Saturday, July 29, 2006

what do you do when....

you don't have credit card debt?

well, sorta

don't get me wrong, i owe money to credit card companies (and phone companies, and cable, and get the picture), but my accounts are all closed and i'm in collections all over the place. most of the "get out of debt" strategies i've seen and read about focus on making deals with your credit card company to lower your interest rate and pay on time....but what do you do when you're in collections??

my finances are so bad i've considered bankruptcy. it's not that i owe an insurmountable amount of money, it's just that i seem to owe everybody everything NOW. all collection companies want their money NOW. sure they may make some payment deals, but when you add up all the bills, it far exceeds the amount i can/want pay at once. i'm sure i haven't done much to help the situation either. my strategy so far has been to ignore the calls and lie: "uhhhh common isn't home right now, call her back later. thanks."

but now that i have a child & have started my life with the man i love, i don't want to be afraid to answer our phone. i don't want to worry about being sued (i've been threatened), i don't want to worry about anybody garnishing my wages, and i don't want my financial problems to stop us from buying a house or a car or anything else we'd like to do.

so today has come. i'm am about give my son some Scooby snacks, throw some toys in his crib and begin the process of opening up all my bills, figuring out what i owe and what i can pay. i am very nervous. i pray a gigantic amount of debt doesn’t haul off and slap me upside the head, but i'm ready to face it.

wish me luck. i'll keep you posted. oh.. .and thank you to everybody who has commented so far. your advice & encouragement has been very helpful!

ps--i've noticed that a lot of you PF bloggers have those fresh looking graphs on your page to track your net worth, debt, and savings...where can i get one? holla at your girl.



Lost Flier said...

OK, just FYI for anyone else reading this... if you get behind don't close your cards...then you have no negotiation room.

OK, Ms. Penny Counter I want to work with you on this...let me walk you through what I think and hopefully some other bloggers will get in on this and tell me if I'm off my rocker.

First and only question for the you "own" your home? Are you purchasing or renting right now?

The answer to this question would give me a little idea on where I think you should go.

By the way, have you tried a traditional Credit Counselor? They will give you a proposal and may be able to help you... do not go to a debt NEGOTIATOR...that you can do on your own with a little planning.
If you want to consider a credit counselor go to one listed as CCCS...check the phone book.

Let me know- I really want to help,
The Lost Flier

Common Cents said...

thanks Lost flier for the info. to answer a few of your questions...

1) no i don't own a house. also, i have sort of a sweet setup in this area because i don't have to pay rent either (saving up to move).

2)i tried credit counseling a few years ago. i set up the payments, etc...but then lost my job and didn't keep up with the payments. so i think i'm out of luck with that one.

3) my accounts are all closed by the creditor, i didn't close them.

4) thanks for your help!

D said...

You don't need to own your home. Many people get behind on bills. You can dig yourself out.

I want you to breathe deep, believe in yourself and in the fact that this is not the end of the world.

Now lets get you cleaned up. Gather all your bills for everyone you owe. You will not be avoiding anymore phone calls. You will start taking and returning calls as soon as the following is done. And you will do this now.

1. List on paper, any kind of paper, doesn't matter. Each person or company you owe, their address, phone number, contact if you have one, total owed, minimum payment owed and payment date.
2. On a 2nd sheet put down all your income. From every avenue you have.
3. Revamp #1 list to put debts in order by smallest to largest, except if any are necessity's like electric, move those to the top.
4. Your first goal is to make sure you keep the roof over your head, when rent is deducted out of your income - what's left?
5. Now you will call all utilities and negotiate to pay off what you owe in full. If the amount is too large for your income after housing and food, ask to have it divided over 2 or 3 months. You will now pay the current bill plus the amount of pasts that you have negotiated. DO NOT MISS ANY PAYMENTS. DO NOT MISS ANY PHONE CALLS. Be honest tell them your situation.
6. Now once the home is secure, hopefully immediately with the negotiations, you need to start calculations to determine how much money you have left at the end of the month to pay off debts. I don't care what their minimums are, your credit is already damaged.
7. What ever amount is left a month, divide it equally among your debts. Call each company and now it is time to eat crow. It is not a good job, but it is going to help you. You will tell them, honestly about your situation, you will tell them that you can only afford to pay X amount of dollars per month and that you will be paying this on a monthly basis.
- they are paid to talk you to a hire payment. Your response is, I understand that a larger payment is needed to expedite my debt repayment, but I do not have this money at this time - X $'s is all I can pay and will be paying.
They will next limit this amount of payment to just a couple of months and then require you to call back or try to bully you into submission by threatening collection. At this point collection does not matter you will pay the same x amount of dollars there.

Now you are moving. The dirty work will be more sporadic now. Stand by your word and make payments as agreed. When your smallest debt is paid back, you will not increase your spending - you will snow ball that into the next smallest debt, to speed up its removal. Continue this cycle until you are debt free.

Each and every month make a new lists of your debts with the new balances. Refer to it often, and motivate yourself. Please understand with this system some debts will grow, because you may not have enough disposable income to keep it moving down. But stay on track and be responsible, integrity is your goal. You will reestablish your credit worthiness later.

Do not pay someone to do what you can do yourself, the funds aren't there.

Should you receive an unexpected gift or bonus, sorry, but you can not spend it. At least not yet, put it into your smallest debt to get it paid off. I promise you, that with every payment you will see yourself move forward and begin to breath and enjoy life again. Don't give up. Move. You can do this!