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How to manage my debt and life as a whole

thegreatcokeolympics — Sat, 19 Sep 2009 12:34:41 -0800

How do I get my life on track with high debt and a chronic medical condition? So i'm 26 years old and have been completely on my own since i was 18. I come from a working class family who lives in a small dying town with no jobs. I knew if I was going to make something of my life in any way, I had to get out of there. Being so young and inexperienced, it's not like I could get a well paying job to support myself. And it's not like my family had any money to give me.
So 5 years ago, I took out many many loans and used that money to move myself across the country to " the big (and expensive) city" to attend college and hopefully start a new life there.

I also used the student loan money to pay for everything I would need to live on (mainly rent because the dorms were more expensive than studio apts, food, and school supplies) and even then it still wasn't enough, so I also worked full time in addition to going to school full time, just to make ends meet.

On top of this, to make matters more complicated, I also have a chronic medical condition. I have had it mildly since I was 10, but never had it addressed, or even diagnosed as to what it was, since my family lacked health insurance.

It was still fairly mild even when I moved here, but through the years got much more serious and I am now in constant daily pain and have some serious breathing issues. I tried to get health insurance on my own, but no plan would cover me due to the pre-existing condition. So I had no choice but to pay out of pocket for all medical expenses. Of course I had no out of pocket money to spare, so I used credit cards to pay all my medical bills.

And I never had enough credit to pay for anything medical that would truly diagnose me, so I resorted to many expensive pain management treatments only to be left with my condition progressively getting worse.

Now flash to present day, 5 years later, and I am $60,000 in debt from school, $10,000 from credit card debt. The job market is scarce and no one is hiring on staff. I've been taking very low pay freelance gigs which don't even amount to half of my expenses.

Currently, my bare minimum expenses amount to $1150 per month.

One of them being a health plan I pay 400 a month for after puting myself on a long waiting list for a government health plan that teams with private insurers to give coverage to high risk people. With this plan I was also able to finally get the tests I needed to diagnose me, only to discover (upon confirmation of 6 different doctor opinions to be sure) that I need a surgery that will cost a minimum of $30,000 depending on where I get it done, while knowing full well my insurance plan will most likely not cover because it is not a common surgery, though results are typically favorable.

I also pay 400 a month to see a physical therapist who I have been seeing for a year and a half and is the only source of pain relief I have found to help me (Insurance only covers 25% of 12 sessions a year, which I have already maxed out) Then pay 300 a month for my credit cards and 50 for my cell phone. And every 3 months, pay 150 forbearance fee for my student loans. That is it.

I had to leave my apartment and move in with a friend who is letting me stay there rent free until I figure something out. They are also fortunate enough to make a decent living and have been loaning me money to help pay my bills, eat their food, and use their computer. If anything, they've almost become my surrogate parent and it makes me feel like shit for puting them in that position, but I simply don't know what else to do.

I would get a second job anywhere I could find, but not only have those jobs even been hard to come by, but my health simply won't allow it at this point. I am extremely distressed, depressed, and hopeless. The biggest issues of all is the health and everything else seems to stem from it to make all the other problems worse. I don't know how much more bare minimum I can get in terms of cutting my budget when I'm already miserable and in so much pain.

I have considered going on disability, but I don't know if I would count since I still have been able to work, so long as the work isn't strenuous and I don't have to be on my feet all day.

I've considered welfare and bankruptcy but I'm not too sure how they work or if I would have to give up making enough money to pay for everything I need just to qualify. Or if bankruptcy will just ruin my credit enough to never be able to rent again.

I want to be responsible and make the best choice that will benefit me in the long run, but I don't know what that is or where to go. I really need some advice or clarity on this, so anything anyone has to say, please I'd love to hear it. Thank you.

What is the best path...

Muirwylde — Thu, 03 Sep 2009 19:18:32 -0800

Did we receive sound advice? A friend is filing Chapter 7 bankruptcy in the next few days. A creditor is threatening to repossess some items if said person doesn't respond to the written request for a voluntary surrender of the items. A document pledging the items as collateral was signed. A legal advisor gave the following advice... The creditor has given the borrower until September 8, 2009 to respond. If no response is forthcoming, the creditor is threatening IMMEDIATE (September 9, 2009) assignment to a repo company. My question is this. During a legal consultation today, my friend was advised to tell the creditor to expect a bankruptcy filing in the next ten days. This seems counter-intuitive. Wouldn't the creditor speed up their efforts at repossesion in an effort to beat the bankruptcy filing? Was this bad advice and if so why? Was this good advice and if so why? Does it make more sense to remain quiet about the filing until the papers are delivered or does the creditor have to stop making efforts at repossesion the moment they are notified of intent to file bankruptcy documents.

Is this hopeless?

Anonymous — Tue, 10 Feb 2009 16:15:39 -0800

My mother took out credit cards in my name. She is now filing bankruptcy, and she is not able to continue paying the debt that's in my name. My husband's upcoming job will preclude us from filing bankruptcy for the debt in my name. Is there any way I can avoid paying $35k of debt she charged up in my name without suing her or otherwise getting her into serious legal trouble? I want to say first that I'm going to see a financial advisor asap. What I'm looking for is any information someone who has been in this situation before can give me.

When I was a teenager, my mom took out credit cards in my name because she had too much credit to get them in her name. She paid these credit cards for nearly a decade. It was with my knowledge, but I was a teenager so there wasn't a lot I could do either way, and even if there was something I could have done I'm sure you can understand why I didn't feel that I was in a position to say no. I figured she was paying for them, so it wasn't a huge deal. For the while that she could pay for them, I had good credit so I figured it must be okay. Plus there were pressing medical issues in the family that complicated things financially, which is why my mom had too much credit in the first place; it was the only way we could get by. When I got a bit older (I'm in my mid-20s) I didn't know what to do about the credit in my name because by then, it had snowballed to the point where all she could do was live off credit cards. I didn't want to put her in a position where she could no longer get by, and she was still paying for the cards, so... You can see where this is going.

Recently her paycheck got cut in half. Suddenly all the things she could once pay for, she cannot anymore. She can barely afford much more than her house payment -- which nearly became undoable -- and utilities, so she is going to have to file bankruptcy. That's fine, but it only applies to the debt in her name, not mine. She is co-signer on almost all of my credit accounts, but from what I understand bankruptcy will not wipe that out -- it will just mean that I alone am responsible for the money. She will not have enough money to pay for the accounts in my name, either.

I would just file bankruptcy myself, except my husband is starting a job next month that will disqualify us from doing so, since he will make too much money to file.

Needless to say, I'm quite upset that I'm going to have to pay back $35,000 that I did not charge up, especially when I couldn't have done anything when she took the cards out in my name. However, I am unwilling to get her in legal trouble over it because I don't think ruining our relationship is worth it, and I don't feel right doing it because it's not like she spent the money on frivolous things. From what I understand, anyway, all I could do is take her to court over the amount of the money, and she doesn't have the money to give me.

Is there anything else I can do? Despite our not qualifying for bankruptcy, paying back that much money is going to be a serious financial problem for us.

I'm not looking for a lecture about how I should get my mom in trouble, or how I should have done something to take the credit away from her sooner. Getting her in trouble is not an option for me, and I can't change the past. I'm not going to let her use my credit anymore, and she won't need to anyway since she'll at least have enough for living expenses. What I am looking for is either a "you should look into this option" or a "no, a similar thing happened to me and there's nothing you can do."

Fed up with banks' use of bailout money

hardbop — Tue, 10 Feb 2009 06:48:04 -0800

What happens if I default on unsecured debt? I'm fed up with the outrageous use of taxpayer bailout money by the nation's banks. I live in Florida, own my home outright and it is protected by the state's Homestead Act. I'd like to just pay about $20 a month to the credit card companies instead of the minimum payment(to keep them from claiming I stopped paying them) until I can file Chapter 7 in 4 years. What do you think?

How can I dig myself out of this credit card hole?

arniec — Sun, 16 Nov 2008 14:31:48 -0800

Given the current economy, would doing a "charge-off" on my credit cards be a reasonable option, and how would I go about doing it for my biggest benefit? Many years ago I had a college credit card that I couldn't afford to pay off. I finally asked about a charge-off on it; about 80% of the card's balance is as low as the company would go. Given that the balance was about $2000 I don't feel the charge-off was really worth it, so I didn't do it.

Soon after that, I bought my first house.

Now however I find myself in much worse credit card debt, nearing $30,000 over a span of 6 cards. The two highest cards have $8,000 balances, and then a few thousand on various other cards. Most of these cards are charging me 30% interest. I have taken a second job, well paying, just to pay off these cards but the interest rates are so high that I just can't seem to make a big dent. Working all of 08 putting all my 2nd job's money to the cards, not using the cards and I'm only in 3k less debt than I was.

I know of some people who told me that they were able to get cards charged off for pennies on the dollar without declaring bankruptcy. I told them it probably hurt their credit, but they were just happy to have the debt gone and credit scores recycle every 7 years anyway...

So I'm reminded of my charge-off experience and that they'd only go t 80%...if I could get even 50% on one of the $8k cards, I could pay that now and save myself so much in interest and use the snowball method to pay down the others...but when I tried last time they just wouldn't go that low.

Complication: My wife and I DO plan to move before the next 7 years, which would involve selling our current house and buying another, so I really DON'T want to nuke my credit where I can't move for 7 years.

Any suggestions on what to do here?

Garnished wages can we still settle the debt?

Anonymous — Wed, 29 Oct 2008 20:49:11 -0800

My Mom’s wages are being garnished by a collection agency. Can we still settle the debt? How much do we offer and where do we get the money? My mother’s Ford Fiesta bit the dust a month ago and she needed to get a new car. Her hours have recently been cut at her old job and she has just taken a second job for significantly less money ($7.50/hr versus $10.50/hr). After talking with her I came to the realization that she couldn’t afford to even purchase a reasonable beater for a few grand. I decided that I would help her out with a few hundred bucks and an interest free loan on the condition that I could look at her finances and make sure everything checked out. Here is what I found:

Her monthly income is variable but appears to average about $1000/month +/- $200 (her rent is $480/month).
She has one credit card with a balance of about $1100
She owes a collection agency about $13,000 and they have begun garnishing 25% of her wages at her primary job. The debt comes from a credit card where the original balance was about $6000. She settled with the credit card company but then failed to make the payments and the account sat in collections for a couple of years.

Here are my questions:

Now that the collection agency is garnishing her wages is it too late to settle with them?
If we can settle with the collection agency how much should we offer?
If we do offer to settle, how should we raise the money to pay them off? Will banks make loans to me or my Mom for this purpose?
Should my Mom just file for chapter seven bankruptcy?

We are both located in Michigan. My Mom does not have any significant savings or assets other than a 401k. I have only been out of school for a couple of years so I am still trying to get on my feet. I have good credit and some savings, but not enough to pay for this endeavor unless I borrow against my 401k.

Is my debt going to ruin my parents' credit?

Anonymous — Mon, 20 Oct 2008 07:09:14 -0800

How will a line of credit that my parents cosigned affect my ability to enter into a debt repayment plan through credit counseling? I've reached a breaking point and I need some help figuring out how I'm going to deal with my debt. I already plan to speak to a credit counseling service and possibly a trustee in bankruptcy next week, but your advice is greatly appreciated. In general, I understand what's going to happen in terms of setting up a repayment plan or a consumer proposal. I'm concerned because part of my debt is an $8000 line of credit that my parents cosigned for me when I was a student.

Is there a way for me to address my debt woes without screwing up my parents' credit? Secondary question: how do you talk to your parents about stuff like this? They're going to be horrified and disappointed in me and it's making me sick thinking about it.

Supporting details: I'm in Canada, I'm 35 and I owe about $45K total ($36K credit cards, 8K line of credit and 3K overdraft). I have no assets and I'm just getting back to work after losing my job a couple of months ago. My parents could almost certainly pay off the line of credit easily... they're pretty well-off, but a little sensitive about money right now because my dad is retiring next year. Our relationship is OK but not fantastic.

Throwaway gmail account is canadiandebtor@gmail.com.

It's not mine, I swear!

mezzanayne — Fri, 29 Feb 2008 09:16:58 -0800

Creditors are starting to harass me again for old debt that I don't believe I'm responsible for. I divorced back in 2003. In the settlement, my ex-husband and I were each assigned a handful of credit accounts. I paid mine off, he filed a chapter 13 bankruptcy. Two credit agencies are now contacting me about (2 different) credit card debts, both of which are the responsibility of my ex-husband according to the divorce settlement.

I have a copy of the bankruptcy matrix which lists both of the credit accounts. I've faxed the matrix and copies of the divorce settlement to both credit agencies but both say that since I was the primacy cardholder, that I'm responsible for the account.

My ex-husband and I are no longer in contact, although I do have his cellphone number (but he refuses to discuss this issue). Creditors are not interested in contacting him. In the meantime, my credit rating continues to suffer with these 2 bad debts on my report.

I have the bankruptcy matrix, the case number, and the name of the lawyer that handled the bankruptcy (although he refuses to give me any information about the case). What do I do now? I live in Kansas, if that matters.

Is a 739 FICO good?

AstroGuy — Fri, 31 Mar 2006 09:16:22 -0800

What's a "good" FICO score? My wife and I had a chapter 7 bankruptcy discharged in 1997. Since then, I've been meticulous about paying debt. I've paid off two car loans (that were in existence at the time of the bankruptcy and re-affirmed), and I pay my mortgage on time every month (also pre-dates the bankruptcy). I have around a $5000 debt on a credit card (remnants of some business debt from years ago) that I have been paying at $500 a month (way more than the minimum and I'm not using that card for any new purchases at all), and another card that we use for day to day use (major car repairs, online purchasing, etc.) that has on average a few hundred dollars on it (some months I may carry a balance, others I pay in full). Both cards are "platinum" cards with major providers with OK, but not great rates. (The one with the balance on it has a "lifetime" rate of 3% on that balance--another reason I don't use it for new stuff so the rate doesn't change.)

Anyway, one of my credit card's web site shows me my FICO score, updated monthly. In the past 12 months it has varied from 707 to 739. How does this rank as far as being "good" or "bad"?

I ask because we'd like to try to refinance our mortgage to get some equity out of our house for some remodeling work. I haven't started shopping for that yet and I plan to pull credit reports from the big three for both of us to make sure everything is in order before I do.

I should also note that I've only been working full time since last summer after an extended time off (since 2001). My wife has uninterrupted work with the same company for 8 years. Neither of us makes a large salary, but we did make it through some rough years on just one income. Things are better now.

Now that you know everything about me, would you lend me money?