your turn around. I hope your problems do not create an environment that has you back peddling to a no-win situation of drugs, etc. At the same time my news for you is not very good.

The only way around similar situations is bankruptcy and unfortunately issues such as fines, court fees, etc are not dischargeable in bankruptcy. I certainly wish I had better news. The only things I can think of is to call the collection agency and simply ask for lower interest fee or to increase your minimum payment so that the debt can be paid off faster and save on the interest.

You may be interested to know that a simple increase in payments can dramatically reduce the total interest and time to pay off the debt. For example, if you have a $5000 debt at 17% interest and pay $100 per month you will pay $11,304 in interest over 40 years. That same interest and amount with a minimum payment of $125 will reduce the amount of time to pay off the debt and the amount of interest by nearly ½.

Perhaps a second job or selling something can assist but unfortunately there are very few other options.

Sincerely,

Mike

If you have a credit or debt question you’d like to ask just use the online form. We are happy to help you totally for free.

Source

Other Related Articles to Read

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• Man charged, Tasered in Keene incident – The Keene Sentinel
• I Quit My Job in October and I Can’t Find a Job But I’m Still Looking. – Sonya

“Dear Steve,

I make 30,000 a year, have 12,500 in credit card debt and an un-secured loan for 10,000 (borrowed to buy the trailer I’m living in) lot rent is 240 a month loan payment is 250 a month and min payments on cards total 250 per mth. My live in girlfriend makes enough to cover her personnal bills and has plenty left for food, fun and entertainment for the family. I’m 48 , she’s 29 and we have a baby on the way!!! I’m scared I’m in over my head.

We pay all our bills on time and have no bad debt or collections. Several of my cards have been sold to other companies which are charging higher interest. My 5 cards range from 500 credit to 4700 credit with interest from 9.99 to 19.99. All my cards are charged to 85 or 90% of there max…

Do I need to seek help and what kind would be best….I would like to take on a mortgage in 2-3 years.

John”

I asked my friend Mike Killian to answer your question for you. I wanted to make sure you got an answer as quickly as possible as I’m a bit backed up at the moment. I’ll be watching the comments on this question and be around to help if you need me.

Big hug.

Steve

Dear John,

Clearly you do need some help. The fact that you pay all debt on time and have nothing in collections leads me to suggest that you might avoid bankruptcy by seeking debt counseling. At the same time I am reading that you have mostly unsecured debt, which allows bankruptcy to be more favorable for you.

First of all you should be calling each creditor to see if interest can be lowered. Secondly, if you do not already have a monthly budget, get one started immediately and see how your month-to-month finances are going. Thirdly I would at a minimum talk to a counselor listed in your local phone book. At the same time I would not make any commitment to a debt counselor without first weighing all they say and the costs involved and then gather information on filling bankruptcy. Many bankruptcy attorneys will offer a free initial consultation. From that consultation and from the free info you gather from a debt counseling agency, you should have enough information to make an informed decision as to the proper course of action.

Sincerely,

Mike

If you have a credit or debt question you’d like to ask just use the online form. We are happy to help you totally for free.

Source

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“Dear Steve,

Can I call a credit card company and ask them to lower the amount and I can pay that in full. So if I owe 2800 for one card can I tell them I can afford to pay 2200 right now to pay it all off. Maybe they have a hidden 10% option? I am thinking that you have to go to be at a stage of collections to make a deal??

Yianni”

I asked my friend Mike Killian to answer your question for you. I wanted to make sure you got an answer as quickly as possible as I’m a bit backed up at the moment. I’ll be watching the comments on this question and be around to help if you need me.

Big hug.

Steve

Dear Yianni,

You can always call a company and ask for a lower interest rate. You can also always call for a lower balance. This is known as Debt Negotiation. There are companies out there who do debt negotiation as a business.

But you should know a couple things about debt negotiation before you try it. For example a professional debt negotiator does not do anything that you cannot do yourself. They just often do it a little better because they have had more experience.

But you should also know that some companies will not negotiate and rarely will they negotiate unless they think that is the best deal they can make. Consider if you loaned money out. Would you take less unless you thought that was the best deal you could make? One of the few ways do make it look like it is the best deal for the company, is not pay them for a few months. But understand if you do this, your credit and credit score will take a nosedive.

Okay so now you have not paid a company for a few months and they are ready to negotiate. Consider this – any debt forgiven above the amount of $600 will be considered taxable income by the IRS as added income. Additionally, recent evidence is tending toward a good possibility that the debt could come back and haunt you as unpaid. This latter fact does not happen often but can happen.

So therefore to answer your questions, yes it can be done but is it a wise thing to do? This is what you must answer.

Please update us on your progress by posting updates here in the comments section of your question and answer. We are all very interested in how this works out for you.

Sincerely,

Mike

If you have a credit or debt question you’d like to ask just use the online form. We are happy to help you totally for free.

Source

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• I’m Making My Minimum Payments But It’s Getting Tough. – Barbara

“Dear Steve,

I had a hydroponic farm business that burned down four years ago.

I rebuilt it using credit cards and then I could not make everything cash flow and I have since sold the buildings and equipment piece by piece.

Two years I had 40 creditiors.
Total credit cards 200K
school loans for 3 people 200K
morgages and notes on farm property along with lines of credit attached to them another 200K
600 K total debt.
Income is just under 100K.

My wife lost her income last Christmas and there is not much farm income anymnore.

I have worked and worked with many creditors doing settlements from 100% over 60 months with no interest and fees to 15% on the dollar over 3 -6 months.

I am down to 3 creditors.

One had not contacted me in over 2 years.

One just filed suit for 9K and the law firm will not return my calls ( this was for a Target credit card).

The last is a huge Chase card balance of 38K and I am close to settleing with them. Actually 10 days ago I had a deal from there law firm ” agent ” to pay 500 dollars a month for 12 months and I ask for them to email the contract and when they did not I called and they said Chase took the debt back and I have to start over. I am close and have talked to them a couple of times but, the price went from 500 a month to 1119 a month, a great deal but I countered with 800 because that will be very hard for me to make.

I have sold 401K , ( I know not the best idea).

I have borrowed the max against the balance of what was left.

Sold all my stock and my savings as well as taking things to auctions and craiglist.

I just am at my end and want to finish this without a judgement that makes me sell property at the worse time in the history of real estate sales.

Very worried about the law suit which is against my wife but, we file a joint return and the farm income was always just a schedule F and not incorporated in any way.

FYI, the insurance company only paid 15% on the dollar for the 77K loss.

I am employed and my wife just started a new job but, I do not have lump sums anymore. Already maxed out parents and siblings and even my church.

I know this is a broad and tough thing but, I just do not want to overlook something I should be doing. I have talked to a Bankrupcy atty and they said it usally runs 15% to file. Well if I am settling for 15 to 25% then I do not want to file until I am forced to.

Any answers to my prayers?

Jay”

Dear Jay,

It sounds like you’d do a consumer bankruptcy and those are not by percentage. Maybe the lawyer was quoting you a business bankruptcy price. If not, see another lawyer.

It’s a good thing you walked away from the Chase settlement. Unless you could get something in writing from the creditor a reduced payment offer can still be collected on latter. See Debt Settlements May Be Voided And the Money Due Anyway.

If you feel you’ve done all you and the last few creditors are being unreasonable then bankruptcy is a legal and logical approach.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: My Hydroponic Farm Burned Down. – Jay

Other Related Articles to Read

• Taming financial worries — for your health – Buffalo News
• My Husband Will Not Tell Me What He Makes So I Can Go Bankrupt. – Deborah
• Chase Bank Lowers My Credit Limit As I Make Payments Each Month. – Josh
• I Got Caught in the Chase Credit Card Term Changes That Raise My Interest Rate. – Dave
• My Parents are in Their Late 80s and Can’t Make Ends Meet With Chase Card Increase. – Brenda

But I could not help chuckle at the irony here as a debt collector was using the classic “you’re a loser” approach with a debtor and then it came out the debt collector had recently gone bankrupt and not paid his own debts.

Look, debt collectors pull this moral manipulation crap because they know it works. And that’s exactly what this and every other debt collector that tries to guilt you into paying a debt you can’t afford is trying to do.

Federal court records show Swafford (the debt collector) also filed for personal Bankruptcy in March of 2009, claiming $717,000 in total debt, including $13,000 owed on a Home Depot credit card. He listed having $40 in his checking account and $5 in his savings account. Court documents also say Swafford had $421,655 in assets, and may have lost money on various investment properties during the nation’s crash in housing prices.

But in one of the messages left for Gordon, Swafford seems to lecture the customer on the importance of paying off debts.

“See, a real man realizes he screwed up and then he pays the money back. See, that’s not you though. You’re a punk,” Mickey says in the message. “If you move, you better move to, like, California because I do travel.” Source

Steve
@GetOutOfDebtGuy

Source: Debt Collector That Called People Loser for Not Paying Their Debts Just Went Bankrupt

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• My Bankruptcy Case Has Been FIled and I’m Scared. – Traci
• Can I Just Tell The Debt Collector That I’m Going to File Bankruptcy to Stop Calls? – Stephaine
• Bill Collectors Keep Calling About a Truck We Paid Off in 2003. – Stephanie
• Our Monthly Payments Are More Than We Make. – Chelsey
• My Mother is Disabled and Bedridden in a Nursing Home and Chased by Debt Collectors. – Carolyn

“Dear Steve,

I was laid off in January 2009 and I am currently receiving an unempolyment check of $247.00 weekly from the state of North Carolina plus the federal unemployment COLA of $25.00. Both these checks are directly deposited to my checking account. These checks barely cover rent, food and gas.

This area of North Carolina has one of the highest unemplyment rates in the U.S. plus I’m 50+ and I’m not anticipating getting a great job any where in the near future.

Unfortunately I also owe thousands of dollars of unsecured debts to creditors. I am not even able to save up enough money to pay a lawyer to file for bancruptcy. All these debts have gone into collections. I’ve called alll these debt collection agencies and to my surprise, most are actually sympathetic to my plight and some have actually given me advice.

Of course they have their job to do, but I think the current economic condition fosters a “there, but for the grace of God, go I” mentality. I have informed them all all that I cannot pay anything and that I’ll be filing for bankruptcy when I can afford to do so. I have no assets except a 2003 Kia that has been in two accidents. I’ve even had to sell most of my gold jewelry just to survive.

Can these private debt collection agencies garnishee my unemloyment check or checking account. If any one of them does, I will end up homeless and hungry (no exaggeration). What options are available to me? I wish I could pay these off especially because of the substantial discounted payoffs that have been offered, but that is not a viable option. Every penny counts right now.

Andrea”

Dear Andrea,

Would I wrong to guess you live in the Rocky Mount region of North Carolina?

Unemployment benefits can’t be garnished.

With your current situation you might want to contact one of these providers of free bankruptcy assistance.

If you have not tried it yet, the North Carolina job bank has an excellent site.

Other than that it sounds like you are doing as well as could be expected in making it through this financial storm.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: Can the Collection Agency Garnish My Unemployment? – Andrea

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• How Much Can My Wages Be Garnished? – Nancy
• I’m Married, Separated, and Facing a Wage Garnishment. – Lynde
• I’m Making Payments Through The Court But Now Getting My Pay Garnished. – Brandy
• I’m Now Working in California But Getting My Wages Garnished From Another State. Can They Do This? – Jay
• Wage Garnishment Exemptions and Garnish Wages Information By State

“Dear Steve,

I am 33 years old and the mother of 2 daughters. We were doing really great, until GM pulled their job out from under my husband. We are now strugging to get by.

I do the best I can to pay our bills, and have dropped the unimportant things, like cable and internet (I’m in a public library sending this). But two Capital One accounts have fallen behind, (I do have one Capital One account still in good standing.) who actually only got behind thanks to their slapping us with fees that didn’t make any sense.

They said I had made my payment late, although I had the copy of the online billing that stated I made it on time. Then the late fee was followed by an overdraft fee, etc and so forth. I tried to talk to them. I tried to fix it, but they didn’t want to work with me. Now they have sued me. I couldn’t afford the mediation fees, so I talked to the law office that had sued me and they were very kind and said when I had a lump sum of money, to call them and they would see if Capital One would take it. So, I started trying to save, which isn’t easy when after you pay your bills you have only a few dollars left over.

I just received a tax garnishment in the mail. I am devastated as our taxes are behind and if we don’t use our tax refund to pay our back taxes, we are going to lose our house. Plus, Christmas is coming up. I just don’t know what to do. It makes me ill to think of this mess we’re in. I stumbled across your site this afternoon when searching for any answers. Do you have any advice?

Is there anything I can do to stop the garnishment on our taxes? I have found information on filing an order for installment payments. But I’m not sure what this would involve payment wise? I can’t agree to a high amount. There simply isn’t enough money coming in at the time. And if they take our taxes, we’re going to lose our house because I was depending on that to pay the back taxes. Do you have any advice?

Jamie”

Dear Jamie,

First, thank you for reaching out to me for help and advice. I’ll do my best to get you steered in the right direction.

I can sense your drowning in stress and debt right now. If it’s the same for you as it was for me when I was in that situation it all feels overwhelming and you don’t know where to turn. I even felt like I couldn’t breathe at times.

Here is something that you should read to help you get through the days right now, “The Second Attribute to Getting Out of Debt – Gratitude.”

Let’s step back for a moment and look at the situation. While it sucks that GM dumped the job and left you in this mess it really could have been any company doing that. All employees work at the pleasure of the employer and no job, anywhere, is guaranteed these days.

The Capital One issue is painfully ironic but one I’ve seen before. In another case the annual fee put the account into overdraft and the overdraft fee was missed by the person so their account went into default. Well…you know the story.

Based on your current situation and the looming tax issue it probably makes sense to discuss bankruptcy with a local bankruptcy attorney you like. If bankruptcy is right for you depends on how much total debt you have and if eliminating that debt would allow you to make your tax installment payments.

A more drastic option for you to consider is starting over and maybe in a new part of the country. This might actually be your chance to get a totally fresh start with bankruptcy and a move if jobs are not available in your area. Moving can suck but if there is an economic drought in your area you might just have to make a move to greener pastures.

Let’s talk Christmas for a moment. Being broke at Christmas can really suck and make you feel guilty. But you know what, when I think back on the best times I ever had at Christmas it’s never about what someone bought me. It’s about the special times and memories I shared with others.

You can share love and gratitude with the people you care about for very little money. You just need to find a way to make an emotional investment in showing them how you feel about them.

One of the most memorable Christmas times my family talks about was the year Pam and I were so broke we could not afford to buy presents. Instead we bought mason jars and dried beans. We measured out the different beans according to a recipe we really enjoyed and attached the recipe to the jar with a big bow. It was must money wise but it allowed us to feel as if we were giving what we could.

And if I was your long lost friend, what I’d love from you most this year is not a stinking pair of gloves, but a hug or a lunch with just you to catch up. So much can be given for so little money.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: His Lost Job at GM is to Blame for Our Debt. We Might Lose Our House. – Jamie

Other Related Articles to Read

• Greater use of savings plans attributed to economic downturn – PITTSBURGH TRIBUNE-REVIEW
• Head online if you want to cut the cost of Christmas presents – Daily Mirror
• Guide to Christmas shopping online – News of World
• Christmas spirit hampered – Stuff
• Christmas Fund: How you can help those hit hardest by economic blows – Times Colonist

“Dear Steve,

I’m a salary plus commision salesperson who’s bottom fell out. My company implemented 30% pay cuts on both salary and commision. Combine this with the slow economy and and I’ve made 40% of last years salary. I have moved to a much smaller apartment and still have no money to pay my increasing 20,000 debt. My cards are 6 months past due and i even have a few “cash store” quick loans that I can no longe pay.

Is there a way other than bankruptcy to get out from this. should i be concerned about wage garnishment, legal action? I am 4 months behind so maintaining my credit is no longer a concern. Making a bad situation really bad from wage garnishment and so on is my true fear.

Peter”

Dear Peter,

There really is no logical way out of this other than bankruptcy and you should absolutely be concerned with getting legal action and your wages garnished.

Dude, you’re drowning in debt. If you were drowning in water what would you do? You’d probably tread water or get the hell out of the pool, right?

Same thing here. You either need to get your life to fit at least within your income so you don’t get further in debt each month (treading water) or you get the hell out of the debt pool by filing bankruptcy and starting over.

This is all difficult stuff to deal with mentally. But one thing is for certain here, you are on a fast downward spiral. Moving to a cheaper apartment was a smart move but taking on more debt and payday or cash store loans is the final nail in your coffin.

I would strongly suggest, and with a sense of urgency, that you find a local bankruptcy attorney you like, make an appointment, and go in to talk to them. Learn what bankruptcy would mean for you.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: I Have No Money to Pay My Increasing Debt. – Peter

Other Related Articles to Read

• The Age of The Big Spender… Revealed – YAHOO!
• Get Out of Debt Podcast – Answers for Deborah Who Was in an Auto Accident
• I’ve Made Some Really Dumb Money Mistakes in the Past. – Mindi
• I Live in South Africa and I Have Creditors Calling Me Everyday. – Zandile
• I Work at a Car Dealership and Think My Truck Will Have to be Repossessed. – Kristi

“Dear Steve,

The motor blew in my 2008 car. I owe more than it’s worth if it were running. Warranty and insurance won’t cover it as they are saying it’s my fault. The dealer want’s nearly $10 grand to fix it. My credit cards are maxed, @ 2x $5000, and my income is down with the economy. I’m barely making the car payments as is.

My wife’s car is paid off, and we think we can get by with one for now (she doesn’t work, is in school still on loans..) Is it time to think bankruptcy?

Danny”

Dear Danny,

Thinking bankruptcy is always an option to consider. After all it is a legal court approved solution.

The real issue here is if there is a likelihood you will be able to recover from your current financial situation. The fact the engine blew up does not relinquish you from your obligation to make your car payments. And you did not say you were struggling to make the payments. It sounds to me like the issue is simply that you are now stuck with a car that doesn’t run.

A strong consideration other than bankruptcy would be for you to consider getting a low interest loan to pay for the engine repair. You can do this through LendingClub.com. Lending Club is a peer-to-peer lending network where people help people in need.

Finding a local lawyer to help you fight the claim with the insurance company and warranty might be a good investment as well.

If you did decide to go bankrupt you’d want to discuss how to deal with the car with your bankruptcy attorney. The attorney might suggest giving the car back in a voluntary repossession, waiting for it to be sold at auction, and then wrap the big bill you will get into your bankruptcy.

Find a local bankruptcy attorney you like and discuss the issue with them. Also, check out LendingClub.com and see if that isn’t a better route for you to take.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: My Motor Blew in My Car and Now I Owe More Than It’s Worth. – Danny

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“Dear Steve,

Getting divorced after 25 years. I’m getting 1/2 of her 401k. Because of the home market we will be lucky to get what we owe on the home.

I need a down payment for a new home can I cash out my 1/2 of her 401k to put down on a new house. I’m looking at a $25,000 share of the 401k or trade the 401k for the home. we have 60,000 tied up in the home,

Ray”

Dear Ray,

Honestly, I don’t know. Much of if this is a right move for you or not depends on the tax ramifications of the disbursement to you. I’d suggest you talk to a tax adviser about his important issue. I’m just not certain how a disbursement from a 401(k) is treated in this situation or if the money can be taken penalty free and how much you will lose to taxes. All of that is a big consideration in determining if this make sense.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: Should I Trade in My Half of Her 401K From the Divorce for a New Home Down Payment? – Ray

Other Related Articles to Read

• Going Out of Business Part 1: Shutting Down When There’s No Choice – Auctionbytes.com
• Going Out of Business Part 1: Shutting Down When There’s No Choice – Auctionbytes.com
• Parents have right to hover – Riverside Press Enterprise
• I Screwed Up and Lost Most of Our Retirement Income. – Rufus
• My Husband is Supposed to Pay My Debt in the Divorce But He’s Not. – Jessica

“Dear Steve,

I’m 65 yrs old. Sold my business in ‘98. Have not worked since. Have 2 homes and travel a lot. That about sums it up. Signed a guarantee for a college Friend in 1999 for a business venture. Credit limit $6-8-10,000(??). Never ever used the card; never got a statement or call telling me the credit limit/balance was going up. Still have the original card w/ the white strip w/the # to call for authorization is still attached to the card. Kept up with the Friend for a few years and finally stopped worrying about it.

This Jan ‘09 it STARTED. You probably can guess how many calls, letters, and e-mails I have gotten. I refuse to settle or pay anything to them unless my credit is cleared of their fillings. I refuse to pay 28% interest. I borrow money @ prime. They can NOT provide me the Documents I signed. It started w/Wachovia Bank….. Citi-Bank now owns the debt but has turned it over to a collection agency. The current balance is $61,000. It was $51t in Jan ‘09.

The friend has no net worth. I wish he had kept me up but I’m just as guilty for not keeping an eye on this. I will have compassion and forgive him.

Going thru this I started in Feb ’09 w/my ethics/moral value that I owed them the last 18 months of purchases + 8% interest and they would clear my credit report. That amount would be $46t paid over 5 yrs at 4% interest (at that time the balance was $51t). I thought my debate would be over the 8% interest and it would end up being 15-18%. Not so! They would not clear my credit under any circumstances. Having experienced this; going thru all the harassment (be it polite except one call); calling my children and neighbors; I’m now willing to let a Judge decide what is best. My lawyer and account say to wait it out and go to Court. The lawyer says with out the signed document they have no case? I am willing to pay something and I fill I should but not the $61t. So, to the question.

1- Is it better to have on one’s credit reports “Settled; not paid in full” or have a Judge decide how much should be paid?
2- When the Court rules does the previous fillings on my credit go away?
3-Does the Court ruling show up on my credit reports?

John”

Dear John,

Yes, it does certainly sound like you guaranteed or cosigned for a line of credit or card for a “friend.” The problem when you do this is you make yourself personally liable for the entire debt the other person runs up. And with high interest rates and fees that number can grow quickly. Heck, at a penalty rate of 29% on the balance a $51,000 balance can easily ride to $61,000 in less than a year.

Part of the problem with the current owner of the debt is that all credit bureau agreements prohibit a lender from reporting anything about the account other than the truth. For example, they could not change the past negative history on the debt even if you paid the debt in full.

If you can come to an agreement to repay the debt for an amount less than you owe the balance paid will show as paid in full on the credit report but the balance written off will show as a bad debt and that amount will be reported to the IRS on a 1099-C and you will have to pay income tax on the forgiven amount. And unless you get specific documentation saying you are not responsible for the amount written off the lender can come back latter to collect that.

The collection activity should remain on your credit report for seven years.

Court activity will appear in the public records section of your credit report indefinitely and it will hurt your credit score. But then again so will the negative entry about the amount written off.

The lawyer is right that unless they can provide evidence of your responsibility they can’t go after you. But remember this, the judge is not there to decide what is fair. The judge will make a determination about your responsibility as a matter of law. Meaning, the the lender can prove you are responsible, it is all your debt. The lender had no responsibility to notify you of the usage or balance. You were not the loan holder, just the guy that personally guaranteed it.

Since you have a lawyer I would ask the lawyer to step in and get involved in this situation. Have the lawyer advise the lender they are now representing you and to not call you anymore about this debt. The lawyer can also as for documentation prior to the court date.

Of course the big lesson to be learned here is not to guarantee a loan for anyone else ever again.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: Ten Years Ago I Guaranteed a Loan For a Friend. Now They Are Coming After Me. – John

Other Related Articles to Read

• My Husband Cosigned for His Mothers Jeep. Guess What? She Defaulted. – Erin
• My Father Co-Signed for My Car and I’m Going Bankrupt. – Deborah
• I Don’t Want The Car In My Driveway, I Can’t Afford, to be Repossessed or Effect My Credit. – Brandy
• I Put a Friends Car in My Name That Cost $67,000. – Anita
• Will My Friend that Cosigned for My Motorcycle Be Stuck With My Debt When I Go Bankrupt? – Tommy

“Dear Steve,

I cosigned on my wifes car so she could get one and now i want to get my own car and cant because i cosigned for her and im not able to get a second car loan for myself, and her credit is not good enough to refinance in her own name, the dealership said if i can get out of the loan then i can get my own loan and into my own car.

How can i get out of this loan and into my own loan other then refinance or paying thousands of dollars?

Peter”

Dear Peter,

You can’t. The reason they looked for a cosigner to begin with was because her credit was crappy. By cosigning you promised to be responsible for the loan. The lender does not want to let you off the hook and be left with someone with worse credit.

The only way out of this mess is for her to payoff the loan or for you to buy a used car for cash. If she pays off the loan it will release you from any liability for the loan. Probably what the car dealer finance manager is saying about your loan request is that your income and credit score does not support the extension of even more credit you would be responsible for.

If either of you are looking for a place to potentially borrow money to use to either payoff the current loan or buy you a used car, consider LendingClub.com. LendingClub is a network of people that lend to other people. Not a bank.

As far as cosigning goes, never ever cosign a loan ever again. It will almost always come back to bite you in the ass. Lesson learned,

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: I Cosigned on My Wife’s Car But Now I Can’t Get One. – Peter

Other Related Articles to Read

• My Sister-In-Law is a Paranoid Schizophrenic With Student Loans We Cosigned For. – Sara
• I Put a Friends Car in My Name That Cost $67,000. – Anita
• My Father Co-Signed for My Car and I’m Going Bankrupt. – Deborah
• I Don’t Want The Car In My Driveway, I Can’t Afford, to be Repossessed or Effect My Credit. – Brandy
• Will My Friend that Cosigned for My Motorcycle Be Stuck With My Debt When I Go Bankrupt? – Tommy

“Dear Steve,

This is a tough one. I am 35 years old, single home owner with a very nice low mortgage of $650 per month. I have some equity, but my credit is not good enough for a refinance to get money out.

I went to flight school and accrued currently $113,000 in student loan debt. I also have about $9000 in another student loan debt. Both are private loans not fixed interest. I have other student loans that are subsidized or unsubsidized equalling about $18,000. My Credit card debt is currently around $23,000.

I think that is it other than my mortgage. I lost a great job in 2008, and am currently doing contracting work, making about $20 an hour. I have made many poor choices in my past and have finally made the choice if I don’t do something now I will not have a future. I am allowing my debt to mentally hold me back from achieving the great things in life I had once hoped for. I need specific help to get my life back on track and to find out my best options for digging my self out of this hole. I have always had a hard time with budgeting and spending money and need to take some drastic steps to change my life. I have almost lost hope that I can recover from this. I am ambitious and creative and can achieve anything if only I could manage my finances. My credit is still in good standing, however I will not be able to pay back my flight school loans when they are due. I just don’t know what to do.

Can you please help me find a way to financial freedom. I am willing to try anything and need personal coaching on how to make this happen.

August”

Dear August,

I had the following questions that I’d like for you to answer before I can answer your question. Please post your answers in the comments section of your question. I’m looking forward to helping you for free.

1. Can you afford any money each month towards this debt?
2. Are you currently working as a pilot or in aviation?
3. Who is the lender for the $113,000 in student loan debt?

As soon as you can post the answers to my questions above I’ll be able to help.

If any reader wants to offer advice in the comments section please feel free to participate.

Big hug.

Steve
@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: I Went to Flight School But Now I Can’t Afford to Repay My $118,000 in Private Student Loans. – August

Other Related Articles to Read

• I Just Graduated From the Police Academy But Can’t Get Hired by a Police Department Because of My Debt. – Heath
• I’d Like to Consolidate My Federal Student Loan, Private Student Loan and Credit Card Debt Into One Debt Consolidation Loan. – Jane
• Can I Eliminate and Discharge My Student Loans With Bankruptcy? – Matt
• Is There a Good Way to Get My Private Student Loan Rates Under Control? – Samantha
• Get Out of Debt Podcast – Answers for James, Charlene, and Duff

“Dear Steve,

I am 22, married and have a 3 1/2 month old child. My husband and I just purchased our home in May 2009. We can pay our bills but we have next to nothing left for gas and groceries and daycare for our son. We have an hour commute to work Monday-Friday. Also the medical bills from having our son are now starting to pile up on top of our regular bills each month.

We don’t qualify for Food Stamps or WIC or anything like that because they say we make too much money to meet the income requirements. Is there anything that we can qualify for to get some help paying our bills? We are desperately searching for some kind of assistance.

Bailey”

Dear Bailey,

The part that concerns me the most is when you say new bills are piling up on top of old ones. While you are just making ends meet right now your statement indicates to me you are going further into debt and that’s a big problem.

I totally hear you about the inability to qualify for benefits and it is a widening canyon more are falling in to. There are many people that make too much for help but need it desperately.

What kind of bills do you have and how much do you owe people? Let me know and I can then work on a Plan B for you.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: We Just Purchased Our Home and Now Can’t Afford Our Bills. – Bailey

Other Related Articles to Read

• No Related Post

“Dear Steve,

Do you have an e-mail or phone for David Sunlin, head of shortsales at B of A? I have located a prop in New Mexico that is going to foreclosure and the listing agent WON”T do a short sale package cause “it takes too long, you never get as response, it’s too late, etc” sunlin says he’ll help with-in days of the foreclosure sale….but i can’t find him!

I want to pay cash, close without inspection, an easy deal, done tomorrow,

thanks,

Linda”

Dear Linda,

David Sunlin used to be with Countrywide Financial as the Senior Vice President, Foreclosure & Bankruptcy REO and was probably absorbed into Bank of America when they bought Countrywide since he is now a B of A Senior Vice President.

You might want to reach him by express mail at 4500 Park Granada, Calabasas, CA 91302. That was his address at Countrywide and I would bet even money he’s still in the same facility.

It looks like the Bank of America email configuration is first.last@bankofamerica.com. I can’t promise that will work but it is worth a shot. Good luck.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: Do You Have an Email or Phone Number for David Sunlin From Bank of America? – Linda

Other Related Articles to Read

• Our Mortgage Loan Was Modified and the Monthly Payment Went Up. – Sandra
• Our House is Worth Less Than Half of What it Was and Our Income is Down 30%. – Brian
• My Wife And I Are Teachers But Our Finances Are Failing. – Jon
• My Wife is Thinking of Divorcing Me So She Can Keep The House. – Brian
• I Bought a House With 100% Financing And Now Can’t Afford It. – Sandy

A third circuit bankruptcy case recently decided that Form 1099-C does not establish that debt is discharged. A creditor typically issues a Form 1099-C to a debtor in bankruptcy to show cancellation of debt. The credit union in the case In re Bononi, had sent the Chapter 7 debtor zero-balance account statements and an IRS form 1099-C for “cancellation of debt.” After receipt of the form and the account statements, the debtor received money from the settlement of a personal injury action.

The court found that despite the statements and the 1099-C form, the debtor still had an obligation to pay on the past debt. Additionally, the court found that even if a creditor issues a 1099-C form, the form does not prohibit the creditor from pursuing collection of the old debt. Only a discharge from the Bankruptcy Court has the effect of canceling the debt and removing the debtor’s liability for the debt. In re Bononi, 19 CBN 864. Source

I’m still researching this issue but from what I have found so far, it is in fact, true. When a creditor writes off a debt or settles a debt, unless they agree the debt has been paid in full, satisfied, and no additional amount is due, then the part of the debt written off may be collected at a latter date.

The reason, the write off of the debt is an accounting function and the issuance of the 1099-C to the IRS is for tax purposes. The write off of the debt and issuance of the 1099-C does not erase the underlying obligation.

This is a big deal. With creditors stressed and pressured for income, I can certainly see a creditor selling their written off debts for pennies on the dollar to generate yet more revenue from them. These would be sold to collectors that are prepared to fight the settlement offers. While the part paid in the settlement would be paid, it is the amount forgiven that could be collected.

And for all the critics that say this will never happen, my response is that it just has not happened yet in mass, but it certainly may. It’s a profit center waiting to be exploited and we all know how much banks love profits.

My bet is the most likely consumers to be hit with this will be all the people that are currently working with one of the commercial debt settlement companies that may soon go out of business. See 85% of Debt Settlement Companies May Be Closing Soon and Taking Your Money With Them. These companies will go bankrupt and the supporting documentation for any debt settled will most likely vanish with them.

Steve
@GetOutOfDebtGuy

Source: Debt Settlements May Be Voided And the Money Due Anyway

Other Related Articles to Read

• No Related Post

“Dear Steve,

i currently have a vehicle that i am way upside down on, the monthly payments are 636 dollars a month, and my pay checks have been cut in half because of the economy. I have contacted the company to seek help and find a solution but all they said i could do was refinance my vehicle, but they denied me for that. My interest is currently at a 13.5% and at this point im going to start missing payments because i simply cannot afford it anymore. Is there a way to have the company lower my interest or payments for the duration of my loan?

Manuel”

Dear Manuel,

I would suggest that before you start missing payment you first contact LendingClub.com and look for a loan to refinance the car from the LendingClub peer-to-peer lending network.

If that does not work for you then try eloan.com. They refinance vehicles.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: My Car Lender Said They Could Refinance My Loan and Then Denied Me. – Manuel

Other Related Articles to Read

• LendingClub.com Could Not Help Me Refinance My Car Loan. – Erik
• I Can’t Afford My Car Payments. What Can I Do? – Jason
• I Need to Refinance My Really High Car Payment. – Kevin
• I’m a College Student With a Big Car Payment – Rachel

“Dear Steve,

I have read a lot of of your advices from different problems. I am based in Dubai and my case is almost similar to those who have problems with the banks, but it’s not actually me but my brother.

The situation is, he and his manager went to the banks to settle his loans, but banks told them to go to police because they’ve already filled a police case against him. So, they went there and then they did not allow to leave unless pay the full amount which the bank is asking.

My question is, if we pay the full amount, can we apply for the new visa for him or, can Dubai issue new visa for him? Or can they give a clearance after they release him?

Waiting for your reply and more power!

Best regards,

Jiv”

Dear Jiv,

It is my understanding that as long as you can prove the debts have been paid then all the other issues can be resolved. Just make sure you keep the original documentation showing the court case is closed and the bank has released him from his debt.

I have not heard of any cases of people being denied visas or being kicked out of the country after resolving the debt problem.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: My Brother is in Jail in Dubai for Debts. – Jiv

Other Related Articles to Read

• Citibank in Dubai Wants Blank Cheques From Me to Repay Debt. – James
• I Have a Police Case Against Me For Non-Payment of Debt in Dubai. – Abhu
• If I Go to Jail in Dubai For Bad Debts Will My Debt Be Cleared? – Katrina
• Will I Get Caught at the Dubai Border For My Past Bad Debts? – Aman
• Bouncing a Check Can Put You Behind Bars For Years in Dubai

A story by KYUU in Alaska made me chuckle. Apparently Alaska is outraged by the actions of debt settlement companies that are charging up-front fees.

Alaska’s attorney general has joined a group effort to crack down on questionable debt settlement services.

Forty states sent out a letter pushing for changes being considered by the Federal Trade Commission to better protect consumers after an increase in complaints.

Across the nation, it’s clear that times are tough, so more consumers are trying to reduce their financial stress by reducing debt and going to those who are supposed to know best.

“With the recent economic problems there has been a shift by some unscrupulous operators to cash in on people’s problems, essentially,” said Cindy Drinkwater, the assistant attorney general.

That’s why the Attorneys General sent out a joint letter to the FTC that supports the commission’s move to change rules for debt settlement companies, targeting their work on TV, radio, the Internet and via telephone

“(To) prohibit certain kinds of conduct such as requiring up-front fees or advance fees,” Drinkwater said.

The change would also make it illegal for a company to engage in a variety of deceptive unfair representations and practices.

Making promises they can’t keep would be one example. Some claim all collection calls will cease, when actually, in many cases the creditors are never notified that a settlement is in the works and continue to demand full payment.

“Ultimately the problem is that consumers will end up in a much worse financial position because they’ve had to pay these up-front fees. Meanwhile, the interest on their debts has accrued (and) collection efforts continue. Ultimately they may be facing judgments against them,” Drinkwater said. Source

Steve
@GetOutOfDebtGuy

Source: Now You Know the Debt Settlement Industry is in Trouble When Alaska Cracks Down

Other Related Articles to Read

• Northern Alaska Environmental Center Annual Benefit Dinner & Auction – Fairbanks Daily News-Miner
• Alaska joins other states in cracking down on debt services – KTUU
• Illinois Attorney General Madigan Sues Company Making Debt Reduction Promises
• Alaska Air Group believes smaller is better – Palm Beach Interactive
• Florida Attorney General Wants Debt Settlement Companies to Put Up Before You Pay Up

“Dear Steve,

Scenario: Child has own business (in name only really) which is partially paid off. Due to bad debts from people owing money said child has been unable to pay back bank loan for past 4-5 months. Child does not live at home but lives with girlfriend. Child has no assets except said business. At this stage there was someone wanting to “write up” assets who came to parents home. Child is in deep depression and mind state of not doing anything.

Would it be better just to declare bankcrupcy versus Debt counselling? The business does not generate income and has not for some time and interest is accumulating. Should one go to the expense of a lawyer in this case? I have heard of people who are paying off debt AND expensive lawyer fees for years to come. Parents are not in a position to help financially as they are both retired. (child was a laat lammetjie) Thanks for this free service.

Mom”

Dear Mom,

I can see from your email address that you are in South Africa. In South Africa there are several options but none of them will magically appear if the child is buried under the burden of depression and is unable to take action.

If you, or someone you know, could take the child by the hand and help push them through this process it will end sooner and the child will recover sooner from their depression and malaise.

The situation you described is really about how to best deal with the end stages of a failed business. Unless the child personally guaranteed the debts the company would need to enter into a voluntary final liquidation. It does not sound like an offer of compromise, amalgamation or arrangement would work since no funds remain to distribute.

I would urge you to have the child speak with a local insolvency practitioner in South Africa and/or meet with a local debt counsellor to discuss the options and possible route of action. Click here for listing of registered debt counsellors that can help.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: My Child Has Own Business That Does Not Generate Money. – Mom

Other Related Articles to Read

• How Do I Find a Registered Debt Counsellor in South Africa? – Flo
• I Live in South Africa and I Have Creditors Calling Me Everyday. – Zandile
• I’m Stuck in South Africa With U.S. Debts. – Anthony
• It All Started When My Husband Lost His Job in South Africa in 1999. – Maria
• How does GenY cope amid such a turbulent economy? Save, save, save – The Canadian Press

“Dear Steve,

I own an LLC in Phila, PA (I live in NJ). Can i be held personally responsible for any debt incurred by the LLC? Such as, we had a credt/cebit card machine that according to them (RBS World Lynx) was terminated early and they are billing for almost $800.

The business is doing poorly. I am thinking of dissolving it. We do not owe any others, just RBS. I don’t want to ditch the debt but they want payment in full ASAP and are threatening my personal credit. Can they do that? Also, when i looked up my credit several months ago RBS showed up as closes and paid in full. What’s the point of an LLC then?

Lisa”

Dear Lisa,

The real issue here is what the RBS agreement said. Most small and medium sized business owners are required to personally guarantee their company debts. It’s in the fine print. This is because most creditors know that the chances of a business being successful are small. Most businesses will fail within five years.

Why don’t you just ask RBS to show you where you would be personally responsible for this debt. If they can’t then the debt will die with the LLC. But, when you close the company you may be asked to certify that all debts have been dealt with.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: Will I Be Responsible for My LLC Debt When it Folds? – Lisa

Other Related Articles to Read

• My Husband Has an LLC That Might Be Going Under. – Katie
• My Part Time Computer Repair Business is Going Down the Tubes. – Eric
• Are the S Corp and LLC Debts Debts Going to Cause Us to Lose Our Home? – Sally

“Dear Steve,

Due to my husband losing his job and my being off work at times for medical reasons, we hve a lot of unsecured debt. We do not want bankruptcy. We have to refi our house next year so I don’t know what to do. we have about $50,000.00 in debt.

Heather”

Dear Heather,

Your options are limited with the requirements you’ve given. If you have to refi your house next year and keep your credit getting better then your only option is to pay down your debt by paying at least the minimum payment each month, on-time.

All other solutions may result in an impact to your credit report. Of course the reality might be with your current situation you can’t make ends meet and that will hurt your ability to refi next year.

In that case, sell the house now, rent, and deal with the debt without fear of getting a new mortgage.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: We Have a Lot of Debt But We Don’t Want to Go Bankrupt. – Heather

Other Related Articles to Read

• I’m Afraid I’m Going To Get Laid Off. How Will I Pay My Bills? What Will I Do?
• I Always Heard Not to File Bankruptcy. Now I Wish I Had. – Kathy
• I Need to Lower My Mortgage Payment. – Josten
• I Can’t Afford My Car Payments. What Can I Do? – Jason
• Single Mom Does Not Have Enough Left For Groceries. – Laura

“Dear Steve,

My second husband, not the father of my children, has managed to spend $150,000 of the home equity line of credit (all of it). He says he gave the last $24,000 to his aunt for ’safekeeping’ because the banks were going to reduce the amount of equity people have available. $8,000 was for my car and I’ll be generous and say $20,000 was to redo our kitchen. We never put an addition on the house as hoped.

The rest of the money was spent $1000- $5000 at a time WITHOUT MY KNOWLEDGE. And I was also unaware of the $24,000 to his aunt. I’m absolutely sick about this. My original mortgage was for $115,000; a 15 year loan that is 4 years away from being paid. Thank god I have prepaid college for my 2 children, one who is a senior in h.s. My house is not worth the amount of debt in my opinion. I’ve decided to separate from this man in order to stop the financial bleeding. I’m a teacher and I don’t make millions.

I don’t know where to begin to clean up this mess. How do I get back on my feet financially. I’m afraid a divorce will make things even worse. But I can’t afford this man who has lied to me repeatedly. I’m so embarrased I have not told this to anyone.

Nicole”

Dear Nicole,

I’m so sorry this happened to you. Sounds like your husband just went “secretly wild” with the money. Honestly, the most logical approach here is to strongly consider a bankruptcy at the same time as the divorce and get a total fresh start and complete break from this man.

It might seem like an extreme approach but then again this is an extreme situation. I would also strongly urge you to pull a copy of your consolidated credit report and see if there are any other financial surprises out there in your name. If he’d silently take money from the home equity line of credit, who knows what other funds or fraudulent accounts may be out there.

Identity theft is a lot like date rape, it usually happens by someone you know. I would not be shocked if you found a credit card or account on your credit report that you did not recognize. The consolidated credit report link is the same one I use for myself.

Thank you for sharing your situation with me. I appreciate the trust and I’m proud to be able to help you.

You’ve got some stressful and tough days ahead but I can already see the light getting brighter for you at the end of this tunnel. Stepping up and taking action moves this issue a lot closer towards resolving it.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: My Second Husband Spent All of My Home Equity Line. – Nicole

Other Related Articles to Read

• Identity Theft and Credit Card Fraud for New Boobs
• Man blames ADHD for using father’s credit card, checks – NW Florida Daily News
• POLICE BLOTTER: NOV. 14 – Oakland Press
• One man arrested in home invasion robbery; accomplice sought – Star-Banner
• Around Town – Indian Express

“During these difficult economic times, consumers are understandably looking for ways to ease the burdens of rising debt,” Madigan said. “But I urge consumers to be wary when solicitors try to make tempting claims of ‘immediate’ savings. In such cases, the schemers rarely deliver and usually leave consumers in an even worse financial situation than before.”

Madigan filed a lawsuit today in Sangamon County against Priority Direct Marketing International, Inc. (PDMI), a Bedford, Texas-based telemarketing firm run by its President, William Fithian, and Advanced Management Services NW, LLC (AMS), a Spokane, Wash.-based firm owned by Ryan Bishop. The suit alleges that the two companies work in a concerted telemarketing scheme to solicit and enroll consumers in deceptive debt negotiation service agreements that promise to immediately reduce consumers’ credit card interest rates, with a guaranteed savings of $2,500. PDMI and AMS telemarketing representatives allegedly promise consumers that the companies will negotiate with consumers’ credit card companies to lower interest rates, and will provide full refunds if they are unsuccessful.

After consumers agree to enroll in the program, the telemarketing schemers allegedly charge consumers’ credit cards for set up fees ranging from $391 up to $1,590. The defendants allegedly tell consumers that these fees will be reimbursed at a later date by the consumers’ banks. Only after consumers’ credit cards are charged for the setup fees do they receive any documentation on the program’s terms and conditions, which on several points, contradict the telemarketers claims in their sales solicitations. Specifically, the defendants misleadingly claim that they can guarantee an interest rate reduction for all customers or provide full refunds in instances where rate reductions are not secured. When customers have requested refunds, after the defendants have failed to negotiate any interest rate reductions, the defendants allegedly refuse altogether or give refunds minus a non-refundable $199 fee that was not disclosed during the sales pitch.

Attorney General Madigan’s lawsuit charges the defendants with violating the Illinois Consumer Fraud and Deceptive Business Practices Act by misrepresenting the services they provide to consumers and the effects the services will have on consumers’ credit. The suit asks the court to enter a permanent injunction barring the defendants from engaging in debt settlement in Illinois and to order the defendants to pay restitution for complainants, civil penalties of $50,000 for violating the Consumer Fraud Act, and an additional $50,000 for each violation committed with the intent to defraud.

Source

Steve
@GetOutOfDebtGuy

Source: Illinois Attorney General Madigan Sues Company Making Debt Reduction Promises

Other Related Articles to Read

• Illinois Attorney General Cracks Down on Debt Settlement Industry
• Now You Know the Debt Settlement Industry is in Trouble When Alaska Cracks Down
• Companies Sued For Credit Card Interest Rate Scheme – consumer affairs.com
• Giannoulias announces ‘welcome home’ loans for military members – Quad Cities Onlines
• Florida Attorney General Wants Debt Settlement Companies to Put Up Before You Pay Up

“Dear Steve,

Hello, I am a female in my late 20’s and my credit is horrible. However, I have been focusing on cancelling my credit card debts and paying down my school loans. My goal is to purchase my first home in about 3 to 5 years. I’m also interested in investing but don’t know much about it.

My question is what is the best way for me to pay off my debts while also trying to save at the same time. Also, what would be the best way to increase my credit score since I know a bad credit score follows you for a long time. Thank you in advance for your answer.

Tayumika”

Dear Tayumika,

Congratulations on working on this while you are still young.

The first thing that strikes me is your statement about closing your credit cards. Paying off the balances is fine but don’t close those cards. I need for you to get them current again and use them from time to time. The length of time you have had the card and new good use will help to increase your credit score.

You also need to get a current copy of your credit report and credit score from all three credit bureaus. If you follow the credit report link you can get it there. It’s the same report and scoring I use for myself. We need to establish a baseline and from that you can measure your progress upwards.

As far as building savings at the same time you are reducing debt. The secret is to adopt an approach that is not all or nothing. Directing part of your money to savings will lengthen the time it will take to payoff the debt. But so what. You really need to do both things at once.

I’d suggest opening a plain savings account and deposit 50% of the extra money you can afford above the minimum payment on the student loan. Keep sending the extra 50% towards the student loan.

That savings is critical for two reasons. Not only will it help you to accumulate a downpayment but it will also be an emergency fund in case a surprise expense comes up that you would have had to put on the credit cards. Now, instead, you’ll have money in savings to pay for it instead of increasing your debt.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: I’m a Female in My Late 20s and My Credit is Horrible. – Tayumika

Other Related Articles to Read

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• We Want to Start Paying Back Old Debt From Six Years Ago. – Jen
• A 12-Step Plan to Get Out of Debt Fast!
• Should I Use All of My Savings to Pay Off My Credit Card? – Hal
• I Have a Really Big Emergency Fund to Carry Me Through My Unemployment. – Ashlee

“Dear Steve,

Hello. This is so hard for me to do. I am 32 years old and have lived in fear of my debt for 5 years now. It controls my life. I have told no one about the amount of debt I have incurred. My boyfriend recently proposed to me and I want with all of my heart to marry him and be honest with him, but I am afraid that once he finds out about my large amount of debt that he will lose all respect for me.

Even thinking about it makes it difficult to breath. I have around 30,000 in unsecured credit card debt 15, 000 of which is an unsecured signature loan with Beneficial…who is now HSBC. This is the one i regret the most as when I was in my early twenties they sent me a check for 6000 in the mail and it has ballooned to 15000 and up until 5 months ago I have always made my payments on time.

I have been unable to make their required 415 monthly payment for several months now because that money was needed to pay for some health issues I have had recently–probably caused from the stress of this debt! I also have a 20,000 car loan. I am just sick with fear and worry.

I currently earn 52,000 a year and am barely making payments on my debt with no room left to make the payment to HSBC. I am so afraid they will sue me and garnish my wages which, for the industry I am in, could also cost me my job.

So far I am 5 months behind on that payment. They have called, but I have received nothing via mail. They will not accept a payment arrangement. Do I earn too much to file bankruptcy? Is that my only option? I don’t want my debt problems to affect my future husband. I don’t know what to do and how to tell him about my horrible situation. Currently ALL of my money goes to my CC bills and anything left over goes to groceries. I live with my fiance and he pays for the house a and utilities. Please help me!

How do I best go about telling my fiance about my horrible debt problem? He views bankruptcy as “the easy way out”. I believe it may be the only way for me to get out of this mess. What can I expect by filing bankruptcy or is there another option for me? The stress of this debt is hurting my body and I don’t want to bring this burden onto my upcoming marriage. Please help me!!

Afraid”

Dear Afraid,

Those of us that have been in problem debt have all lived through the fear and panic. It sucks. There is hope.

Right now your fear is intensified and magnified because of this secret you have. Ultimately the most liberating action you can take is to come out of the closet. But that’s scary as hell. All those voices in your head have you wondering, “Will he love me? Will he leave me?”

Here’s how I see the situation. I think that if two people can be committed to each other, want to get married or live together and can trade bodily fluids then they should be intimate enough to be honest and truthful with each other when it comes to money problems.

If you truly love the guy you should not infect him with your sexually transmitted debt by bringing it into the marriage when it can be dealt with before the wedding.

Here is what I would suggest you do right now.

1. Find a local bankruptcy attorney you like. Make an appointment to go in and talk to them. Openly discuss your situation and see if you agree that bankruptcy would be right for you.
2. After you get a clear head about bankruptcy and what it means for you, sit your guy down and have a heart-to-heart about the situation. But also let him know that you already have a plan to deal with it.
3. If the guy gives you a hard time or judges you, he’s an ass. That’s important to know before you launch into a life together.
4. My best is that he will be surprised but supportive. He will appreciate the fact that you already came up with a solution and researched it. Rather than this being a problem that will need to be dealt with by him, all he needs to do is give you a hug and let you execute the solution.

The stress and anxiety over this situation, as long as it goes unresolved, will impact your outlook on life, your job performance, stress levels and hurt your health.

In a perfect world you would not have to deal with this situation or be still dragging the debt around with you. But guess what, it’s not a perfect world, is it?

What do you think? Sound reasonable? Can you do this?

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: It’s Really Hard for Me to Ask for Debt Advice But I Live in Fear of My Debt. – Afraid

Other Related Articles to Read

• A Question Update From Sarah – Communication, Relationships, and Debt
• I Don’t Want to Get Married With Debt. – Brandi
• I’m Getting Married to a Guy That Has Not Paid His Credit Card Bills in 6 Months. – Monique
• Trudy is Worried About Getting Married Before Her Bankruptcy is Completed
• I’m Getting Married and Discovered She Has a Mountain of Debt. – Sammy

“Dear Steve,

I am unemployed,but i have some savings!

I have 3 credit cards that total $14,000 and a car loan that I owe $6,000 on. what do you think i should do? they are all over two years delinquent!

Tim”

Dear Tim,

You have two choices, you can either wait till you start making money and then try to begin to repay these debts, or you can use part of your savings, go bankrupt now and close the door on these old debts. If you decide you want to repay them latter after bankruptcy, you can.

Going bankrupt now will put an end to the old bad stuff and give you a chance of starting over, without the debt, without collections and truly give you a fresh start.

Find a local bankruptcy attorney you like, make an appointment and go in and talk it over.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: I’m Unemployed and Can’t Pay My Bills. – Tim

Other Related Articles to Read

• My Husband is Going to Be Laid Off This Friday. – Lori
• I Am Pregnant and Unemployed. Are Their Companies That Can Provide Me With Debt Relief? – Chris
• You May be Down and Unemployed But You Are Still a Hero to Me.
• Being jobless is more difficult now than it used to be – Vindy.com
• Jobless: 10 percent is tougher than it used to be – The Keene Sentinel