I need help clearing up debts!

[lvhocken]

I just got married and, unfortunately, we both have some seriously delinquent debts. We really want to fix our credit, but aren't sure how to do it. We tried consumer credit counseling before we were married, but my income isn't steady because I don't always work the same amount of hours and I'm partially dependent on tips. My husband is in construction and gets laid off most winters. As a result, we weren't able to maintain regular payments to the "get out of debt" place.

Does anyone have any suggestions or helpful tips? I've heard that you can sometimes negotiate a lower amount with creditors. Does that have to be with the original creditor or can it occur after it has gone to collections? Most of these debts are at least 6 or 7 years old.

I'd appreciate any helpful suggestions that I can get.

Thanks!

Leah :

[sweeps]

Any legal advice you get from a web board should be taken with a grain of salt. Few people on here are lawyers, and even then, we don't know your whole situation. That being said....

This question has been coming up a lot recently, and I've been doing some reading.

I see you're from Ohio. Unfortunately Ohio has a very long statute of limitations on written contracts: 15 years! This means that even though these 7-year debts should start disappearing from your credit report, you will still be liable for another 8 years and could be sued for collection. You can try letting these debts go, cross your fingers and likely be fine, but there is a risk that a creditor could successfully sue you to garnish wages, repossess property, etc.

If you choose to settle your debts, I recommend going to the original creditor first. Explain your situation and ask them if they'd be willing to negotiate a settlement. A lot of creditors will be happy to if it means they're at least getting something, especially for old debts. Document all your conversations, and most importantly, make sure you get your settlement IN WRITING before paying a dime.

A few tips: You may want to use the unpaid interest and late fees as terms of the negotiation. For example, if your original debt was $1000 and interest and late fees added another $1000, you may want to offer to pay the original debt if they'll waive the interest and late fees. Also, don't seem desperate and immediately take the first offer they give you. Tell them you hit hard times, you have a lot of debts to pay off, and you're trying to do the right thing by settling. Because of the age of these debts, they should be willing to make a good deal with you.

[Synacle1]

When dealing with bill collectors a little knoweledge is power. Don't let tactics like threatening litigation and/or bluffs about interest rates and fee's get you down.

First of all the Agency I managed was able to take citibank credit card debts and settle for as low as 70% for prime cards (less than 9 month default) and as low as 50% for sub prime (2-5 year after original default). Thats the standard for below blanket settlements for major teir lendors. If your debt is from retail cards and other second or third teir lendors like household and providian you might be able to get a settlement as low as 30% of teh current balance. If a collector is giving you grief or continuiously calling you you have the right to send a cease all calls letter. As long as you give the oppertunity to send letters they will.

As for the original question. All I can answer for is collection debts. With citifinancial, mbna, household, wellsfargo, and dinerclub (the accounts in our portfolio) your interest can be stopped completely if you stabalize the account by paying it up current or by paying a minimum of 30% of the balance as long as you agree to a payment plan. Just remember all decent collection agencts are going to quote you high because the more you pay per month the more they take home. Just be willing to hang up and stick to your guns.

(( and I concur, as a collector I'll admit we always talk out of the side of our mouth. get any arrangement in writing before paying a dime and watch your due dates or all deals are off))

[barbara L]

This is what most of the finace books advise.

1) Cut up those credit cards.

2) Make a budget.

3) Get rid of the non essentials. Do you really need state to state long distance, caller ID, call waiting, HBO and those $250 deductibles?

4) Start a savings account for emergencies.

5) Track you expenses

6) Avoid bank fees, late charges, buying items from stores with a no return policy or restock fees, ATM POS fees, etc.

7) Talk to your creditors.

I hope this helped.

[lisajane]

Well my advice is to try and find some sort of passive income. I rely on the income from my site as I cannot work, I have issues with Sciatica. Getting a job where I am in Ajax basically amounts to physical labour, so I have to go back to Toronto sooner or later.

Start a blog or a website and look into affiliate programs, google adsense, and write about something you passionately love. It's a lot easier then you think. I really loved surveys so I wrote about them on my site.

There is this wonderful saying "Pay yourself first". Take 20% of all your income, and give it to yourself. Then what's left divy it up with your debts. It works for me, I make about 200 a month and NO rent. I still manage to have enough left over to save, if "I WANTED".

I hope that helps somewhat.

[jmjj215]

Get on a budget. I agree partially with lisajane that you should focus on increasing income, but only after all the "leaks" have been fixed by properly budgeting will increased income be any help.

Why not post your budget on the board for everyone to critique? Include all income and all expenses (both fixed and variable).

[lisajane]

If I could use a budget, it would be awesome for myself. How do you create a budget when you don't have a fixed income?

Lisa

[MrsChambers]

LisaJane...

what is on your credit report?

have you gotten your free credit reports for you and your hubby?

that 15 year law in Ohio for written contracts just SUCKS...... were all your debt incured in that state of Ohio?

are you gettting collection letters for any of these debts?

tell us more

[dealsaver]

CREDITNET.COM

[lisajane]

I'm in Canada,

But I'm curious what would my credit report have to do with me wanting a budget, or is the talk getting all confused between who's talking ?

Originally Posted by MrsChambers

LisaJane...

what is on your credit report?

have you gotten your free credit reports for you and your hubby?

that 15 year law in Ohio for written contracts just SUCKS...... were all your debt incured in that state of Ohio?

are you gettting collection letters for any of these debts?

tell us more

[sweeps]

Yes, I think she meant to direct her questions to lvhocken.

[jmjj215]

Lisajane,
See this article on handling variable income and a budget. Also, make sure to check out the "related articles" at the bottom, as they go into the principle a bit more.

[lisajane]

Thanks Jesse

Your a life saver

Originally Posted by jmjj215

Lisajane,
See this article on handling variable income and a budget. Also, make sure to check out the "related articles" at the bottom, as they go into the principle a bit more.

[Tree0164]

We have a variable income. Hubby is on commission and my income is variable as well. We have a buget on our must haves. Months that we make extra go to a separate account and we use that if we are short on our income coming in. Of course we don't have debt except for our car so it is a little easier now.

[lisajane]

Yeah I think my only for sure spending is Eating out, Gym, Cellphone and Transportation.
My income can vary from $50 a month to $700.

Crazy eh?

[jmjj215]

That is definitely variable. Treo's strategy of prioritizing works very well too.

[lvhocken]

What is Treo's strategy of prioritizing?

[lvhocken]

I wasn't aware that people got paid for writing blogs.

Originally Posted by lisajane

Well my advice is to try and find some sort of passive income. I rely on the income from my site as I cannot work, I have issues with Sciatica. Getting a job where I am in Ajax basically amounts to physical labour, so I have to go back to Toronto sooner or later.

Start a blog or a website and look into affiliate programs, google adsense, and write about something you passionately love. It's a lot easier then you think. I really loved surveys so I wrote about them on my site.

There is this wonderful saying "Pay yourself first". Take 20% of all your income, and give it to yourself. Then what's left divy it up with your debts. It works for me, I make about 200 a month and NO rent. I still manage to have enough left over to save, if "I WANTED".

I hope that helps somewhat.

[lisajane]

No you get money from adsense from your blog, not for writing to your blog.
You can get paid to write blogs, but very little like 5 dollars an article. I don't know where this was but I've seen it somewhere.