How to Get Out of Debt - Free Help

TEDTalks : Daniel Libeskind’s 17 words of architectural inspiration – Daniel Libeskind (2009)

Wed, 01 Jul 2009 07:00:00 +0000

Here is a video I want you to watch it to get your mind off your debt, to make you think about something else, and to see that there is a whole world of possibilities and amazing people just like you that can do incredible things.

I believe in you. Believe in yourself.

Steve

Video Summary: Daniel Libeskind builds on very big ideas. Here, he shares 17 words that underlie his vision for architecture — raw, risky, emotional, radical — and that offer inspiration for any bold creative pursuit.

If you can not see the video above, click here.

TEDTalks : Daniel Libeskind’s 17 words of architectural inspiration – Daniel Libeskind (2009)

Wed, 01 Jul 2009 07:00:00 +0000

I believe in you. Believe in yourself.

Steve

If you can not see the video above, click here.

TEDTalks : Gever Tulley teaches life lessons through tinkering – Gever Tulley (2009)

Tue, 30 Jun 2009 07:00:00 +0000

I believe in you. Believe in yourself.

Steve

Video Summary: Gever Tulley uses engaging photos and footage to demonstrate the valuable lessons kids learn at his Tinkering School. When given tools, materials and guidance, these young imaginations run wild and creative problem-solving takes over to build unique boats, bridges and even a rollercoaster!

If you can not see the video above, click here.

TEDTalks : Arthur Benjamin’s formula for changing math education – Arthur Benjamin (2009)

Mon, 29 Jun 2009 14:50:00 +0000

I believe in you. Believe in yourself.

Steve

Video Summary: Someone always asks the math teacher, “Am I going to use calculus in real life?” And for most of us, says Arthur Benjamin, the answer is no. He offers a bold proposal on how to make math education relevant in the digital age.

If you can not see the video above, click here.

TEDTalks : Arthur Benjamin’s formula for changing math education – Arthur Benjamin (2009)

Mon, 29 Jun 2009 14:50:00 +0000

I believe in you. Believe in yourself.

Steve

If you can not see the video above, click here.

Will My Family Have to Pay My Debts From My Life Insurance After My Death? – John

Steve Rhode — Fri, 26 Jun 2009 13:07:00 +0000

John wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty. If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help.

“Dear Steve,

I have $152,000 in student loan principal, down from $163,000 after 6 years of payment. $77,000 are at a fixed rate of 2.625%. $6000 are at 5% fixed, and $69,000 are at a variable rate, which currently averages 2.5%.

I also have $22,000 in credit card debt, which is at fixed rates of 4.99%, 3.99%, and 2.99%. The average rate on the 3 cards is around 3.75%.

My monthly payments are interest only on the student loans at $410 per month and my credit card issuers want me to pay 2% of balance plus interest, so the payments are about $470 per month.

I rent for $600 per month.

My car is 22 years old.

My income is $44,000 per year, working one FT and one PT job.

Will my family have to pay any of my debt from the proceeds of my life insurance after my death?

John”

Dear John,

Upon your demise creditors can only look to your estate, your part of assets for repayment of debt. The life insurance proceeds are a benefit to the beneficiary, just like a 401(k) is, so it is not part of your estate.

It also depends if the debt is a joint obligation with a surviving family member or spouse. That agreement lives past your death.

In the community property states of Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, the liability of debt after death is more complicated. These are community property states. If you live in one of these states you should speak to a lawyer licensed in your state for specific advice.

Big hug.

Steve
@GetOutOfDebtGuy

Source: Will My Family Have to Pay My Debts From My Life Insurance After My Death? – John

We Are Spending Down Our Savings Trying to Make Ends Meet. – Patch

Steve Rhode — Fri, 26 Jun 2009 12:44:12 +0000

Patch wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

My husband and I have alot of debt due to my student loans that are almost 100,000, and then of course we have a mortgage, car payments and the household bills. I feel like we are drowning and our savings is dwindling down fast.

How can we get this under control before we are totally broke?

Patch”

Dear Patch,

If your savings are dwindling that tells me that there has been some change in the household income or expenses. At one time you were able to save, and now you can’t.

Having money in savings is great and critical but it is clearly a warning sign of bad things over the horizon if you are spending down your savings without a solution that will stop that need. Otherwise what will happen is you will spend yourself down to broke.

If you are unable to raise income you will have to lower expenses. That might mean moving, downsizing, bankruptcy or some other radical adjustment. Typically among the most expensive bills each month are the mortgage and car payments.

If you have government backed student loans, investigate the new Income Based Repayment (IBR) program that will modify student loan payment.

What is Income Based Repayment?

Income Based Repayment (IBR) is a new repayment plan for the major types of federal loans made to students. Under IBR, your required monthly payment is capped at an amount that is intended to be affordable based on your income and family size.

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What federal student loans are eligible to be repaid under an IBR plan?

Any Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program is eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans, or consolidation loans that repaid a parent PLUS Loan. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).

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Who is eligible for IBR?

You may enter IBR if your federal student loan debt is high relative to your income and family size. While your lender will perform the calculation to determine your eligibility, you can use the Departments IBR calculator to estimate if you would likely benefit from the IBR plan. It looks at your income, family size, and state of residence to calculate your IBR monthly payment amount. If that amount is lower than the monthly payment under a 10-year standard repayment plan, then you are eligible to repay your loans under IBR. See below for a more detailed description of how IBR eligibility is determined.

The following chart shows the maximum IBR monthly payment amounts for 2009 for a sample range of incomes and family sizes.

IBR Monthly Payment Amount
Annual Income	Family Size
Annual Income	1	2	3	4	5	6	7
$10,000	$0	$0	$0	$0	$0	$0	$0
$15,000	$0	$0	$0	$0	$0	$0	$0
$20,000	$47	$0	$0	$0	$0	$0	$0
$25,000	$109	$39	$0	$0	$0	$0	$0
$30,000	$172	$102	$32	$0	$0	$0	$0
$35,000	$234	$164	$94	$24	$0	$0	$0
$40,000	$297	$227	$157	$87	$16	$0	$0
$45,000	$359	$289	$219	$149	$79	$9	$0
$50,000	$422	$352	$282	$212	$141	$71	$1
$55,000	$484	$414	$344	$274	$204	$134	$64
$60,000	$547	$477	$407	$337	$266	$196	$126
$65,000	$609	$539	$469	$399	$329	$259	$189
$70,000	$672	$602	$532	$462	$391	$321	$251

After the initial determination of your eligibility for IBR, your payment may be adjusted each year based on your income and family size, but your required payment will never be more than the standard 10-year payment amount (unless you choose to exit the IBR program).

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What are the benefits of IBR?

PAY AS YOU EARN – Under IBR, your monthly payment amount will be less than the amount you would be required to pay under a 10-year standard repayment plan, and may be less than under other repayment plans. Although lower monthly payments may be of great benefit to a borrower, these lower payments may result in a longer repayment period and additional interest.
INTEREST PAYMENT BENEFIT – If your monthly IBR payment does not cover the monthly interest that accrues on the loans, the government will pay your unpaid interest on Subsidized Stafford Loans (either Direct Loan or FFEL) for up to three consecutive years from when you first enter IBR repayment. After three years, and for all the other types of loans, interest that accrues will be capitalized (added to the loan principal on which future interest is calculated) when the borrower no longer is eligible for an IBR repayment amount.)
25-YEAR CANCELLATION – If you repay under the IBR plan for 25 years and meet certain other requirements, any remaining balance will be cancelled.
10-YEAR PUBLIC SERVICE LOAN FORGIVENESS If you work in public service and have reduced loan payments through IBR, your remaining balance after ten years in a public service job could be cancelled if you made loan payments for each month of those ten years. The Public Service Loan Forgiveness Program is available only if you have Direct Loans and you make 120 monthly payments under the Direct Loan Program. If you have FFEL loans, you may be eligible to consolidate them into the Direct Loan Program to take advantage of the Public Service Loan Forgiveness Program. However, only the payments made while in the Direct Loan Program will count toward the required 120 monthly payments. For more information about this program, review the Departments Public Service Loan Forgiveness Program Fact Sheet.

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What are the disadvantages of IBR?

YOU MAY PAY MORE INTEREST The faster you repay your loans, the less interest you pay. Because a reduced payment in IBR generally extends your repayment period, you may pay more total interest over the life of the loan.
YOU MUST SUBMIT ANNUAL DOCUMENTATION To set your payment amount each year, your lender needs updated information about your income and family size. If you do not provide the documentation, your payment reverts to the standard 10-year repayment amount.

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How is the IBR amount determined?

Under IBR, the amount an eligible borrower would repay each month is based on the borrowers Adjusted Gross Income (AGI) and family size. The annual IBR repayment amount is 15 percent of the difference between the borrowers AGI (or an alternate income amount) and 150 percent of the Department of Health and Human Services Poverty Guidelines, adjusted for family size. That amount is then divided by 12 to get the monthly IBR repayment amount. If that amount is higher than the 10-year standard repayment amount on the borrowers loans, then the borrowers required payment is the standard amount. The repayment amount under a 10-year standard plan is calculated based upon the total amount borrowed and the applicable interest rate applied over 10 years. (Unlike the IBR plan, the repayment amount under a 10-year standard plan is not based on your annual income.)

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Are there examples of borrowers who are eligible for IBR and for borrowers who are not?

Example 1 – Based upon the IBR repayment formula a borrower with a family size of one and an AGI of $30,000 would have an IBR calculated payment amount of $172 per month. If this borrower had total student loan debt of $25,000, the calculated monthly repayment amount under a 10-year standard plan with an interest rate of 6.8 percent would be $288. Since the $172 IBR calculated amount is less than the 10-year plan amount of $288, the borrower would be eligible to repay under IBR at a monthly amount of $172. However, if this borrowers total educational loan debt was only $10,000 the 10-year calculated amount would be $115 per month, which is less than the IBR amount of $172. Thus, the borrower would not be eligible for IBR.

Example 2 – A borrower with a family size of four and income of $50,000 would have an IBR calculated monthly payment amount of $212. If this borrower had total student loan debt of $20,000 the calculated monthly repayment amount under a 10-year standard plan with an interest rate of 6.8 percent would be $230. Since the $212 IBR calculated amount is less than the 10-year plan amount of $230, the borrower would be eligible to repay under IBR at a monthly amount of $212. But, if this borrowers total educational debt was $15,000, the 10-year calculated amount would be $173 per month which is less than the IBR amount of $212. This borrower would not be eligible for IBR.

For more information on other repayment plans and calculators, click here.

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How Do Borrowers Apply for IBR?

For more information and to apply for IBR, you should contact the lender or lenders who hold your student loans.

Big hug.

Steve
@GetOutOfDebtGuy

Source: We Are Spending Down Our Savings Trying to Make Ends Meet. – Patch

Why Does Credit Counseling Drop Us When We Can’t Make The Payment. – Tracy

Steve Rhode — Fri, 26 Jun 2009 12:12:17 +0000

Tracy wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

My husband and I are self employes and dont make a lot of money.he use to have a steady job before being laid off two yrs ago..we tried consolidating our debt and were kicked out of the program because we couldnt afford the monthly payments..now creditors are calling all day and I dont know what to say..we arent in a position to pay anyone right now..what is going to happen to us?

What do we do now and what actions can the credit card companies do to us?

Tracy”

Dear Tracy,

A credit counseling program will drop you when you can’t make the payment because you become a liability to them. When your monthly minimum payment is not enough to satisfy the creditor wishes then the credit counseling program has no further use for you.

When they say it’s not about the money, guess what, it’s about the money.

It is time for you to find a local bankruptcy attorney, pick up the phone and call to make an appointment for a free bankruptcy consultation. This is not going to get better without intervention or a sudden increase in income.

Bankruptcy will stop the calls and end collection attempts. It will close the door on this unmanageable debt for ever.

Sometimes the hardest thing to do is the right thing.

Big hug.

Steve
@GetOutOfDebtGuy

Source: Why Does Credit Counseling Drop Us When We Can’t Make The Payment. – Tracy

Video Update on Solar Power Interconnect

Steve Rhode — Fri, 26 Jun 2009 11:47:04 +0000

Here is a quick tour of the hardware installed on the side of the house to connect the DC power from the solar panels to the inverter to convert it to AC to feed back into the grid.

If you can’t see the video above click here.

Steve
@GetOutOfDebtGuy

Source: Video Update on Solar Power Interconnect

American Credit Experts and Legal Credit Repair Center Settles With FTC Over Credit Repair Infractions

Steve Rhode — Fri, 26 Jun 2009 11:41:03 +0000

A federal court has ordered a credit repair operation and its principals to stop making false claims and requiring advance payment for credit repair services. See the court order here. The agreed-upon court orders are a result of a settlement between the Federal Trade Commission and the “credit repair” defendants.

The Commission sued the defendants in October 2008 as part of “Operation Clean Sweep,” a crackdown on credit repair operations. The defendants represented that they could remove negative but accurate information from consumers’ credit reports, including bankruptcies and late fees. According to the FTC, the defendants charged consumers up to $59.95 initially, then $59.95 per month, to send letters to credit reporting agencies disputing information on the consumers’ credit reports. Contrary to the defendants’ representations to consumers, those dispute letters failed to remove accurate negative information from the consumers’ credit reports.

The orders bar the defendants from violating the Credit Repair Organizations Act by charging clients fees in advance and claiming that a credit repair organization can permanently remove negative information from credit reports, even when the information is accurate. They also bar the defendants from making deceptive claims when marketing any product or service, including credit repair services.

The orders further prohibit the defendants from collecting money from consumers who purchased their services before December 3, 2008, when the court halted their unlawful practices, and from disclosing or benefitting from customers’ personally identifiable or financial information. The orders require them to take reasonable measures to protect consumers’ personally identifiable information during its disposal.

The order against Ace Group, Inc., doing business as American Credit Experts, Inc., The Ace Group, Inc., The Ace Group, and ACE; Legal Credit Repair Center, Inc.; Michael Singer, and Gerald Roth, imposes a $20,645,754 judgment that will be suspended if Singer and Roth pay $5,000 each because of their inability to pay the full judgment. The order against Melvin Kessler also imposes a $20,645,754 judgment, which is suspended based on his inability to pay. If the defendants are found to have misrepresented their financial condition, the full judgments will become due immediately. The orders also contain record-keeping and reporting provisions to allow the FTC to monitor compliance with the orders.

The FTC advises that only time, effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your credit report. Federal law requires that the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – provide you with a free copy of your credit report once every 12 months, if you ask for it.

Steve
@GetOutOfDebtGuy

Source: American Credit Experts and Legal Credit Repair Center Settles With FTC Over Credit Repair Infractions

I Signed Up With Debt Settlement Company Debt Relief USA. They’ve Done Nothing. – Vicki

Steve Rhode — Fri, 26 Jun 2009 11:37:12 +0000

Vicki wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I signed up with a company by the name of Debt Relief USA, July 7, 2008. Their address is 16200 Addison Rd, Ste 105, Addison, TX 75001. They have not done anything to help me with my debt as they promised. I have recently found several articles on the Internet about complaints from other clients and that they have filed bankruptcy.

I live in Missouri and their are several complaints with The Missouri Attorney Generals Office. I am filing a complaint with them as well.

Is there any possible way to get my money back? They owe me almost $4,000.

If you can help or give me advice, I would appreciate it.

Vicki”

Dear Vicki,

The other day I posted Debt Settlement Company Debt Relief USA Files Bankruptcy. I’m afraid the news might not be so good on the refund front. I would suspect that you are now an unsecured creditor to Debt Relief USA and shortly you will receive a form to fill out to put a claim in for the money owed to unsecured creditors.

I suspect that the secured claims against the company constitute a large percentage of the assets they have on hand. This means that you and other unsecured creditors will probably get back a percentage of cash you have paid to Debt Relief USA to date.

If you want any information about refunds or the process you should contact the Debt Relief USA bankruptcy attorney:

Gary Armstrong
Armstrong & Alford
5646 Milton St
Suite 711
Dallas, TX 75206

214-265-0808
Fax 214-853-5323

Big hug.

Steve
@GetOutOfDebtGuy

Source: I Signed Up With Debt Settlement Company Debt Relief USA. They’ve Done Nothing. – Vicki

I’m Broke in Florida and Can’t Afford to Go Bankrupt. – David

Steve Rhode — Fri, 26 Jun 2009 11:33:22 +0000

David wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

My pay is garnished each month for $800 a mnth in child support payments. My 15 yr old son has lived with me for almost 4 yrs now so I pay for all his needs from home to school and our living costs each month don’t leave much left. I live paycheck to paycheck. I live in Florida.

Being sued for a credit card, have a court date in July, I don’t have any extra money or I’d pay them off, what can they do to me? I can’t afford a lawyer either.

David”

Dear David,

The American Bankruptcy Institute has a listing of free bankruptcy attorneys that may be able to help you. Visit this site and find a local attorney to contact for assistance with bankruptcy.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I’m Broke in Florida and Can’t Afford to go Bankrupt. – David

I Am Working With Debt Settlement America But Now I’m Getting Sued By My Creditors. – Bee

Steve Rhode — Fri, 26 Jun 2009 11:29:08 +0000

Bee wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I was divorced in 1999 after 21 yrs of marriage and 2 bankruptcys with my ex, Since then,I have bought and sold 3 houses and purchased 3 brand new vehicles and re-built my credit. I had my credit cards current but didn’t feel I was getting anywhere, even tho the payments were always made on time and usually more than the mininum, I was getting nowhere on the balances.

So I contacted Debt Settlement America and was told to stop making the payments and they would work with my creditors while I paid them every month. Then I started getting summons served on me. DSA was unable to do anything for me so I stopped paying them. I have almost 26000.00 in credit card and personal debt.

I have consulted a bankruptcy attorney, but I really don’t want to go that route. How can I negotiate with my creditors or should I just file bankruptcy for the 3rd time in my life. I don’t think DSA was any help to me at all, all my credit cards were current until they told me to stop ,making payments, now its been over a year and i can’t catch up on the payments that include more interest and late fees? What do you suggest?

Thanks

Bee”

Dear Bee,

I think you’ve fallen into the negative pit of debt settlement. Getting sued while in a debt settlement program is not that uncommon. And being told to fall behind on debts while entering a debt settlement program is not unusual at all. Creditors reserve the best deals for people that are behind and demonstrate they can’t pay.

If you have the cash on hand to offer the creditors at least 50% of the balance you owe, you might want to contact them yourself. Just remember, that you won’t be out of debt unless all agree. Some might take 20% and some may not be willing to reduce your debt at all.

Right now this is a mess. You could click here to try a debt management program and see if they could get you a monthly payment you can manage, otherwise, I’m afraid that back to bankruptcy is the route you’ll have to take.

I did notice that Debt Settlement America brags on their site about winning The Association of Settlement Companies (TASC) 2007 President’s Award for excellence. TASC is always going on about how great their members are so maybe TASC can assist you to get some straight answers from their award winning member that seems to not be providing you with good service.

The Association of Settlement Companies
16 N. Carroll Street, Suite 900
Madison, WI 53703
888-657-8272 (TASC)
888-482-3791 Fax
info@tascsite.org

Big hug.

Steve
@GetOutOfDebtGuy

Source: I Am Working With Debt Settlement America But Now I’m Getting Sued By My Creditors. – Bee

I’m on Active Duty in San Diego But Deep in Debt. What Can We Do? – Andrew

Steve Rhode — Fri, 26 Jun 2009 11:25:51 +0000

Andrew wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I am active duty and was stationed in San Diego and we dropped to one income and run up an extreme amount of debt (45,000).

I am looking at options and wanted to file Chapter 13 but is it true that they take all of your disposable income? And if so is a debt reduction company a better option?

Andrew”

Dear Andrew,

It is not true that all of your disposable income is taken. I would urge you to meet with a local bankruptcy attorney and go in and discuss your situation so you can get an actual idea about what your payment would be. With such a large reduction in income and debt I can’t see how a debt reduction company would be a path worth pursuing.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I’m on Active Duty in San Diego But Deep in Debt. What Can We Do? – Andrew

I Can’t Afford My Car Payments. What Can I Do? – Jason

Steve Rhode — Fri, 26 Jun 2009 11:23:18 +0000

Jason wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I purchased a car about two years ago, due to the recent drop in the economy my job has been made pretty much obsolete and now i can afford to make the payments, is there anything i can do asap to fix the situation ?

What can i do to fix this problem so i don’t lose my car, and damage my credit?

Jason”

Dear Jason,

You could attempt to refinance the car and extend the loan out for a longer period of time. This would lower the monthly payment but in the end you would wind up paying much more for the car.

Refinancing will depend on the year of the car and your current credit. You can search online for car refinancing companies.

The bottom line might be that now you’ve had a reduction in income you simply might now be able to afford the car or payment. in that case the worst situation is that the car is repossessed by the lender. That will result in a huge bill to you once the car is sold at public auction.

Last ditch effort would be for you to talk to the current lender and see what options might be available to modify your payment.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I Can’t Afford My Car Payments. What Can I Do? – Jason

I Want a Divorce From My Cheating Husband But We Have This Mortgage. – Stuck

Steve Rhode — Fri, 26 Jun 2009 11:17:29 +0000

Stuck wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I am seeking to divorce my husband who I have found out is cheating. We live in a no fault state so that is not an issue. However, though the title to the house is in both our names, the main mortgage is in my husbands. I say main because we qualified for the house from a local program that has given us no interest loans (in addition to the main mortgage) for as long as we live in the house.

I need him to leave for my peace of mind. I would like to remain in the house with our child as on my salary alone, I can just afford the bills. However, we now are upside down on our mortgage and I am stuck.

What can I do, trying to be fair, to get him to leave. I dont want to move because the house is in my daughters school district.

Stuck”

Dear Stuck,

When you say you can “just afford the bills” that does not leave me with a warm fuzzy feeling. Just getting by is a plotted path towards financial disaster, especially owning a home. What’s the plan when something breaks? I doubt you’ll be able to build an emergency fund as you are “just” getting by.

Hum, why not just ask him to leave and if he won’t then evaluate what your priorities are. If your priorities are to get you and your daughter out of that environment then talk to your divorce lawyer about your soon to be ex-husband taking over the house and you move out to rent in the district.

This might be a better time to consider breaking your financial ties together, consider bankruptcy, hand the house back to the bank since it has no equity and get alimony and child support from your husband along with a fresh start. That is not an unreasonable plan based on where you might want to move forward with your life from this point.

Consider this, if the main mortgage is in your husband’s name and you guys split and he falls behind on the mortgage or stops paying it, the house gets foreclosed on and you get evicted.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I Want a Divorce From My Cheating Husband But We Have This Mortgage. – Stuck

TEDTalks : Ray Zahab treks to the South Pole – Ray Zahab (2009)

Fri, 26 Jun 2009 07:00:00 +0000

I believe in you. Believe in yourself.

Steve

Video Summary: Extreme runner Ray Zahab shares an enthusiastic account of his record-breaking trek on foot to the South Pole — a 33-day sprint through the snow.

If you can not see the video above, click here.

TEDTalks : Katherine Fulton: You are the future of philanthropy – Katherine Fulton (2007)

Thu, 25 Jun 2009 07:00:00 +0000

I believe in you. Believe in yourself.

Steve

Video Summary: In this uplifting talk, Katherine Fulton sketches the new future of philanthropy — one where collaboration and innovation allow regular people to do big things, even when money is scarce. Giving five practical examples of crowd-driven philanthropy, she calls for a new generation of citizen leaders.

If you can not see the video above, click here.

We Got 100% Financing On Our Home But Once the Loan Adjusts We Won’t Be Able to Afford it. – KC

Steve Rhode — Wed, 24 Jun 2009 21:24:28 +0000

KC wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

My husband and I have a 5/1 Adjustable Interest Only loan, as well as a HELOC loan because we did 100% financing. I’m no longer working (staying at home with new son), and my husband’s salary was recently cut 10%. We’ve given up a few luxuries (cable tv, saving for retirement, etc) in order to stay current on our mortgages, but once our rate adjusts in January I’m quite certain we’ll no longer be able to.

Another factor is our home value is now nearly half of what we owe on it ($246,000 down from $455,000) Now that we have a child, our 2 bedroom home is getting to be too small. We’d like to move on from our starter home, especially to a better school district, but I think we’d be willing to stay in this home for 3 or 4 more years if we can get a modification that makes sense and saves our credit. So far, BofA doesn’t want to talk to us unless we’re delinquent.

I’ve been considering going with MMI’s free counseling to help. Any thoughts on this? Are we so underwater now that we should look at walking away and going into foreclosure and possible bankruptcy? Some friends in the same situation are doing this and I wonder what the consequences (besides poor credit for 10 years) would be. I don’t take this lightly. I understand we have an obligation to pay our loans, it’s just that as of January, we won’t be able to without sacrificing necessities. Your advice is appreciated!

KC”

Dear KC,

You are so underwater on the loan that I doubt that Bank of America is going to come up with a loan modification plan.

Unfortunately you are just part of the next wave of mortgages that are going to default. These option ARM loans are toxic and bad news.

If housing values had doubled instead of dropped by half, you’d feel like a genius. But as it is you feel like a failure.

Bankruptcy can be recovered from. The irony is that only by going bankrupt do you even have a shot at saving up money for a new home in the future. The shock to your credit report can be repaired.

Unfortunately Congress never passed legislation that would have given bankruptcy judges the authority to drive down the mortgage balance to current values. If this had been your second or vacation home, they can do that already, just not on your primary residence. Crazy.

You can certainly go and talk to any HUD approved housing counselor but at the same time you need to find a local bankruptcy attorney and make an appointment for a free bankruptcy consultation. You need to hear both sides of the story to understand which path is best for you.

If I was to bet, I think you’ll decide that walking away from the home and starting over is the most logical path to follow.

Big hug.

Steve
@GetOutOfDebtGuy

Source: We Got 100% Financing On Our Home But Once the Loan Adjusts We Won’t Be Able to Afford it. – KC

We Are About to Lose Our Home and My Husband Won’t Talk to Me About It. – Jeanette

Steve Rhode — Wed, 24 Jun 2009 21:03:19 +0000

Jeanette wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

We are about to lose our home $10,000 in the hole my husband has not talked to me i just found out in the mail he takes care of the bills he lost his self employment is now working for someone else I know this is a big change for him a big pay cut I know things are on his mind bad he don’t talk just says there is alot on his mind my husband has done things for our family for 32 years I would like for him to know there is help how do we hold on.

Jeanette”

Dear Jeanette,

These are difficult times for proud people. I suspect that your husband is stuck in the first stage of debt, denial.

He sounds like he is working hard to try to make ends meet, probably so he does not disappoint you and let you down.

There are two courses of action you could take. The first would be to sit down with him and let him know you are aware of what is going on. You would like to help to be part of the solution and you are willing to do whatever you can to work to find a solution for the problem.

The second approach would be for you to get a copy of your consolidated credit report. The link is for the one I use myself and love. You could then uncover what the true condition of your financial situation is and sit down with that information and tell him you’ve got the facts and you are going to take over dealing with the creditors.

I prefer the first approach. A solution based on communication and understanding works better than one based in confrontation.

Once you do that, come back and give me an update in the comments section. I’ll help you from there but we need him onboard first before we explore solutions.

Big hug.

Steve
@GetOutOfDebtGuy

Source: We Are About to Lose Our Home and My Husband Won’t Talk to Me About It. – Jeanette

Holy Crap. Chase Minimum Credit Card Payment Goes to 5% of Balance for Mary.

Steve Rhode — Wed, 24 Jun 2009 19:57:13 +0000

Mary wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

My husband and I have credit card debt of $ 87,000 and medical bills of about $ 2,000. The credit card int. rates vary from 2.99 to 9.99%. We have 2 teenage children. We own a mobile home and a couple acres but don’t have much equity in it.

We both have fairly good jobs and have paid our bills on time up to this point. For years I did some part time work in addition to my regular job but 6 months ago I lost that income of about $400 month. Since then we have used the credit cards on quite a few occasions to pay utility bills, phones, dr bills, medicine or whatever on months that we couldn’t pay everything.

We just developed a budget and have cut about $150 month in expenses for things we really didnt need and are working on trying to cut more. We are also trying to sell some small personal belongings but that will only bring in about $2,000 at the most, assuming we can even sell them.

We wanted to put this money in savings. I am looking for addl work to replace the $400 mo I lost. Right now we are just able to pay our regular bills (house, cars, utilities, ins, groceries, gas, etc) and the minimum payment (or a little more) on credit cards. We are not able to put any money away for savings for things that come up so I dont know how we will pay those things other than using a credit card.

Two days ago I received a letter from Chase on one credit card saying the min pymt is going to 5% in August – this will make the pymt on that card go from $250 mo to $625 mo. We are considering selling my husbands truck to save us $300 month to pay this difference. However, we have 3 different cards with Chase so if they all go up we will be looking at owing an additional $850 month. If all our credit cards go to 5% minimums we will owe $2,500 mo in additional pymts on credit cards.

There is no possible way we could ever come up with a way to pay that. My husband is able to retire at end of this year and was planning on retiring then (assuming he is able to get another full time job). We were planning on using his lump sum distribution (about $40,000 after taxes) and the monthly checks (about $800 after tax) to pay off our cars and our mortgage to get to a point where we could breathe.

At this point however we really dont know what to do. If our card min payments all go to 5% I guess we will have no choice other than to file bankruptcy because there is no way we can make those payments. This is causing extreme stress on our lives. I dont even sleep anymore unless a take sleeping pills. I am constantly worried sick about what we are going to do.

I have a medical condition, Multiple Sclerosis (a big part of the credit card debt) and all this stress just aggravates that. We have got to come to some resolution and proceed with whatever we are going to do. We just dont know what the best solution for us is. We really dont want to file bankruptcy but if that is what we end up having to do I guess that is just the way it is and we will have to live with it. I would appreciate your opinion on where we go from here.

Should we just file bankruptcy or will anything else work for us?

Mary”

Dear Mary,

Selling things to fund yet another month without it resolving the situation is not a solution. It helps you to avoid making the hard choices but it does not resolve the underlying problem.

With Chase Bank raising your monthly minimum payments to 5% of the outstanding balance it leaves you in a position where you can’t recover. You’ve been using credit to make ends meet and that strategy will fail.

Sadly, I think the best course of action is for you to immediately find a local bankruptcy attorney and go in and talk to them about bankruptcy for you in your situation.

If you go bankrupt now you can protect the retirement funds, can discharge the debt, can eliminate the underlying stress and that should begin to slowly improve your medical state.

Based on the likely prognosis for your situation, after meeting with the bankruptcy attorney you should probably stop making any additional payments on the credit cards and save that money to go bankrupt.

Unless you take the action of intervening in your situation with bankruptcy it won’t be long when you will be without anything to sell, not in good physical shape to work, won’t be able to afford to make ends meet, and in need of your full retirement funds to take care of yourselves.

While it might not feel like it at the moment, in the face of an almost certain disastrous outcome, bankruptcy is the logical and responsible action to take.

Big hug.

Steve
@GetOutOfDebtGuy

Source: Holy Crap. Chase Minimum Credit Card Payment Goes to 5% of Balance for Mary.

Debt Settlement Company Debt Relief USA Files Bankruptcy

Steve Rhode — Wed, 24 Jun 2009 19:41:07 +0000

Debt settlement company Debt Relief USA has filed bankruptcy in Texas following recent investigations and suits by the attorney general of several states.

The bankruptcy petition can be viewed here and shows the ownership of Debt Relief USA to be Kelly E. Reilly, Alvin B. Bell, and James F. Wojcik.

What will be significantly up in the air is going to be the disposition of payments made by consumers that have only gone towards fees by Debt Relief USA that may no longer be able to honor those commitments.

Gary A. Armstrong, the company’s attorney, said Debt Relief will not negotiate individual settlements and will not remove money from individual accounts pending the bankruptcy proceedings.

The bankruptcy filing won’t affect any debt settlements the company has reached with a client’s creditors, he said.

On client deposits at Debt Relief, Armstrong said, “Our intention is to refund them as much as possible, but it’s subject to bankruptcy court approval.” Source

Steve
@GetOutOfDebtGuy

Source: Debt Settlement Company Debt Relief USA Files Bankruptcy

I’m a Disabled Construction Worker in Oklahoma That is Being Chased by Bank of America. – Butch

Steve Rhode — Wed, 24 Jun 2009 18:32:49 +0000

Butch wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I live in a “village” located on Lake Tenkiller in Northeast Oklahoma. I am 58 years old and have worked construction (worker, foreman, owner) all of my life. I have been married and divorced three times. After the third divorce I lost my business, my home and all of my money. I was disabled and had been working with a lawyer to be proclaimed “legally” disabled. In the meantime I was doing odd jobs to make it. A family member had given me a 1969 10′ by 40′ mobile home to live in. The only bills I had to pay were the utility, phone, and lot rent bills. Even so, I was having a hard time because I couldn’t do jobs that took much physical labor.

Well, I finally was proclaimed legally disabled and have been getting a disability check for approximately $675 a month. I also receive food stamps amounting to approximately $120 a month. I was able to get by on this by buying and selling things occasionally on the side. I pick up new hot water heaters that Lowe’s have rejected for one reason or another, fix them (usually something simple), and sell them at a reduced rate. I was making it and I was fairly happy.

Then a few years back Bank of America sent me a credit card with a $7000 limit. All I had to do was use it to activate it. I was positive that when I tried to use it it would be turned down. I was wrong. I don’t know why, because my credit was terrible, but “they” let me keep it and within two years I received two more cards from them totaling $15,000!!! I was only going to keep them in case of a real emergency. Well, guess what. My son got into trouble with his business and needed $11,000 immediately. He was going to pay me back within six months and would make the payments every month. Within the six months his business tanked. He was in no position to pay me back.

There, of course, was no way I could pay Bank of America back, and I told them so. I told them everything except I substituted myself for my son. I didn’t want them bothering him. I told them I was on disability (they didn’t know!) and was also working a job on the side which I lost because of the economy. I tried to work something out. I asked them to drop the interest to 0%, for a certain amount of time, and then I would be able to make the payments. They would drop the interest rate, but the monthly payments would still be too much. I talked to them several times to no avail. Now the collection agencies are on me. They have offered to cut the debt in half, but I have to make one lump sum payment. They have hinted they would even settle for less. Of course my credit is shot, so I can’t borrow any money to pay them.

What should I do? Can I use the being disabled in any way?

Should I go bankrupt? The credit card debt is the only debt I have. Seeing how I am 58 years old, am disabled, and have a terrible credit rating (which I will probably have for the rest of my life), should I just change my phone number and ride it out? I wouldn’t feel too bad about not paying them back because of what the banks have done, including the Bank of America, to the average person.

I would appreciate any information or advice you could give me.

Thank you,
Butch ”

Dear Butch,

Well, here you are now. You’ve got two choices. You could hide from your creditors and ride out the storm that could last for years, or you could go bankrupt and close the door on this situation and be done with it without having to look over your shoulder. Bankruptcy would be my vote since hiding is just so much more emotionally exhausting.

You don’t need a lesson or a lecture about what went wrong here. I think you can see it. Just remember, that because someone gives you credit does not mean you can afford it.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I’m a Disabled Construction Worker in Oklahoma That is Being Chased by Bank of America. – Butch

I’m in Debt to the IRS and Student Loans Only. What Can I Do? – Veronica

Steve Rhode — Wed, 24 Jun 2009 17:59:27 +0000

Veronica wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

Gawd I hate being in this situation, but I am 45 years old and almost $70,000 in debt. Most of it is from student loans, IRS, and other loans. No credit cards.

I’ve heard that you cannot file bankruptcy with IRS or Student Loans debt. Was wondering if this is true. If so, what other options should I look at?

Will Consumer Credit help me work with them to develop a payment plan I can live with? What other options are out there? I haven’t contacted them regarding making a plan yet – was wondering what all my options might be before I contact them and before they start garnishing my wages

Veronica”

Dear Veronica,

The IRS will come up with a payment plan for you. You should call them ASAP to get that in progress.

On the student loans, if they are government backed loans you may find some relief through the new Income Based Repayment (IBR) program.

Click here if you can’t see the video above.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I’m in Debt to the IRS and Student Loans Only. What Can I Do? – Veronica

Dave Ramsey – Bankruptcy Bigot or Personal Finance Saint?

Steve Rhode — Wed, 24 Jun 2009 17:28:49 +0000

I was just over on the blog of Dan Nunley, an Oklahoma bankruptcy attorney.

He has a fantastic post on his site about Dave Ramsey and his aversion to bankruptcy. It is a post worth reading and the comments as well. It provided a good look at different points of view about Ramsey’s zealous effort to help people to avoid bankruptcy.

Here is what Dave Ramsey says about bankruptcy on his site.

Bankruptcy is not something I recommend any more than I would recommend divorce. Are there times when good people see no way out and file bankruptcy? Yes, but I will still talk you out of bankruptcy if given the opportunity. Few people who have been through bankruptcy would report that it is a painless wiping-clean of the slate, after which you merrily trot off into your future to start fresh.

Don’t let anyone fool you. I have been through bankruptcy and have worked with bankruptcy for decades, and it is not a place you want to visit. Bankruptcy is listed in the top 5 life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one. I would never say that bankruptcy is as bad as losing a loved one, but it is life-altering and leaves deep wounds both to the psyche and the credit report. Source

I find that position to be a gross disservice to people in trouble and an exaggeration of the truth. Because the path contained some pain, does not mean it isn’t the best path to follow. Sometimes the most appropriate treatments are. Should we avoid heart surgery because it is painful even though it will save our life or make it better? Besides, credit report wounds can be easily healed.

People who go bankrupt, as Dave himself did, are most often better off financially after a fresh start, as Dave was. But Dave has built a very profitable following based on his position that his recommended path is somehow better, more evangelical, or appropriate in some divine way.

As someone that has lived through bankruptcy, the trials of debt, and spent every moment since 1994 helping people find a way to overcome their debt situation I’d like to offer my point of view.

Several commenters on the post noted that living through financial problems is a mentally taxing event. It is. In my studies I found that 40% of people living through financial troubles are clinically depressed.

The survey found that 49.3 percent of people with problem debt can be classified as depressed, of those 39.7 percent report symptoms of severe depression. In comparison, studies have shown that 9.5 percent of the general population is clinically depressed.

In August, 2001 we surveyed 136 clients whose unsecured debts range from $1,000 to more than $100,000. Their ages range from 21 to 77 years old; incomes range from $6,000 to $165,000 per year. Participants were asked a series of questions about their financial situation and mood states using the Center for Epidemiological Studies Depression Scale (CES-D), an industry standard for measuring depression. They also were asked about other psychological factors such as social support and optimism.

“Single women are at the greatest risk for depression related to financial problems,” said Steve Rhode. Depression is typically thought of as a combination of feelings of hopelessness, inadequacy and other negative emotions and behaviors.

The survey found that 58 percent of women reported mild and major signs of depression, compared to 36 percent of men. More than six out of ten women reported their level of debt to be very bad, while 46 percent of men described their situation that way. Women think about debt troubles more often than men, and feel less competent to solve their problems. More than half of women reported their stress level to be high or very high.

“For women and men, too often financial problems equal depression,” said Rhode. “The survey found that it doesn’t matter how much debt or income a person has. In fact, many of our clients have incomes exceeding $100,000 a year. Depression affects people who have high and low debt and income.”

The survey found that nine out of ten of all debtors feel some stress over their financial situation. Stress is commonly defined as emotional strain that manifests itself as fear and/or anxiety. Almost 50 percent of the respondents said debt caused their stress level to be high or very high. Seventy percent of respondent said they think about their debt very often or constantly.

“Depression creates an inability to conquer financial problems,” said Psychologist Joe James. “People become emotionally paralyzed, which leads to the inability to develop a plan or take action and compounds their financial problems. This is why people who are having money troubles should get extensive professional help as soon as possible.”

And in my humble opinion I don’t think that we best assist someone to live through a well intentioned path of bankruptcy avoidance simply to avoid bankruptcy, a path that may be considered punishment, at a time they may be lowest in their life. Whose goals are being served by that course?

The process of bankruptcy can result in the teachable moment for those that will hear the message, which is most. Less than 8% of Chapter 7 bankruptcy filers file for bankruptcy protection again. (Source) The emotional pain of loss and the process can result in a lifelong desire to avoid such pain again. In fact it often results in the detrimental avoidance of credit which is more harmful than bankruptcy.

I do object to declaring that those that choose to embark on the path promoted by Dave Ramsey to avoid bankruptcy are somehow better because they lived in deprivation to make amends and meet their goals. And I’m left asking what the success rate is of Dave’s approach in the elimination of debt by all who try. There does not appear to be any transparent public data to support his path as a better route to overcome immediate financial problems.

I spent many early years telling people to avoid bankruptcy as well but upon introspection that was more about my internal voice than what was the best technical tool for that person at that moment in their life.

If Dave wanted to promote a path that worked best for the individual, he would promote the investigation of all methods to allow the individual to make a fully informed decision about what is best for them in their individual situation. Financial peace does not come only from the purchase of his Financial Peace University books, tapes, seminars or consultations. There are more ways to a destination than just Dave’s road. And for some, the best tool to accomplish the task at hand may be bankruptcy.

Bankruptcy is the only route out of debt that provides the individual with any legal rights and protects them from unfair creditor actions, judgments, wage garnishments, etc. And at a time when the social safety net is strained to breaking or is falling apart, bankruptcy serves as a way for people to recover from traumatic situations without the access to or demand for additional social welfare programs.

One point that is often missed in the avoidance of bankruptcy discussions is that someone can go bankrupt, receive the protections available under the law, and still repay their creditors because they have a moral belief to honor that obligation. I wonder if that is what Dave did? I took that approach and tried to but actually had some creditors ask me to not send payments. A subject of a future post.

Forcing people to live a path certified by Dave Ramsey because of his personal experience and his emotional scaring is a disservice to many who are suffering with depression, pain, emotional trauma and difficult life situations as a result of their current financial misfortune.

Steve
@GetOutOfDebtGuy

Source: Dave Ramsey – Bankruptcy Bigot or Personal Finance Saint?

I Can’t Make the Mortgage and Feed the Kids. – Lill

Steve Rhode — Wed, 24 Jun 2009 15:42:01 +0000

Lill wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

We are having problems making our mortgage payments and lot rent. We live in a modular home park and we are suppose to pay 21000.00 total for this place. The modular home appraised by the county is at 11,000 as I just found out not long ago.

We pay 285 monthly lot rent and 295 monthly mortgage. We have to pay & keep home owners insurance ,plus we keep current on car insurance and of course all the utilities we pay. It has got so bad,that for the past year we have been really struggling. I have been borrowing money from family and friends, we have to do tons of cash advances to make payments.

We are really hit hard by everything and we are barely keeping the electric on now & its even hard to afford groceries anymore, I just hit up the food banks and applied for foodstamps. I have 3 children with my husband who also currently pays child support on another child he has.

I just got a free ride to college full time, but think I need to just let that go because we cant afford for me not to work. Which I was previously working but got a bright idea I would go to college so gave my notice. My husband thought he could pick up overtime to make up for it.

Now the company insurance has gone up for the 4th time in 2 years,they are doing all kinds of pay cuts, cut out bonuses and raises and are not allowing overtime. We are not making as of now and we have been looking at bankruptcy and/or just letting them foreclose on the place. But I am afraid of what they can do to us after they foreclose?

I also am afraid of not having any money to feed and cloth my kids trying to make payments and keep utilities on here. I am stuck what should we do and what can we do?I am just terrified,

Lill”

Dear Lill,

Your situation sounds like a horrible experience to live through. Between the daily stress and future uncertainty, this is not the life you probably thought you’d be living.

We have to prioritize your expenses at this point and make sure that you can pay for the health insurance and take care of the food for the family. While it might be better to let the mortgage go and go bankrupt, you’ll still need to find a place to live.

Your mortgage and lot rent add up to $580 a month and it seems like your family income has really dropped that the housing payment is now way more than you can afford.

It sounds like you’ve had some caring friends and family helping you out, but they can’t keep that up. It’s not fair to have them pouring money down a hole that is not going to get better without action on your part.

If you can go back to work and you can find a place to stay or rent, bankruptcy probably is worth seriously investigating. Find a local bankruptcy attorney and go in and talk to them for free about your situation.

The path out is probably this approach:

Go bankrupt.
Find new place to stay.
Maintain insurance.
Try and start saving some money after bankruptcy.
Find new employment.
Regroup life under this new fresh start and move forward.

This unfortunate downward spiral is not going to change until you take specific action to alter the path. You must intervene.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I Can’t Make the Mortgage and Feed the Kids. – Lill

TEDTalks : Paul Collier’s new rules for rebuilding a broken nation – Paul Collier (2009)

Wed, 24 Jun 2009 07:00:00 +0000

I believe in you. Believe in yourself.

Steve

Video Summary: Long conflict can wreck a country, leaving behind poverty and chaos. But what’s the right way to help war-torn countries rebuild? At TED@State, Paul Collier explains the problems with current post-conflict aid plans, and suggests 3 ideas for a better approach.

If you can not see the video above, click here.

TEDTalks : Paul Collier’s new rules for rebuilding a broken nation – Paul Collier (2009)

Wed, 24 Jun 2009 07:00:00 +0000

I believe in you. Believe in yourself.

Steve

If you can not see the video above, click here.

TEDTalks : Paul Collier’s new rules for rebuilding a broken nation – Paul Collier (2009)

Wed, 24 Jun 2009 07:00:00 +0000

I believe in you. Believe in yourself.

Steve

If you can not see the video above, click here.

I Cosigned for a Car Loan and that Person Went to Jail. Now I Have to Pay it. – Noname

Steve Rhode — Tue, 23 Jun 2009 20:20:23 +0000

Noname wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I am in a distressed situation and i dont know what to do about it. I recently lost my job and I have 2 car payments that along with insurance is taking about 600.00 a month and recently a family member that i signed for a car went to jail so now i have that car as well as insurance to keep on i.

I hate to damage my credit but i have no way out and it looks like there is no light at the end of the tunnel with all this debt. the job market in my area looks bleak and if i do find a job its looking like i’ll only be making a 3rd of my original income.

I have tried running ads to sell the vehicles but the cars are just breaking even on what they are worth as to what is owed. I have a few credit cards that i recently defaulted payments on to keep afloat with bills since my job loss

Is bankruptcy the best way to go for me?

Noname”

Dear Noname,

It seems like bankruptcy is a reasonable solution to explore. Without any expectation that you will make enough money to support the old debts, there is no way the math will add up to let you get or stay current.

You should find a local bankruptcy attorney and schedule an appointment for a free bankruptcy consultation.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I Cosigned for a Car Loan and that Person Went to Jail. Now I Have to Pay it. – Noname

Chase Put a Hold on My Bank Accounts and I Can’t File for Bankruptcy. – Gina

Steve Rhode — Tue, 23 Jun 2009 20:13:56 +0000

Gina wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

Chase places a judgement against me for $3,700 for a credit card. I was going to include this in my bk. They got to me before I could file and put a legal hold against 3 bank accounts (joint checking, joint savings, personal checking). The hold was for $7,500 per account for a total of negative $22,500.

I had about $1,400 between the three accounts (this was from a hardship withdrawl I took from my 401k to pay my mortgage). I also had a pay check direct deposited 2 days later — which I can not access.

I live in IL. How are they allowed to hold all of my 401k withdrawal and my entire paycheck? Is there any way to get this money back?

I’ve changed my mind quickly and will be filing a 13. However, I don’t even have the $450 the lawyer needs for fees b/c they are holding all of my money.

Gina”

Dear Gina,

I think you need to discuss the situation with the bankruptcy attorney you have selected. They may be able to help.

I’ll ask a bankruptcy attorney friend to comment to give us some insight. I don’t know if the stay from bankruptcy will release the money held.

Big hug.

Steve
@GetOutOfDebtGuy

Source: Chase Put a Hold on My Bank Accounts and I Can’t File for Bankruptcy. – Gina

My Business is Melting. What Options Do I Have Other Than Chapter 11 Bankruptcy? – Robert

Steve Rhode — Tue, 23 Jun 2009 20:05:38 +0000

Robert wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I own a dental lab business for about 28 years. It does well enough to pay my bills and credit card debt so far. About 3 years ago i bought into an ice cream store and created an all organic ice cream. It was a great idea, i thought, but never really took off the way i thought it would.

To make a long story short, I wound up giving it up. As a matter of fact, i am selling it to an auctioneering company that i know i will get very little money for, but i can’t afford to hang on to the store because i don’t want to pay another months rent and i just want to get out of this.

I owe tons of money to bank loans, credit card. and vendors and utilities. I don’t know what i am going to do. I feel like i will never be able to pay off these bills. My accountant told me that chapter 11 is only temporary and it cost about 25 thousand just to file. So thats out of the question. I own a house and i own my office space for my business. I am worried that i can lose them.

Do you have any suggestions of what i can do to get out of this tremendous debt that i have?

Robert”

Dear Robert,

Why doesn’t the business just go chapter 7 bankruptcy and close the whole thing down? I am assuming you are not personally responsible for any of this business debt.

Chapter 7 business bankruptcy is best when:

the business has no future,
it has no substantial assets or qualities that cannot be reproduced after bankruptcy, or
the debts are so overwhelming that restructuring them is not feasible.

I can’t imagine that the sale of the business is going to happen with all the debt around the neck of the business.

Talk to a local bankruptcy attorney and get advice before you sell the ice cream company to the auctioning company.

Big hug.

Steve
@GetOutOfDebtGuy

Source: My Business is Melting. What Options Do I Have Other Than Chapter 11 Bankruptcy? – Robert

My Son Has Aspergers, Autism, Anxiety, Depression and College Credit Cards. – Laura

Steve Rhode — Tue, 23 Jun 2009 19:40:20 +0000

Laura wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

My son who is 27 yrs old and currently on permanant disability for aspergers autism,anxiety disorder 300 and depression, he got caugh up in getting credits cards while attending school you know the ones, credit cards for students. Any way he will never be able to work and is currently getting social security disability benefits. what action can be taken other then bankrupcy because not only can he not afford it as social security is his only income and his mental capacity cannot handle bankrupcy court, I am on disability my self and my financial means is very limited…. Thank you for any help you can give me.

Laura”

Dear Laura,

I think it would be beneficial for him to go bankrupt and permanently eliminate this past debt so you never have to deal with it again. The alternatives of ignoring collection attempts or fighting the debt is a much more stressful experience for both of you and his condition would not benefit from that path.

You may be able to find an attorney that will help you for free by visiting the pro-bono listing of bankruptcy attorneys.

Big hug.

Steve
@GetOutOfDebtGuy

Source: My Son Has Aspergers, Autism, Anxiety, Depression and College Credit Cards. – Laura

I am on a Visit Visa in UAE and Have Lots of Debt. What Can I Do? – Rina

Steve Rhode — Tue, 23 Jun 2009 19:20:47 +0000

Rina wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I am currently on visit visa here in UAE as i have resigned salary from my previous job and got my employment visa cancelled as I got a better employment offer from another company but unfortunately it took them more than three months to start the employment visa processing.

Leaving my old job, they asked me to pay the visa expense which caused two months salary.
I have some credit cards which I defaulted on paying my monthly minimum amount because my previous company delays our salary which is the reason I look for another employment.

My new company took at least three months to start off processing my employment visa, thus leaving me jobless and without visa…I was forced to buy a visit visa in order to stay in UAE and wait for my new company to finish the visa processing. Now I am almost 5 months past due with all my credit cards and one of the banks already forwarded my case in alwasl legal advocates. I am wondering if it will have any effect on my employment visa application which my new company is processing now.

Please help me get out of this situation, as I am alone here in UAE, no family, no relatives to help me.

Rina”

Dear Rina,

If you are already the subject of legal action and an arrest warrant is out for you them it may impact your ability to get the visa. But looking at the standard UAE Visit Visa Application Form I can’t see anything asked that directly applies to your financial status.

As you may be aware, owing debt in the UAE and letting it go unpaid can result in imprisonment. I hope you can get your work situation resolved quickly so you can begin to repay your debt.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I am on a Visit Visa in UAE and Have Lots of Debt. What Can I Do? – Rina

I Filed a Chapter 13 Bankruptcy But Now it is Getting Dismissed. – Laketia

Steve Rhode — Tue, 23 Jun 2009 19:08:10 +0000

Laketia wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I filed chapter 13 bankruptcy in June of 06, I was laid off of my job Jan 09 I notified my attorney and I was told I still had to make my payments. I did’nt have a option of getting my plan decreased or anything I was just told to find a job point blank! Now my case is getting dismissed and I don’t know what to do or where to start to be able to keep my home and my car. please help!!

After my chapter13 case is dismissed where do I go from there?

Laketia”

Dear Laketia,

I’m going to ask some of my bankruptcy friends to comment on this question.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I Filed a Chapter 13 Bankruptcy But Now it is Getting Dismissed. – Laketia

I’m Being Chased For a Repo From Six Years Ago. – Steve

Steve Rhode — Tue, 23 Jun 2009 19:03:48 +0000

Steve wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I went through a bad time financial about 6 years ago. In 10/2004, I turned a vehicle back into the lender that financed it MMCA. I only ever heard from them once by phone and recently, in the last 90 days, they have transferred the old debt to a collection company showing it as an unsecured debt. This is from NH

The collection company has called the house trying to negotiate a settelment; What are my options, as it stands in the way of me now getting a conventional mortgage? I hate dealing with collection agents and I have a credit service disputing it, but I don’t know when it might drop off.

Thank you,

Steve”

Dear Steve,

The debt should drop off your credit report seven years after it was first reported. But bear in mind that just because it is no longer on the credit report does not mean that it is not collectible. Depending on the statute of limitations in your state you may still be sued for this past debt. Once the statute of limitations runs out you can no longer be sued but they can still try to collect.

If you have the cash on hand you could probably settle this debt for around 40% of the outstanding balance.

As long as this open and outstanding collections account remains on your credit report it does not help your chances of getting a mortgage.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I’m Being Chased For a Repo From Six Years Ago. – Steve

New York State Shuts Down Debt Collection Companies That Used Illegal Scare Tactics

Steve Rhode — Tue, 23 Jun 2009 18:56:12 +0000

Attorney General Andrew M. Cuomo announced that his office has shut down a New York collection operation that consisted of at least nine debt collection companies across Western New York, run by Buffalo resident Tobias Boyland. This is the latest action in Attorney General Cuomo’s ongoing investigation of unlawful debt collection practices.

According to hundreds of consumer complaints filed with law enforcement agencies across the country, Boyland’s employees violated state and federal law by routinely posing as law enforcement officials, threatening to arrest consumers and throw them in jail unless they made arrangements to pay the company immediately. Under the terms of the court order obtained today by Cuomo’s office in Buffalo Supreme Court, Boyland’s operation will shut down all of its companies in the Buffalo area. Attorney General Cuomo also announced that his Office executed search warrants on four of the operations known locations and on Boyland’s residence this morning. When investigators from the Attorney General’s Office arrived at the residence, they found a loaded, .380 semi-automatic pistol on Boyland’s person. Boyland was taken into custody by the Erie County Sheriff and the Office of the Erie County District Attorney will handle the resulting gun-possession case.

“Plain and simple, this company was run by people who lied, bullied and preyed on vulnerable Americans struggling to resolve their financial situation,” said Attorney General Andrew Cuomo. “Pretending to be a police officer, threatening to throw consumers in jail – these practices are as despicable as they are illegal. My Office will continue to relentlessly root out these kinds of tactics and shut down unscrupulous companies that violate the rights of consumers across New York and the entire nation.”

According to the lawsuit filed by the Attorney Generals Office, Boyland, a convicted felon, and three other individuals ran numerous debt collecting companies that operated out of at least four locations in Western New York. The other three individuals named in the lawsuit are Kayla Pritchett, Dellian Sharp and Dorian Wills. Both Sharp and Will also have criminal records.

These debt collection agencies operated under several names across the Buffalo area, including: Central Resource Management, Final Claims Asset Locators, Final Control Asset Locators, Interchange Payment Solutions, Next Step Services, Portfolio Asset Assurance, Silverbay Services, and Teleport. Their collectors routinely made scripted telephone calls designed to intimidate consumers into paying their debts. The debt collectors pretended to be law enforcement officers and threatened consumers with arrest and incarceration if they failed to pay. These employees also falsely informed consumers that they were being sued in civil court.

Attorney General Cuomo’s investigation revealed that collectors regularly demanded payment for non-existent debts, demanded payments for debts that had already passed the statute of limitations, or substantially inflated the amount owed on an actual debt. Using their false law enforcement identities, collectors coerced and cajoled terrified consumers into agreeing to make payments. Frightened at the prospect of arrest and humiliation, consumers authorized withdrawals from their checking accounts, sent Western Union moneygrams and/or money orders out of fear. Consumers were intentionally given misleading names, addresses and telephone numbers that led them to believe the businesses were located far from the Buffalo area.

Peter Dellinger of the Empire Justice Center said, The Empire Justice Center stands firmly behind Attorney General Cuomo’s efforts to stamp out fraudulent and abusive debt collectors across the country. In these times of financial hardship, dishonest debt collection companies are attempting to take advantage of honest, hard-working consumers. We thank Attorney General Andrew Cuomo for his leadership and for putting a stop to these merchants of financial misery.

The federal Fair Debt Collection Practices Act, the New York State debt collection and consumer protection laws prohibit the following conduct: posing as an attorney, threatening lawsuits or other legal action which cannot be taken, saying a consumer committed a crime or will be arrested and talking with third parties except to get location information. The law further requires collection agencies to send a written notice within five days of initial communication with the consumer explaining how he or she can dispute the debt. If properly disputed, the collection agency must stop all collection attempts and send verification.

Today’s action is part of a larger investigation by Attorney General Cuomo into unlawful debt collection practices. Earlier this month, Cuomo announced settlements with three Western New York-based debt collection companies to reform their deceptive methods. Attorney General Cuomo also subpoenaed nearly twenty companies and law firms operating as debt collectors throughout the state. His office shut down two collectors for threatening and intimidating consumers into paying debts that they did not owe. In early May, Attorney General Cuomo announced a lawsuit against two debt settlement companies for fraudulent business practices and false advertising by selling misleading debt settlement plans that very rarely deliver the promised benefits to consumers dealing with debt.

Steve
@GetOutOfDebtGuy

Source: New York State Shuts Down Debt Collection Companies That Used Illegal Scare Tactics

The Collection Company Says My Income Counts in Repayment Even Though I Am Not On the Credit Card. – Kim

Steve Rhode — Tue, 23 Jun 2009 18:19:43 +0000

Kim wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

My husband hasn’t worked a full pay period in months and therefore one if his credit cards went to collection. I am not on that card as a signer nor did my income get used for securing that card, however the debt collection company is telling him that my income is included and therefore I can pay it off. I don’t have the money to pay it off either and they aren’t working with him on a reasonable payment plan. They tell him the payments that are now more than doubled include legal fees.

Can they legally include my income in consideration of paying off his debt if I am not on the card at all?

Kim”

Dear Kim,

They can make any old claim they want. Making the claim does not make it so. I am at a loss to see how you would be responsible for his card unless you were an authorized user on the account. Even still that is a hard case to make. But if you were an authorized user you want to make sure that you contact the credit card company and have you removed from the account to prevent the negative status of the account from showing up on your credit report.

I would suggest that you call the original creditor and confirm that you either not on the account or only an authorized user.

If the collector continues to pursue there claims I would suggest you see a local attorney to represent you and contact the collection company.

Big hug.

Steve
@GetOutOfDebtGuy

Source: The Collection Company Says My Income Counts in Repayment Even Though I Am Not On the Credit Card. – Kim

I’m Not Sure if Ocwen Will Modify My Mortgage. They Won’t Respond. – Rush

Steve Rhode — Mon, 22 Jun 2009 21:51:34 +0000

Rush wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I am in Dallas, Texas and have been unable to find full time work since 9/2007 and am 6 months behind on my mortgage. I submitted a modification package to Ocwen in April but have received no response other than “Your request is still under review.” Meanwhile, I have received a bunch of foreclosure documents from some law firm in Houston.

I have recently begun working part time and my common-law husband (who is not named on the mortgage loan) is working full time so we are now able to make payments again. However, Ocwen is now saying I owe almost $11,000 instead of the $6,600 it should be from accumulated late payments, and will not accept any payments less than that amount. I sent in one check a few months ago and they sent it back uncashed.

The house is no longer worth what I owe, and cannot pay any large lump sum, but could start making payments again. I do not know how to get through to someone who can help me work this out, and I very much do not want to lose my home.

How do I get my loan modification worked out?

Rush”

Dear Rush,

I think all you can do is bug them daily to get a status update. Try this contact information:

Loan Resolution Dept.
Ocwen Loan Servicing, LLC
12650 Ingenuity Dr.
Orlando, Florida, 32826

FAX – (407) 737-5693

Ocwen has a reputation of being really slow or just not calling back. You will have to chase them.

I’m not sure what modification program you may be eligible for since you are so delinquent with them. If they are moving ahead with foreclosure your only way to stop that would be with a chapter 13 bankruptcy. Texas has both judicial and non-judicial foreclosures so you may not be called to appear in court for a foreclosure hearing at which you could make your case to the judge.

I am concerned that you do have foreclosure correspondence from a law office. That tells me that Ocwen may have just coded your account as in foreclosure and is not moving ahead with a modification. Don’t sit back and wait for them. Start calling Ocwen now and get some answers.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I’m Not Sure if Ocwen Will Modify My Mortgage. They Won’t Respond. – Rush

I’m Taking Oxycontin and Roxicodone. I Can’t Think Straight to Deal With My Debt I Ran Up in My Husband’s Name. – Cynthia

Steve Rhode — Mon, 22 Jun 2009 21:36:22 +0000

Cynthia wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I am on disability and ran up 17000 in credit card debt in my husbands name and he can’t file bankruptcy or he will loose his job.

I only get 11.00 an hour on disability and have applied for social security disability and keep getting turned down. the company I hired Binder & Binder are not helping me at all. They said they could help when they first took my case, but they never send the right paperwork like they want to wait until the last minute so they can make more money.

I have to do everything myself and I am sick and on Oxycotin 20 mgs 4 times a day and roxycodone 4 times a day. I can’t think straight while I am doing all these. Have tumors in my liver and tumors in my uterus and have a hard time doing anything right.

I think that is why the debt happened because I cant think straight and charged stuff without realizing it now I am in trouble. My husband thinks we will loose our house and I can hardly afford to go to the doctor anymore or buy groceries.

I know for a fact that debt settlements companys don’t do what they are suppose to what else can I do? thanks?

Cynthia

P.S. I don’t even know how to subscribe to the rss feed you are talking about to watch for my answer. Seems like I can not learn anything new on all these drugs. They make you crazy and I hate them, but if I don’t take them, I can’t do anything anyway because I am always in pain for almost 2 years now.”

Dear Cynthia,

I had to look it up to double check but OxyContin and Roxicodone are the same drug with different names. If you are taking both at the same time you may be overmedicating yourself. If you are taking both, please check with your medical doctor immediately.

The side effects of OxyContin are:

shallow breathing, slow heartbeat;
seizure (convulsions);
cold, clammy skin;
confusion;
severe weakness or dizziness; or
feeling light-headed, fainting.
nausea, vomiting, constipation, loss of appetite;
dizziness, headache, tired feeling;
dry mouth;
sweating; or
itching.

What kind of job does your husband have that he fears he would loose in bankruptcy? Please respond in the comments section so I can help you with more detailed advice.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I’m Taking Oxycontin and Roxicodone. I Can’t Think Straight to Deal With My Debt I Ran Up in My Husband’s Name. – Cynthia

Call to Action Debt Management Plans Rolling Out Slowly. May Benefit Consumers Looking to Repay.

Steve Rhode — Mon, 22 Jun 2009 20:08:11 +0000

For years I have been emphatic that in a credit counseling or debt management repayment plan, it isn’t the interest rate reduction alone that is important, people need to get their monthly payments reduced. That’s more important.

New “Call to Action” debt management plans (DMPs) offer low or no interest rates to people who can qualify. In addition, the plans allow for people to be able to save from $25 to $200 a month while in these plans to help them build an emergency fund to tap in case of a financial surprise. Excellent!

A downside to these plans is that these special terms do not appear to be available to all people and some enrolling in a DMP that will pay a higher monthly payment or a higher rate of interest since they either won’t qualify or be approved by the creditor for these special Call to Action (CTA) concessions.

Consumers who can meet their monthly contractual payments with available cash, net of the emergency cash cushion, will not be eligible for a DMP; however, consumers whose available cash, net of the $200 cushion, is GREATER than a 2 percent fixed payment, but LESS than the full monthly contractual amount, WILL BE DMP eligible and must add that additional amount to the DMP fixed payment. Source: Association of Independent Consumer Credit Counseling Agencies (AICCCA)

According to the NFCC the criteria for enrolling in the CTA will be decided on a case-by-case basis by the counselor, with the final acceptance coming from the creditor. In a typical counseling session, after a thorough review of all sources of income, living expenses and current debt obligations, the counselor makes recommendations for resolving the financial distress. If the CTA is right for them, it will be recommended. The decision regarding which level to recommend is driven by the consumer’s budget and does not include additional criteria such as how delinquent the client is, or the amount of total debt.

I am also told by others that the consumer will be told by their counselor that they must liquidate any assets they might have to reduce the amount they owe to qualify for the CTA DMP.

If you are already enrolled in a DMP and have had a change in your financial situation, ask your counselor if you can now qualify for the CTA.

Creditors participating in this new selectively available DMP will waive late and over limit fees and adjust the APR so that DMPs will not extend longer than 60 months.

Not all creditors that have pledged participation are accepting people into these programs yet. They claim that they can’t since their computer systems are not setup to accept these special proposals. A typical excuse.

Despite what you may hear, these special DMPs are being are being extended to agencies within the NFCC, AICCCA and other independent true nonprofit agencies, not just NFCC and AICCCA.

Creditor Name	Call to Action Standard Monthly Payment Percentage of Balance	Call to Action Standard Interest Rate	Call to Action Hardship Monthly Payment Percentage of Balance	Call to Action Hardship Interest Rate
Arrow Financial Services	2.00%	5.00%	1.75%	0.00%
Chase Card Services	2.00%	6.00%	1.75%	2.00
Discover Financial Services	2.00%	6.99%	Pending	Pending
GE Money Bank	2.00%	7.45%	1.75%	2.00%
US Bank	1.90%	4.90%	1.67%	0%
Wells Fargo Card Services	2.00%	7.30%	1.75%	0%

Let’s look at how this plan would give you some breathing room if you qualified for it. If you owed Chase $10,000 your monthly payment would be $200 in the regular Call to Action DMP and $175 in the hardship plan.

While it is fantastic to get a monthly payment reduction. I am not convinced that it is a significant enough reduction to make a big enough difference to give the consumer the greatest chance of successfully repaying their debt through the DMP.

It is still too early to report on a review of the effectiveness of these repayment plans but the NFCC states that an initial review will be available around the first part of August.

It will be interesting to see how these plans benefit consumers that want to repay their debt through a DMP. I think it is obvious that a creditor would prefer to not lower the monthly payment or interest rate any more than necessary. And ultimately the question of effectiveness will come down to one more rooted in behavioral economics, than DMP terms.

The longer that a consumer will need to repay with a tight budget, the higher the failure rate should be. Long periods of forced budgetary deprivation are hard to tolerate and thus more likely to fail. All you have to do to confirm this fact is look at the tremendous failure rates of chapter 13 bankruptcy plans that offer reduced payments and consumer protection from creditor collection actions, something the CTA does not offer. The vast majority of the chapter 13 bankruptcy plans fail and are either converted to chapter 7 bankruptcy and the debts fully discharged since the consumer could just not keep up on the payments for such an extended period of time or had a life or income change.

Call to Action DMPs are a step in the right direction but I’m concerned that acceptance still leavers the debtor with a very tight budget and that will be the failure point of an otherwise great step in the right direction for consumers.

The original NFCC / CCCS press release is below.

Responding to the “Call to Action” of the National Foundation for Credit Counseling (NFCC), the nation’s top 10 credit card issuers have agreed to provide additional relief to consumers struggling to repay their debts.

“This represents a significant action on the part of the creditors to take additional steps to help consumers, which is our collective mission,” said Susan C. Keating, president and CEO of the NFCC. “This will provide those in debt with more options to stabilize and rebuild their economic lives.”

For more than 40 years, consumers have avoided bankruptcy and benefited from repayment programs commonly referred to as “debt management plans” (DMPs) through which creditors provided some repayment concessions, including waiving late and over the limit fees and a reduction in interest rates. However, in these tough economic times, fewer consumers have sufficient income to be eligible for, or the ability to maintain, a traditional DMP, often leaving bankruptcy as the only option.

In response to a need to make better alternatives available to struggling consumers, the NFCC issued its “Call to Action” last fall, calling on more creditors to take additional steps to make DMPs more affordable for people in troubled financial circumstances. The NFCC also expressed its appreciation on behalf of struggling consumers to those card issuers already providing significant concessions aligned with the “Call to Action.” The “Call to Action” set the end of the first quarter of 2009 as the target date for adoption and implementation. Together with the “Call to Action,” the NFCC created a strategic partnership of NFCC Agencies and Association of Independent Consumer Credit Counseling Agencies (AICCCA) to work with the top 10 credit card issuers.

As of March 31, the top 10 credit card issuers have agreed to implement the changes necessary to provide both a more affordable “Standard” DMP and a “Hardship” DMP (together, the “Call to Action” DMPs) for consumers who are seeking to avoid bankruptcy, but who do not have sufficient income to qualify for a traditional DMP. The key elements of these two new DMPs will allow consumers to maintain a reasonable monthly budget, establish a savings account for economic emergencies, make fixed monthly payments more affordable, and be out of debt within 60 months.

Those creditors supporting the “Call to Action” are American Express, Bank of America, Capital One, Chase Card Services, Citi, Discover Financial Services, GE Money, HSBC Card Services, U.S. Bank and Wells Fargo Card Services. The NFCC urges all other consumer lenders to follow suit.

“Many consumers are facing serious financial problems, and they should be given every opportunity to qualify for an affordable program that meets their individual circumstances and that puts them back on the road to financial stability,” said Keating. “We applaud these creditors for recognizing the need to do more for consumers who are trying to avoid bankruptcy, and need some additional help with interest rate and fee waiver concessions so they can repay their debt.” Source: NFCC

Steve
@GetOutOfDebtGuy

Source: Call to Action Debt Management Plans Rolling Out Slowly. May Benefit Consumers Looking to Repay.

I Have Gone Through All My Savings and Gambled to Try to Stay Current on My Bills. – Janet

Steve Rhode — Mon, 22 Jun 2009 18:06:53 +0000

Janet wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

I am 75,000 in debt. All are credit cards. Last year I lost a job of 20 years but was able to get a job at about 20,000 less income. I was able to convince myself that I had my debt under control because I was able to pay it.

I have been fooling myself and now have gone through all my savings to stay current. In the meantime I realized that I was becoming more desperate and although I have always liked to gamble I now find I am gambling more, hoping to get money to help.

I have raised 3 children by myself so I would say half my debt is related to their needs but the rest is gambling. This month will be the first month that I will not be able to pay most of my bills(credit cards) My income allows me to keep curent on living expenses. I have never considered bankruptcy but I am so stressed out .

Yet I can’t seem to make that step. I always paid my bills and had good credit. I don’t know if they would even forgive some of this debt since it is related to gambling. So that also stresses me out. After I pay my normal bills and food I have about 200.00 left over. What do you suggest? I can’t even get a second job due to the economy.

Should I consider bankruptcy?

Janet”

Dear Janet,

Rest assured that I will do what I can to help you through this situation.

I’m not at all surprised that your gambling brain kicked in a bit as things got tough. What you describe is almost classic progression through the three stages of gambling addiction.

The Winning Phase
The person starts gambling as a social pastime, experiences the euphoria of winning and this fuels further gambling behaviour.
The Losing Phase
In this phase the gambler starts to lose control and becomes impulsive. He tries to win back his losses. If losses accumulate, he will lie and cover up to escape detection.
The Desperation Phase
At this phase, life is out of control as losses become unmanageable. Gamblers feel powerless, remorseful and desperate. Source

I think that we are at the point where desperation and wishful thinking meet reality. It is an uncomfortable junction but one that must always be crossed to reach the other side.

Your instincts are correct, bankruptcy is certainly worth exploring. The questions you have and the concerns about part of the debt being related to gambling can be answered for free by a local bankruptcy attorney. Call up and asked to schedule a free bankruptcy consultation.

The gambling issue aside, bankruptcy is the most logical solution in your situation. Without any replacement income there is a reduced expectation that with the reduction in income that you would be able to afford a continued repayment plan.

The second issue is the pursuit of gambling. On one hand you probably talked yourself into increasing your gambling activity so you could magically find a way out of the mess. Gambling also gave you an emotional escape during a difficult part of your life and that allowed you to reduce your stress and relax. That relief is not going to be available as your credit cards are closed down.

While bankruptcy can address the numerical debt issue, it can’t relieve you of the addictive burden you carry from gambling. For that you will need to seek treatment. If you are willing to admit that you have a gambling addiction and you want help for it, I suggest at least attending a local Gambler Anonymous meeting for support.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I Have Gone Through All My Savings and Gambled to Try to Stay Current on My Bills. – Janet

I Made Such a Mistake Buying My 774 Square Foot House in Chicago. – Carmen

Steve Rhode — Mon, 22 Jun 2009 15:43:38 +0000

Carmen wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Hi Steve,

I am desperate and would appreciate any insight that you can provide. I bought a house for $188,000 on the south west side of Chicago in June 2007. My mortgage is now upside down and houses on my block are selling for half of what I paid 2 years ago. My monthly note, including PMI because I paid no money down, amount to just under $1600.00. It would be easier to make my monthly payment, which I can afford because my husband and I are both employed, if this was at least the home that I wanted. But it’s not.

This is the house I settled for because it was what I could afford. It is very small, about 774 sq feet, and in need of several repairs. I have already bought new windows, new furnace, central air conditioner and rebuilt the porch since we have been here. I do not want to invest anymore money into this house, which still needs repairs, because I do not think I would ever make it back.

My sisters tell me that I should hang on till the market rebounds, but what if I still can not recoup what I have invested. Besides that, at $1600.00 a month, how can I ever save a down payment for another home. The bank, Wells Fargo, is not willing to help me because I am not behind on my payments. I am a law abiding citizen and if you could check my credit, you would see that I pay people when I owe them, but I really want to walk away from this house. I feel so sad and frustrated because I should have just stayed in an apartment and saved a down payment. I was so ignorant. I just thought that you didn’t need a down payment and that you could buy a house without it. Now I look back and see what a bad decision I made. I promise you that I understand the bad choices I made and would never attempt to buy another home without a 20% down payment. Any advice that you could provide would not be wasted on me. I just do not want to suffer for the next 28 years for my mistake.

If I voluntarily foreclose on my home, can they come after my husband whose name is not on the loan papers but was added to the title deed? Will my husband’s credit be affected by my foreclosure? Can he still purchase a home if I foreclose? Will lenders be checking into my credit if he wants to purchase a home? Are there any other options for my situation that you could offer?

Thanks Steve.

Carmen”

Dear Carmen,

There are a number of issues here to deal with. While the house will eventually rebound in value I doubt it will be anytime soon. And even when it does you’ll have to factor in the cost of inflation that has occurred in the meantime. By the time the house bounces back you’d probably need a valuation of $225,000 to get to the value of your investment dollars.

I certainly understand what your sisters are saying but I think you need to evaluate what your ongoing costs would be to maintain the house during the time it would take the home to rebound. Those investments will just repair, rather than expand the home.

Since your husband is not on the mortgage, any action you take will not be reported on the credit report. However, if he is asked if he has ever had a home voluntarily handed back, the answer would be yes. That is not a credit report question but it might be a future mortgage application question which would require an explanation.

Simply based upon your situation and what you’ve shared, it seems like handing the house back and then maybe a bankruptcy to clear the resulting debt would be a way to go. Here is why.

It sounds like you have embarked down a path that you now regret and unless you face handing the keys back and bankruptcy, there is no exit strategy for you from this situation for at least the next decade. If the real estate market had not collapsed you would have been able to sell the house to another starter couple and moved on with your plan. But that’s not what did happen to the real estate market. You bought, the market dropped, you’re stuck.

If you hand the house back and go bankrupt it will allow you to get a fresh start and a second chance. Hopefully the difference in rents and your mortgage payment will allow you to save for a future house.

You’re credit can be rebuilt and you can qualify to purchase a house again in the future. I’m not worried about that.

That most unfortunate part is the money you have already invested in upgrading the house which you will not get back. The only way to get that back would be to stay and that does not sound like the way to go.

I would suggest that before you do anything that you meet with a local bankruptcy attorney and discuss the situation to coordinate a game plan and timing on how to make this happen.

Big hug.

Steve
@GetOutOfDebtGuy

Source: I Made Such a Mistake Buying My 774 Square Foot House in Chicago. – Carmen

TEDTalks : Philip Zimbardo prescribes a healthy take on time – Philip Zimbardo (2009)

Mon, 22 Jun 2009 14:35:00 +0000

I believe in you. Believe in yourself.

Steve

Video Summary: Psychologist Philip Zimbardo says happiness and success are rooted in a trait most of us disregard: the way we orient toward the past, present and future. He suggests we calibrate our outlook on time as a first step to improving our lives.

If you can not see the video above, click here.

My Parents Were Sued by Landlords Mortgage Company. – Jacob

Steve Rhode — Mon, 22 Jun 2009 13:19:21 +0000

Jacob wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

My parents were sued by a mortgage company that took over the house they lived at (almost a year ago). The landlord at the time went with my parents to court. She agreed to pay the settlement ($2400). We got her to sign an agreement with her saying that she would pay the amount. My parents signed the settlement at court saying that they were going to pay the amount.

By trying to be safe, the landlord signed an agreement saying she will pay.

During the whole time, my parents were in a lease with the landlord and paid the rent on time every month.

Long story short, the landlord is in jail (for I believe mortgage fraud) and she never paid the settlement.

We contacted her husband and he said he isn’t in the position to pay.

Debt collectors have been sending letters, with interest on the original debt.

My parents do not have the money to pay.

What do you think my parents should do?

Jacob”

Dear Jacob,

Okay, let me get this straight. The original landlord seems to have been foreclosed on if the mortgage company took over the loan. There was a court case and your parents were sued by the mortgage company now handling the property. At court, your parents agreed to pay the mortgage company $2,400. The landlord agreed to reimburse your parents, but didn’t, and is now in jail for mortgage fraud.

First off, in legal matters you need to talk to a licensed attorney in your state for legal advice. I am not a lawyer.

Here is what I think may have been happening. The property was foreclosed on, the mortgage company became the landlord, the rent payments may have been given to the old landlord instead of the bank now holding the property. That might be how your parents wound up getting sued instead of the original landlord. It’s the only logical connection I can see between the mortgage company and your parents.

Your parents agreed to pay the amount based upon the promise of the landlord, who turned out to be a liar.

Worst case scenario here is that the landlord lost the property to the bank and did not tell your parents. Your folks kept paying the landlord rent payments she was not entitled to collect. Your parents agreed to pay the suit based on a promise by the deceptive landlord.

It is all very confusing but I think the first thing you need to establish are the facts. So many open questions.

I really think you need to speak to a local attorney for assistance in this matter. So much is at stake and so much information is missing.

Big hug.

Steve
@GetOutOfDebtGuy

Source: My Parents Were Sued by Landlords Mortgage Company. – Jacob

Will We Be Evicted or Have to Still Pay Our Rent if We Go Bankrupt? – Lizzy

Steve Rhode — Sat, 20 Jun 2009 15:15:44 +0000

Lizzy wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

My husband and I are considering filing for bankruptcy. WE have a lot of debt. We dont know how we are even going to pay next months rent. We have two little children as well. Car payments coming up… etc.

How does bankruptcy work? Will we be evicted out of our current apartment? If not, will we have to continue to pay rent? What happens to our car (we still owe on it). How do we go about filing for bankruptcy in texas?

Lizzy”

Dear Lizzy,

You should really call a local bankruptcy attorney and them these specific questions. They can assist you with the entire process.

In general, if you want to stay in the apartment you will need to continue to pay the rent. If you want to keep the car, you will need to continue to make the car payment. If you are going to go bankrupt, then stop paying the unsecured creditors, like credit card companies.

Use this link to find a local bankruptcy attorney. Otherwise, open the telephone book, call a few offices, see which treat you the nicest, and make a free bankruptcy consultation appointment with them and go in and talk to the bankruptcy lawyer. They are busy people, not scary.

Big hug.

Steve
@GetOutOfDebtGuy

Source: Will We Be Evicted or Have to Still Pay Our Rent if We Go Bankrupt? – Lizzy

A Close Relative of Mine Needs Help With Gambling Debts. – George

Steve Rhode — Sat, 20 Jun 2009 14:51:51 +0000

George wrote to me through the GetOutOfDebt.org site and asked the following question. 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.

“Dear Steve,

Hi Steve, A close relative of mine owes over $30,000 in credit cards debts due to his gambling problem. He asks me for help, and so I am trying to help him settle these debts with the CC companies for as much as 50%. He does not own any house or car or has any savings, and he is currently unemployed. Bankruptcy is unthinkable for us. We force him to attend Gambling Anonymous meetings.

Should I let these credit card companies know that the reason he owes so much cc debts is because of his gambling issue; and that also because of his gambling issues, he does not have any house, car, savings or job; and that I am willing help him pay the debts if they are settled for 50% of the original amount? Or should I just let these cc companies know about his pathetic situation minus the gambling part?

George”

Dear George,

The story is of minor importance with the credit card companies. Acceptance is based on the corporate policy and the status of his accounts at the time you approach them. Typically the person needs to be at least 90 days past due on their debts to get to the best deals offered by the banks. Falling behind will hurt their credit.

Make sure that if you do approach them that you get agreements from all of them before you start settling debts. Your relative won’t be out of debt unless all agree.

I find your statement to be interesting and I’m concerned that the decision to take bankruptcy off of the table may not be the most prudent.

Your relative has found themselves in gambling debts and has a gambling problem. If you are “forcing him” to attend Gambler Anonymous meetings that tells me he is not ready for change yet. Change is tough enough, even when the person is willing to seek assistance them self for a problem they self-identify.

Bailing out this person that you love seems more like enabling them than making them responsible for their bad behavior. As part of a 12 step program it is beneficial for the individual to accept responsibility for their actions and make amends. It is part of the healing process.

The 12 Steps of Gamblers Anonymous

We admitted we were powerless over gambling – that our lives had become unmanageable.
Came to believe that a Power greater than ourselves could restore us to a normal way of thinking and living.
Made a decision to turn our will and our lives over to the care of this Power of our own understanding.
Made a searching and fearless moral and financial inventory of ourselves.
Admitted to ourselves and to another human being the exact nature of our wrongs.
Were entirely ready to have these defects of character removed.
Humbly asked God (of our understanding) to remove our shortcomings.
Made a list of all persons we had harmed and became willing to make amends to them all.
Make direct amends to such people wherever possible, except when to do so would injure them or others.
Continued to take personal inventory and when we were wrong, promptly admitted it.
Sought through prayer and meditation to improve our conscious contact with God as we understood Him, praying only for knowledge of His will for us and the power to carry that out.
Having made an effort to practice these principles in all our affairs, we tried to carry this message to other compulsive gamblers.

By you bailing them out it only makes it easier for that person to reoffend and get back into gambling. You are sending them the message that they don’t have to be responsible for their actions since you are bailing them out.

Since you asked me for advice, I’ll give you my honest opinion based on experience in helping others since 1994. I think settling the debt for them is a complete mistake. Settling will result in bad credit for them, so will bankruptcy, so will not paying. But by settling this debt with your money, or family money, you are simply helping the person to discharge their responsibility for their actions in a way that will most likely lead to a repeat of their pattern of abuse.

I think you believe that GA can be a helpful tool in the recovery of this gambling addiction but I think that you should contact the GA sponsor of your family member and ask for their opinion on this course of action. Let the sponsor give you feedback if they think that your enabling the person to escape the consequences of their gambling assists or hinders their recovery.

Do that first, and then come back and give me an update in the comments section of this question and let’s then take it to the next step.

I think you’d agree with me that the ultimate goal here is to help this person you love to break free from their addiction to gambling. I’m not convinced that the forcing them to attend meetings and bailing out of debts will result in achieving the goal. It usually doesn’t and I’ve seen the situation before.

I’m here for you, I care, and I’m offering you my help for free. Just because I don’t agree with your initial plan of action, does not mean I am not on your side here.

Big hug.

Steve
@GetOutOfDebtGuy

Source: A Close Relative of Mine Needs Help With Gambling Debts. – George

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