Money is tight. Tight is an understatement, money is non-existent. Every dollar that comes in goes out and you can’t get your needs taken care of. The phone rings all the time. You are nervous and anxious and will do anything to avoid another phone call. It seems that nothing is right in your world. But there is! I have been there, in the bankruptcy path. It is a dark and lonely place. Mostly, you have become embarrassed and unsure of yourself and have no support system. The lack of a support system is something we do to ourselves to hide the fact that we are not making it. We feel like failures.
Looking back I would change so much. I would also take full responsibility for my actions and set out on a different path. Bankruptcy would have not been an option if I knew then what I know now. I hope if you are reading these words you heed my warning and at least give my ideas a try. After all what have you got to lose at this point?
1.The first thing is to own up to all your debts. Don’t hide the envelopes when the bills come in. Put them all in one place.
Better yet, make files for each bill. Organization is your first step to control.
- Make a spreadsheet on Excel or Lotus or just on green ledger paper it doesn’t matter where as long as it is in a place where you can do the same thing each month and keep the prior months history. This is basically a list of all people or businesses you owe money. The first section would be their name, address and phone number. The second sections would be the total amount owed, the 3rd section would be the minimum payment and the 4th would be the interest rate.
- After the list is complete organize the list by interest rate – highest to lowest.
- Make a complete list of your income and household expenses – outside of debt, but including your home. Subtract these expenses from your income. This is the amount you have available to pay down debt. For now there will not be any extras.
- Keep all your files with you and find a quiet room with a phone. You are now ready to call each and every creditor and try to negotiate with them. You will need to go into your reserves and past your insecurities to where your true self is. You will request an interest decrease, whether it be for the life of the debt or just a few months, take it. If they will not work with you try to speak with their manager. This should not be a problem. If your credit is already shaky, which it probably already is, you may not receive a interest decrease. In this case you need to explain to the creditor (not your highest interest card) that you are experience financial difficulty and am unable to maintain the current minimum. You would then request an amount that you can pay monthly. The credit company will try and talk you into a higher amount, but your job is to convince them that you can not pay more and that this is what you can pay. You should also explain that you are trying to stop bankruptcy and pay your way out of debt. As a general rule some money is better than none. The trick is don’t bargain more than you can pay.
Whether you negotiated a new interest rate or a decreased payment, even if only for a limited time. It will all help you to get a grip on your debt. Now, you should have the minimums you can afford. Your next step is to eliminate late fees and build your credit back slowly.
- Open a separate no fee, no minimum account. In this account you will deposit, each pay period, a portion of the monthly debt pay back. This amount was calculated in number 4 above. So if this amount is $100 and you get paid every 2 weeks you will deposit into this account $50 each pay check. This will eliminate the chance of you spending it before the debt is due.
- Next you will set up each credit account to withdraw from your new account on the day it is due. May sure you select minimum payment and not the full balance. Even though you may be moving more money than minimums you will still set up all accounts to only take the minimum. Our bankruptcy lawyers at the Law Offices will provide the requirement of the money to the person. The payment can be done with different mode of payment with the confidentiality of the private information.
- The amount that is left in the account less $1 to keep the account open will be paid by you separately at the end of each month to the account with the highest interest rate. Note this amount will be changing because as you pay off your debts the minimum payments decrease. Plus you may or may not be making interest on your account.
- When the highest rate credit is paid you will apply the extra account money to the next highest interest rate card.
Things you should know and/or be aware of:
You can ask creditors not to call you. They can send all notices through the mail. But this shouldn’t be important if you have initiated the above practice.
As long as you are paying $5.00 per month to medical bills they will not be able to obtain a judgment against you. When you go to court this will show the judge you are making an honest attempt to pay.
When your negotiated deals with creditors expire or you did not receive one, call back. Do this every month. As you are continuing to pay on time with the above system you are becoming more credit worthy. Don’t worry what the person thinks of you on the other end. You will never meet them, so keep calling.
Talk to someone you trust. There is always someone out there who sees things that you are missing. Be brave tell them you are struggling. Most people will help you figure out a plan to succeed. Remember you are human, not perfect. None of us is perfect.
The worse anyone can say to you is no.
And lastly, money will be tight for awhile. You did not acquire this kind of debt over night. You may feel at times that you are getting no where. This is normal. This is why you should record your current debts each month on a spreadsheet either on the computer or by hand. By doing this you will see your progress each month. The progress will begin to grow with each debt payment made, so be proud of your successes and acknowledge them.