“Dear Steve,

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

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

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

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

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

John”

Dear John,

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

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

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

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

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

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

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

“Dear Steve,

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

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

Peter”

Dear Peter,

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

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

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

“Dear Steve,

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

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

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

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

August”

Dear August,

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Other Related Articles to Read

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

“Dear Steve,

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

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

Bailey”

Dear Bailey,

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

• No Related Post

“Dear Steve,

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

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

thanks,

Linda”

Dear Linda,

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

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

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

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

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

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

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

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

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

Steve
@GetOutOfDebtGuy

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

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“Dear Steve,

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

Manuel”

Dear Manuel,

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

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

“Dear Steve,

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

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

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

Waiting for your reply and more power!

Best regards,

Jiv”

Dear Jiv,

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

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

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

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

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

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

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

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

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

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

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

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

Steve
@GetOutOfDebtGuy

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

Other Related Articles to Read

• Alaska joins other states in cracking down on debt services – KTUU
• Illinois Attorney General Madigan Sues Company Making Debt Reduction Promises
• Alaska Air Group believes smaller is better – Palm Beach Interactive
• Florida Attorney General Wants Debt Settlement Companies to Put Up Before You Pay Up
• New Law Prevents Foreclosure Relief and Mortgage Modification Services From Charging an Up-Front Fee

“Dear Steve,

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

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

Mom”

Dear Mom,

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

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

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

“Dear Steve,

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

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

Lisa”

Dear Lisa,

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

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

“Dear Steve,

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

Heather”

Dear Heather,

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

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

“Dear Steve,

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

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

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

Nicole”

Dear Nicole,

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

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

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

• Identity Theft and Credit Card Fraud for New Boobs
• Money Matters: Retail Theft Rises In Recession – KELOLAND TV
• Don’t be victim of consumer fraud this holiday season – Gulf Breeze News
• Lebanese banks recall credit cards as pre-emptive move against fraud – Zawya.com
• 10 things you should know about identity theft – CreditCards.com

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

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

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

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

Source

Steve
@GetOutOfDebtGuy

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

Other Related Articles to Read

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

“Dear Steve,

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

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

Tayumika”

Dear Tayumika,

Congratulations on working on this while you are still young.

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

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

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

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

“Dear Steve,

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

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

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

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

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

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

Afraid”

Dear Afraid,

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

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

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

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

Here is what I would suggest you do right now.

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

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

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

“Dear Steve,

I am unemployed,but i have some savings!

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

Tim”

Dear Tim,

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

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

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

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

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

Other Related Articles to Read

• My Husband is Going to Be Laid Off This Friday. – Lori
• I Am Pregnant and Unemployed. Are Their Companies That Can Provide Me With Debt Relief? – Chris
• You May be Down and Unemployed But You Are Still a Hero to Me.
• Unemployment more harmful now compared to 1982 – Columbia Missourian
• What Does 10 Percent Unemployment Mean In 2009? – WCCO

“Dear Steve,

My bankruptcy case has been filed and I will be going to the meeting the the trustees in a couple of weeks. I did alot of cash advances and alot of withdraws out of my account. I am afraid they will think I am being fraudulent and not discharge anything. I am very scared!

What is going to happen to me? I made a lot of mistakes and let people take advantage of me and my money. I let it happen to myself it is my fault.

Traci”

Dear Traci,

Your bankruptcy attorney would not put forward a case that he or she did not think would be accepted.

So let’s deal with this head on. By your own admission you made some bad choices and screwed up. The best thing you can do now is to learn from their mistakes. As I always say, “There is no sense wasting a perfectly good mistake.” Learn from it and don’t make those same mistakes again.

The fears you have are real in your head and scare you. But what you should do is call your attorney, discuss your specific worries and let your attorney calm you nerves based on his or her experience with the trustee.

It will all work out. It always does.

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: My Bankruptcy Case Has Been FIled and I’m Scared. – Traci

Other Related Articles to Read

• We Are Drowning in Debt And Can’t Take Another Collection Call. – Shannon
• I am Completely Freaking Out About My Debt. – Heather
• My Husband is a Schizophrenic and Unable to Keep a Job. – Lisa
• Our Monthly Payments Are More Than We Make. – Chelsey
• I Got Screwed Over By the Bankruptcy Trustee and Lost My House. – Gina

“Dear Steve,

Back in 2003, I was in the US for my Masters degree. In 2005, I completed my masters and got a job. All was going well and my credit score was well over 640. I lost my job and my H1B visa status. I had to leave for India due to job and visa issues.

I have a pretty huge credit card debt in the US. It keeps hounding me as this is not me, this was never intentional. I am now in India, and even the collection agencies are aware about my location and address. I cannot repay as my salary in India is way too low to take care of the dollars. As I am into the IT industry, I might have to travel to the US for projects. Will I be arrested at the port of entry? I am really worried.

Please advise.

Vikrant”

Dear Vikrant,

The United States does not detain or stop people at the border for debt problems. If they did half the people would not get in. The debt issue is not a criminal matter that might get you stopped at the border.

It’s interesting that your U.S. debt has been assigned to a debt collector in India. What kind of pressure are they applying against you? Are they making threats or just being annoying?

These international debt collection efforts are more about intimidation than anything else. I can’t see a U.S. credit card company trying to legally go after someone from and in another country.

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: Will I Be Arrested When I Come to the U.S. For My Debt? – Vikrant

Other Related Articles to Read

• I Had to Flee the UK. Will I Be Arrested For Debts When I Fly Back In? – Ann
• I’m Getting Kicked Out of the U.S. on an H1B Visa and I Owe Money. What Should I Do? – Ravi
• I Was Sentenced to Prison For My Debt in Dubai. – Asif
• I’m Worried I’m Going to Get Arrested For My Bad Debt in Dubai and Sit in Jail for a Long Time. – William
• I’m Almost Drowned in Debts in India – Ram

“Dear Steve,

My husband ,42,became disablied this spring, and just won his disability last month. So far all the doctors, including local univerity hospital, have been unable to diagnous the nuerolgial problem, but guess it will continue to get worse until he is unable to talk and move. He can still do many thing now, but cannot walk unaided, or type well. Use to earn about $100K. We have two girls, 9 and 13. I have been a stay at home mom for 9 years. We live on an acre, with a mortgage of $165,00, house tax value about $280,000. The girls have been in private school, and we own a motorhome, owing $78,000 on it,. It blue books at $75,000 but we don’t think we could sell it for that.

We are at a sudden crisis, as his very generous ex-boss paid him full wages and benefits before the social security money came in, and p romised us the difference after the benefit came. Now he is unable to give us any more. So we are forced to find a Plan B. We pulled $20K out of his 401K to pay for medical bills and a major remodel to accomate my husband downstairs in his wheelchair. We only have $40K left. I do not have any money in a 401K. With only the disabilty money we are almost $1500 a month short of what we usually spend.

How do we decide what to sell and how to downsize? Should I go back to work and leave my husband at home (I don’t feel safe doing that), and with my skills my income couldn’t cover all current expenses. My husband wants to sell the house and move the family into the RV, touring the country and spending his last few good years together, homeschooling. Another idea is to sell both house and RV, and move the family into a mobile-park, buying the mobile-home with the equily.

Thank you for your time.

Athena”

Dear Athena,

I actually like your husband’s plan. If his time is limited and his condition will grow worse it does not seem like being able to travel and spend more quality time with you guys is a bad idea. Actually sounds like something I’d do.

The key here is that no matter what you do you will need to be able to live within the disability income now coming in. Taking more money from investments to pay for things is a dead end road.

You’ll also need to think ahead about what will happen if or when the time comes that he needs to settle down in a place without wheels. How will you care for your family then?

But for now, enjoy your travels, your time together and cherish those wonderful memories you will create. Take lots of pictures!

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: My Husband is Disabled and I’m Not Sure What to Do. – Athena

Other Related Articles to Read

• My Second Husband Spent All of My Home Equity Line. – Nicole
• My Husband is Disabled, the Medical Bills are Growing, and I Feel Like a Low-life for Considering Bankruptcy. – Tracy
• My Disabled Husband Wants to Take Money Out of Retirement to Pay Credit Cards. – Stacy
• My Husband Gets Collection Calls From Payday Lenders. He is Now Trying to Make Money With Herbalife. – Cindy
• Can My Husband File For Bankruptcy Without Hurting My Credit? – Sara

“Dear Steve,

Steve , I wrote to you sometime back and stated that I owed 60k on my CC’s and would like to pay this off with the equity in my house which I built myself . You asked me four questions and I sent a reply but I haven’t heard back . I think you did not get my reply .Also I got a BLP balance liquidation plan from Chase . This is a 60 month program that lets you pay off the balance at a reduced rate is this for real or another under handed offer from the CC company.

Thanks

Jim”

Dear Jim,

I get so many emails that the best way to get info back to me on a specific question is by posting it as a comment on the original Q & A.

The Chase Balance Liquidation Program (BLP) seems like the latest offer but I hear they are testing a different version of the program that allows you to repay 60% of the balance over 60 months. It is called the 60/60 plan.

Ironically I just answered another question that also mentioned the Chase BLP. You can read that here.

So is the BLP real, yes. It is an offer from Chase to allow you to repay your balance in five years.

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: Is the Balance Liquidation Program from Chase, Real? – Jim

Other Related Articles to Read

• I’m Currently in Balance Liquidation Program With Chase and Take Charge America Plan. – Justin

“Dear Steve,

We have signed up with Allego law in Huntington, NY. 12/15/08. With the exception of talking to them when signing up we have not had any correspondence wtih them. We have tried writting the via mail, sometimes our emails are getting kicked back, creditors still call, the sherriff still shows up. Allegro told us as long as we did not hear from them that things are going as planned. We are reading very disturbing things about Allgro. We feel very uncomfortable about where are money is and going. We call and call and we are on hold for hours and no one picks up. (2 1/2 hours +) We feel we need to get out but we do not know how.Can you help us?

Thank you in advance for your time.

Sincerely,

Karin”

Dear Karin,

That’s horrible. I’m so sorry you are having to live through that mess. The Allegro Law situation is a mess. I actually now think the situation is worse now since the court receiver has taken it over than before.

I think the most logical move now, based on your customer service and what we know about the Allegro debacle is to close your bank account and open another one to prevent any additional debits from your account by Americorp, the designated Allegro servicing company.

Then you can send a certified return receipt letter to Americorp asking for your money back. Most of the up-front money paid was going to fees under the Allegro Law deal but most of the fees will be lost in the liquidation of Allegro by the court. On this deal, you are getting screwed twice.

I would also urge you to write a letter of complaint to the Alabama Attorney General at:

Consumer Affairs Section
Office of the Attorney General
500 Dexter Avenue
Montgomery, Alabama 36130-0152

Be sure to detail the treatment you have received since the state of Alabama took over your account. Unless people complain they won’t take action. They also have an online complaint form.

Once you extricate yourself from the Allegro Law debacle we still have to deal with the debts. Now that you are getting sued over these debts your only logical option to stop the suits is going to be bankruptcy. Find a local consumer bankruptcy attorney you like and go in and talk to them.

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: We Signed Up With a Debt Settlement Company. They Take Our Money But We Can’t Reach Them. – Karin

Other Related Articles to Read

• Who Can I Sue to Get Me Out of This Debt Settlement Mess? – Tim
• Allegro Law and Ripping Off Customers – Get Out of Debt Podcast
• I Don’t Want to File Bankruptcy or Have My Wages Garnished. – Deanna
• The Credit Exchange Referred Me to Allegro Law and Now the Court Has Closed Them Down. What Do I Do? – Stefanie
• Jim, Charles and Cheryl Get Their Questions Answered on This Get Out of Debt Podcast

“Dear Steve,

Currently enrolled in two debt program. Take charge America plan: I pay 292 a month and have done so for about 15 months. This programs pays down a cap1; discover; home-depot cards. I now owe a total of $3423 and that should be done in about 11 months.

I am also in the “Balance Liquidation program” from Chase. I pay $377 monthly at a rate of 12% APR and for a 60 month term and i am 17 months into the program. this is working of the original balance of (roughly) $17, 500, and 3 to 4 thousand of that were fees ( late,over-limit etc). i just feel like they are raking me over the coals, and not using any lube if you catch my drift.

I believe i am doing the right things here, but i feel like chase is fleecing me. Anything I can do about it? What more can I do? Will the new laws in 2010 be able to help me?

I’m trying my hardest to pay back all the money I owe and be a productive member of society. Any tips?

Thanks for all you do!

Justin”

Dear Justin,

LOL, I got your drift.

My first thought would be for you to talk to the folks at Take Charge America and see if the interest rate would be lower if it was included with your debt management plan.

Outside of bankruptcy, any creditor can charge whatever they want in a self-administered program or through credit counseling. The only limit will be the maximum amount allowed under law. So if a creditor, like Chase, wants to make a concession and reduce your rate to 12%, the only reason they do that is because their mathematical models say that’s the sweet spot for limiting losses and maximizing profit. While 12% feels high at least it’s not 29.99% like some people are charged.

The 2010 laws will not reduce anybody’s interest rate. It will only limit any increase in interest rates for a current balance. So I guess the good news is that you would be protected from an increase but it does not give you a reduction.

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: I’m Currently in Balance Liquidation Program With Chase and Take Charge America Plan. – Justin

Other Related Articles to Read

• Is the Balance Liquidation Program from Chase, Real? – Jim
• I Just Started Working With Take Charge America But Chase is Suing Me. – Mae
• Disturbing and Potentially Deceptive Move by Credit Card Industry. HelpWithMyCredit.org

These would be the companies that charge large up-front fees to consumers, collect monthly payments from consumer where the first year or so is only payments for fees, or has no refund policy for fees paid but services not rendered.

The FTC is currently leaning towards imposing an up-front fee ban. Instead of debt settlement companies being allowed to continue to collect thousands and thousands of dollars from consumers they would be allowed to collect a nominal overhead fee, about $50 a month, but not be able to collect any commission from settling the debt until the debt was actually settled. It certainly sounds like a fair approach to me. And if you read the testimony of the respected consumer and financial services organizations that offered comments, they are all behind it as well.

But what really caught my eye was the October 26, 2009 testimony of the United States Organizations for Bankruptcy Alternatives (USOBA) when they said “an industry survey showing that an advance fee ban would drive the vast majority of debt settlement companies from the market and would cause some 85% to stop offering debt relief services to existing consumers.” Source

If 85% of debt settlement companies are already preparing to go out of business when this rule change passes, watch out. Why? It means they’ve collected millions of dollars in fees and have already spent it, unable to stay in business to service the accounts people have already paid or are paying fees for. The debt settlement companies took the fees when received, not when earned. As Michael Bovee of Consumer Recovery Network (CRN) said, “The current debt settlement industry is a massive Ponzi scheme.” And he’s right.

It also means that all the consumers over the past few years that have been making monthly payments to debt settlement companies that have designated all or a majority towards fees and people will be simply out all that money when the debt settlement companies close their doors and go bankrupt themselves. Advanced fee restrictions are going to pass and potentially 85% of debt settlement companies, by their own industry admission are going to close their doors.

There are big changes coming in the debt settlement industry, changes that will better protect consumers from the bad apples of the bunch but watch out, cleaning up the debt settlement industry is going to get ugly, messy and a lot of people who are still working with debt settlement companies are going to lose a lot of money. That’s not the fault of the regulators, but of the debt settlement companies that charged massive up-front fees and never escrowed them to be taken when earned.

If you are currently working with a debt settlement company and they have a refund policy for you to recover fees you’ve paid I would suggest you strongly consider bailing for the debt settlement plan and get as much of your escrow and fees back now. Latter will be too late.

Steve
@GetOutOfDebtGuy

Source: 85% of Debt Settlement Companies May Be Closing Soon and Taking Your Money With Them

Other Related Articles to Read

• Reforms Recommended for Debt Collectors and Debt Collection Industry
• Federal Trade Commission Should Allow For-Profit Credit Counseling and Debt Settlement Firms to Assist All Consumers
• The FTC’s mission and your goal. – Examiner
• Debt settlement industry in a fight for its life – Examiner
• Florida Attorney General Wants Debt Settlement Companies to Put Up Before You Pay Up

“Dear Steve,

I recently bought a business that isn’t doing well. I’m just making enough to pay the business expenses with zero left over. I’ve accumulated $68000 in debt plus an additional $81,000 in a Home Equity loan due to a gambling problem I have. I’ve since gotten help for the habit and haven’t gambled in over 7 months. At any rate, I don’t want to lose our home and the $68000 includes $21000 back taxes I owe to the IRS. I have $80000 in a 401k plan and $12000 in stocks. I’m not sure where to go from here. Everyone is telling me not to touch the retirement plan but how do I get out of this?

Please help provide the best solution possible with the least amount of tax ramifications. Should I file for bankruptcy?

Susan”

Dear Susan,

I’m sure you’d agree, that’s a mess.

The biggest issue is the massive IRS debt. When the IRS calculate a repayment plan they don’t factor in any unsecured debts you owe. In their mind, they come first before anything else. My biggest concern is even if they gave you a repayment plan, with your other debts I seriously doubt you’d have any money to make the payment each month.

You probably don’t have many options other than giving back the house if it has little to no equity and going bankrupt to discharge the mortgages and credit card debt. That will leave you in the best position possible to start repaying the IRS.

And no, you should not touch the 401(k) money since it is protected from your creditors. But the money in simple stocks would not be protected. You could sell the stocks and use the funds to pay down the IRS. But you have to be careful doing that and you should only do it under the guidance and wing of the bankruptcy attorney you decide to work with.

Find a local bankruptcy attorney you like, make an appointment to go in and talk to them and see how you feel after that conversation about bankruptcy.

In working with the IRS you might want to look into an Enrolled Agent who can represent you with the IRS. Check out the National Association of Enrolled Agents to find a local EA for you.

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: I Recently Bought a Business That Isn’t Doing Well and Owes the IRS. – Susan

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• How Do I Uncover My Wife’s Hidden Debts? – Denny
• Advertisements About Eliminating IRS Debt Not Honest
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• How Can I Get Caught Up on Back Payments When I Don’t Make Enough Money to Get By On? – Kenneth

“Dear Steve,

A partner and I just dissolved a small business which had seriously declining revenue over the past few years. I owe 48k in credit card debt, 78k on a mortgage for a house that needs a ton of work, and 8k on a car. I still have my job which gives me 50K, but that’s not enough to meet minimum cc payments together with all else, in fact I’ve missed two months on credit card payments already. I’ve been paying the mortgage and insurance, but I’m 3 years behind on the property taxes and have received an advanced foreclosure notice. I realize I’m probably going to have to file bankruptcy (not sure if I should do 7 or try to do 13 to keep the house.) My mortgage/taxes/insurance add up to about 1200/mo., and I’m telling you the house is in serious need of repair (heating system, wiring, plumbing) but it’s in the country (I value that) and would be paid off in 11 years (I’m 46).

I’m wondering if I should try and save the house by repaying the property taxes in a chapter 13 plan, or if I should just let them foreclose. I tried auctioning the house for what I owe on it, but no takers.

Thanks for your input, much appreciated.

Darin”

Dear Darin,

Interesting situation.

If the house is sold for taxes you would lose title to the property but still owe the mortgage. Not a great situation to be in.

You obviously enjoy the location of this house in the country but I am not convinced that you feel this is the “must have” house for you.

Let’s say you fall on the sword and go bankrupt. It would be a shame to waste that fresh start opportunity and not clear all the debt you have hanging over your head so you can get a truly fresh start.

Sure, if you include the house now, give it back to the bank and do a Chapter 7 bankruptcy to discharge all the debt, you won’t have that house anymore. But that does not mean you won’t have another house in the country in the future.

Besides, I see this house as a continued financial anchor around your neck when you can least afford it. Things like new wiring, plumbing, heating, etc are damn expensive.

But this is just my opinion after living through these issue and watching many others struggle. My vote, go for the whole fresh start and reboot your entire financial life.

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: I’m Three Years Behind on Property Taxes. – Darin

Other Related Articles to Read

• I See My Situation as the Most Dire That I Have Seen or Even Read About. I Am at the End of My Rope. – Martina

The Second Attribute – Gratitude

You know someone has achieved internal prosperity if they are grateful for the life they have. So, if someone else does something kind for you, be grateful. The only thing you are entitled to in life is…let’s see…nothing. That’s right. Everything more than nothing is a blessing in your life. Be thankful and grateful for whatever kindness or good fortune comes your way. A key attractor for money is gratitude. Those who are ungrateful often get the garbage that life dumps.

A gracious attitude is easy to accomplish. If you start from a position of understanding that any moment could be your last, you can easily find things for which to be grateful. I’ll grant you, it’s hard at times. If you find it hard to find anything to be grateful for, use the emergency gratitude
checklist.

Emergency Gratitude Checklist
(If you can answer “yes” to any of the following, you have something for which to be grateful.)
1. Am I alive?

Teresa, my wonderful and kind mother-in-law, died after a long period of terrible pain. Every joint and bone ached from being stuck in bed. The moment she was told she had pancreatic cancer, her spirit died. She stopped laughing, smiling or being happy at all. The end was rapid and horrible; then she died and left a huge void. While it looks like there is nothing to be grateful for, there is.

Teresa suffered so much but had much to be grateful for; she just forgot it in her anger over her situation. She could not see through her anger and remember the blessing of many years of joy, love and comfort from a caring family. They were by her side when she died and they took great care of her through her life and in her final days. For most of her life she laughed and was a friend to all. She was the kindest person I ever knew.

She died, and that feels awful. But she lived and for that I’m grateful.

Try this simple exercise. Look around wherever you are right now and see how many things for which you can be grateful.

How is the temperature?
Does it smell bad?
Is anyone threatening you?
Are you in pain?
Are you comfortable?

Let me show you how this works in real life. As I sit and write this, I’m in my home office, the temperature is very comfortable, I have a cold glass of water, I’m sitting in a comfortable chair, the light is just right and the ideas are flowing. I’m grateful for all of the things that are right. Are some things not as perfect as I’d like them? Sure. But why not be grateful for those things that are good and fix the things that are not? You have a responsibility to yourself to be happy. Start small. Be grateful whenever you can.

Steve
@GetOutOfDebtGuy

Source: The Second Attribute to Getting Out of Debt – Gratitude

Other Related Articles to Read

• Key Steps to Get Out of Debt

“Dear Steve,

Married couple, I am a CA State Employee who had a reduction of pay of approx. $700.00 a month. We have two car payments and a mortguage, in addition we have credit cards debt of approx. $25,000. THe payments of the credit debt is approx 1,4000 a month and seems that we are living paycheck to paycheck and we hate it.

We would like to reduce our credit debt but because of paycut we are only paying minimum payments. I did contact B of A on one of the credit cards and they reduced the finance rate on one card to 7% and they told me that the account will reflect closed by customer. How can we reduce our interest rate and get out of financial debt without any affects on our credit? I hate the situation we are currently in. We need help,

Martha”

Dear Martha,

If you can afford at least your regular monthly credit card payments but want an interest reduction then a debt management plan is the best bet. However, while your credit report won’t reflect you are in a debt management plan, the cards included will be closed by the creditor and that could impact your credit score.

But while the credit report and credit score are important, that’s not the real problem is it? The real problem is that the reduction in pay has left you at the breaking point each month and all it will take is one unexpected expense to throw you under the bus and all your credit will come tumbling down.

You should explore the debt management solution but after looking into it, if the payment seems to high to sustain for a long period of time, come back, let’s talk about other more drastic options.

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: California State Employee is Suffering From Pay Cut Disease. – Martha

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• We Are Barely Making Our Bills Each Month. – Tiffany
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• My Mortgage Went Up and My Income Went Down. – Damarys
• We Spend $1,000 More Per Month Than We Earn. – Tracey

“Dear Steve,

Thank you for providing such a valuable service during these difficult economic times.

I am getting married in the spring of 2010. We have been discussing each other’s finances and unfortunately she will be bringing with her a mountain of debt. She is 50yo, Gross income is $120k, $45k of credit card debt, a condo that is valued at $100k that she owes $145k on, No savings, $60k in retirement adding $0k/yr. I am 47yo, Earn $85k gross, have a condo @ $225k/30yr @ 5.0%, $55k savings, $125k Retirement adding $15k/yr and a 50% Pension. From what I read she earns too much to declare bankruptcy, would it be wise for her to let the bank take her condo and tackling the $45k in credit cards with my savings?

Thx >

Sammy”

Dear Sammy,

Savers attract spenders. It’s the old opposites attract thing.

Purely from a practical point of view I think the best thing to do is tidy this mess up before you are joined in wedded bliss.

It sounds like you are not going to keep her condo anyway after you get married and selling it really isn’t an option. Also, she’s maturing and currently not saving any money towards retirement.

While some others might chastise her for considering bankruptcy, just purely from that practical point of view I mentioned, I don’t think it is entirely unreasonable.

Let’s look at it like this. Let’s say she hands the condo back and then enters a Chapter 13 bankruptcy for the next three years. It would be best to do that now before you are married. At the end of three years she’ll be totally debt free and you’ll have a clean slate to start from. You can help her to be responsible and start saving.

I admit that sometimes I can be a bit cynical but I think if you simply bail her out with your savings you are sending the wrong message. You don’t want to sacrifice your good savings by investing to try to address her bad behavior. Besides, I think a dose of pain will help her to wake up and get back on track.

Let’s not forget that it’s not going to be just $45,000 of credit card debt. The bank is also going to come after her for $50,000 or so for the deficiency from taking the house back. Do you plan on sacrificing more of your savings for that as well?

I think the two of you should find a local bankruptcy attorney you like and go in and discuss this matter together. Then go home, mull it over, and see if it makes sense to the both of you. If you want to make an investment to bail her out, pay for her bankruptcy.

Bottom line, this is her financial cesspool and it should be her responsibility to clean it up without dragging you in. That’s just not fair.

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: I’m Getting Married and Discovered She Has a Mountain of Debt. – Sammy

Other Related Articles to Read

• It’s Really Hard for Me to Ask for Debt Advice But I Live in Fear of My Debt. – Afraid
• A Question Update From Sarah – Communication, Relationships, and Debt
• I Don’t Want to Get Married With Debt. – Brandi
• I’m Getting Married to a Guy That Has Not Paid His Credit Card Bills in 6 Months. – Monique
• I Just Turned 26. Should I Liquidate My 401K to Pay My Debt.

“Dear Steve,

My wife and I currently have credit card debt of about $60,000. In addition to that we have 2 mortgages and 1 car payment with about 1 year remaining. We both have incomes, and are barely able to make the minimum payments.

We aren’t behind on any of our debts, but continue to live a lifestyle where we are putting groceries and gas on a credit card and not cutting down to the bare minimum on expenses. We are not friviolously spending money all the time, but probably spend at least 100 bucks a month on stuff we don’t need (daily purchases) and probably about 200-250 bucks a month on monthly things that we feel we need to maintain a certain lifestyle (maid/cable, etc). I am just overwhelmed with our debt number.

I have been a little more worried than my wife has been, and she manages paying the bills. Should we seek credit counseling or debt management before we start falling behind? Any ideas for good budgeting tools to help us look at how much money we waste monthly? I don’t want to file for bankrupcy, but with the amount of debt we have, and no real emergency fund right now, I know that we are just a blink away from having to consider it. We can’t even start a family because of the situation we have put ourselves in.

Scott”

Dear Scott,

It seems like I’m always suggesting bankruptcy, but here is a new one, not in your case.

First, let’s look at what is driving your concern, financial panic. It’s totally normal and natural. But before we wheel out the big legal cannon to deal with your debt, let’s take some baby steps.

Right now you are earning good money but operating in a fog. I seriously doubt you are tracking all your expenses and totally aware where the money is going. The first thing we need in your situation is clarity. And how do we get that? Tracking.

There are a couple of ways to track and budget. They range from traditional approaches like writing down when you spend any money on a pad a paper and what it was for. Or you can use more modern tools like the online service Mvelopes. The best solution is going to be the one that works for both of you. The Mvelopes approach may work better for you if you both have access to the web during the day and can quickly login and enter what you spent.

Simply tracking your cash will cut your spending by about 20%. This is because once you start tracking spending you become more aware what you are spending on and then make decisions to alter your spending habits.

Now tracking the cash can sound like a painful and boring exercise. Personally, I hate doing it but you don’t have to do it for ever if you don’t want to. Just promise me you’ll do it for at least three months.

Now the benefit of the tracking is awareness but it is also clarity. Once you know where you money is going you can then make conscious and educated decisions based on facts about what you might want to cut back or cut out.

This approach works so much better than the traditional budget approach. A budget is a wish list on how you’d like to spend your money and tracking the cash is a measurement of where you actually spend your money.

Try this approach first and build in some immediate savings. Just open a savings account at your local bank and transfer $25 a week into ti. You should be able to easily do this once you start handling your cash with clarity.

After you track the cash for three months, if you are still in trouble, come back and we can talk about the path forward. Does this sound like a reasonable and responsible path forward to you?

Oh yes, to reduce your debt with the most motivation, use the debt snowball approach. Trust me, it works.

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

Big hug.

Steve
@GetOutOfDebtGuy

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

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

Source: Any Suggestions for Good Budgeting Tools to Dig Out of Debt? – Scott

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