Credit Counseling/ Debt consolidation

Pastor Bill · Postby **Pastor Bill** » March 11th, 2008, 6:19 pm

I know there are alot of cons out there, (which is why I posted for advice) she knows I'm posting here, and is really just at a point of not knowing what to do.

I completely agree that consolidating does run the risk of adding to your debt once the cards are not maxed out, but if you really want to change, it can help.

Rose and I dealt with this early in our marriage, we were over our heads, but my parents helped us out, signing a loan for us at a great interest rate, we canceled all the cards paid off the loan, and are debt free right now (bought 2 vehicles since, both paid well before the loan was scheduled).

The biggest concern she has is that on some of these things minimum payments aren't cutting it, but she doesn't have the money coming in to pay any more, and things are snowballing on her. She already works 2 jobs as well as is taking classes trying to get more on her feet. Single Mom with little support, it's a rough situation, and while I know there are things she should have handled differently, right now she is feeling without hope.

RamboPreacher · Postby **RamboPreacher** » March 12th, 2008, 2:38 am

the challenge is that "if you really want to change" may not be good enough, probably. the paradigm shift needs to already have taken place. cut the cards up, send them back, cancel the accounts, etc. Then don't get more cards, and live within your budgeted means for a period of time.

wanting and doing are two different things. and especially in this context of budgeting and consolidation, this could be the case, and extreme caution should be taken. it's way too easy to spend beyond the budget, after the consolidation, because there is an appearance of more weekly (monthly, or whatever the pay-periods and billing schedules are like) cash.

all people aren't the same in this area, but most can be, especially in our current "Western mentality" (Read as "American"), and socio-economic paradigm, underpinnings and upbringing.

just my opinion.

rjjunior · Postby **rjjunior** » March 12th, 2008, 11:30 am

Not an expert, but here's a few suggestions that most people already know.

Step 1: Identify spending habits and QUIT most all of them. (ex. movies, eating out, etc) In a word, BUDGET. The bigger the financial stress, the stricter the budget.
Step 2: eliminate ALL unnecessary bills (cable tv, home phone, etc).
Step 3: negotiate with creditors. (if your credit is good and you're disciplined, play the balance transfer game, just look for no balance transfer fees.)
Step 4: Prioritize debts by % rate or lowest balance (arguments for both). Pay minimums on all of them but the top one. Pay as much as possible on it every month until its paid off then transfer that whole amount to next prioritized debt.
Step 5: sell something. (furniture, 2nd car, have a yard sale-as often as possible if necessary)
Step 6: buy a lottery ticket. (just kidding)

The hardest part for us Americans to deal with is that in order to get out of debt, it will require a shift in our standard of living. We want to get out of debt while maintaining our current standard of living. Problem is, it's that standard of living that got us into trouble, in many cases. Even in other cases where debt was the result of something else (divorce, unemployment, etc), a lower standard of living isn't going to kill us (that's easy for me to say sitting on my comfy couch with a laptop on my lap, a cell phone, Ipod, and dvr remote nearby, the room temp comfortably at 70 degrees...we are spoiled...)

Pastor Bill · Postby **Pastor Bill** » March 12th, 2008, 5:40 pm

We talked about most of this tonight, she is going to work on listing everything out and looking at exactly where she stands, we talked about the real changes that need to happen, and then once those are made, what options she would have (negotiating lower interest rates, consolodating debt/moving debt to lower interest rate options, etc.)

I don't think it's as bad as I originally thought, and she does realize some of these issues, and has already prepared herself for those changes. I think she's ready, the biggest issue isn't starting the changes, it's being consistent with them.

Pastor Bill · Postby **Pastor Bill** » March 19th, 2008, 9:18 am

OK, update on this situation.

She talked to someone at Crown, and basically her debt is more than her income. They told her she could pay $380 per month (of course this does not count her regular living expenses, home or car, which would be additional, and adding that together, she doesn't have enough coming in to make that kind of a payment.

I was surprised, their advice to her was bankruptcy.

I have looked back through this thread, and found a couple other groups you all have suggested, but I'd say they'll tell her the same thing. any other suggestions?

fezzik · Postby **fezzik** » March 19th, 2008, 10:09 am

Bankruptcy isn't the end of the world. For someone with more going out than coming in like you described, bankruptcy would allow them to get out of paying (at least right now) some of the stuff going out. It's not going to help the credit score or getting any kind of loan in the near future, but those things aren't needed right now anyway. What's worse, bankruptcy or defaulting on loans? I say the latter is going to cause more damage.

Pastor Bill · Postby **Pastor Bill** » March 19th, 2008, 10:15 am

setting aside the moral issues of bankruptcy, this would probably then cause her to lose her house and car, which without, she would probably be forced to rent (for more than what her house payments are) and she would have no way to get to work, or school, being in a rural area, she would also be VERY limited in grocery shopping options and would drastically increase those costs as well.

OR is it possible to file Bankruptcy without including her home or car? if that is possible, that maybe her only way out at this point.

fezzik · Postby **fezzik** » March 19th, 2008, 10:20 am

http://www.bankrate.com/brm/news/bankru ... 1004a1.asp

Chapter 13 - personal reorganization bankruptcy...chapter 7 is liquidation. She can keep the house...but it takes longer to get out. Sounds to me that this is what she needs.

Susie Hamilton · Postby **Susie Hamilton** » March 19th, 2008, 2:19 pm

Does she maybe have equity in her house that she could refinance, use the equity to pay some bills? Interest rates are falling.

Pastor Bill · Postby **Pastor Bill** » March 20th, 2008, 3:23 am

I don't think she has enough equity in her home to do it, plus she is scared to involve her home in this, she is not behind on house or car payments, and would like to keep those out of any problems, she has to have the car to get to work/school, and she has to have a place to live (renting would probably be more expensive)

SBW · Postby **SBW** » March 20th, 2008, 4:16 am

Dave Ramsey's in house financial councelors: 888.227.3223

Dave Ramsey - search for councelor in your area:
http://www.daveramsey.com/fpu/counselin ... dCounselor

I know some here don't like Dave, but his folks will probably try to help and aviod bankruptcy.

Susie Hamilton · Postby **Susie Hamilton** » March 20th, 2008, 10:58 am

Pastor Bill wrote:I don't think she has enough equity in her home to do it, plus she is scared to involve her home in this, she is not behind on house or car payments, and would like to keep those out of any problems, she has to have the car to get to work/school, and she has to have a place to live (renting would probably be more expensive)

If she just refinanced she could probably lower her payments plus get to skip a payment or two, little extra cash to pay on other stuff.

Pastor Bill · Postby **Pastor Bill** » March 21st, 2008, 4:03 am

Rahab, the problem with that is 2 things, most of the time refinancing into a house loan cuts payments, but close to doubles the amount you'll actually pay back, plus it means then her house is tied up in the problems, and she would be more likely to lose the house too if there were future problems.

Jude 2