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Should I Risk Going to Court with a Creditor That Refuses to Work With Me?

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    Should I Risk Going to Court with a Creditor That Refuses to Work With Me?

    Idaho (but I currently live in MD)

    I am currently dealing with an Idaho-based creditor who is extremely inflexible. I am a government contractor, and my finances have been troubled ever since the October shutdown(I didnt recieve any backpay).

    I have requested numerous times for a moreaffordable payment plan, they refuse to work with me. I eventually ended up maxing out a credit card to pay for late fees and daily interest when I was almost 30 days late. I have to make payments every two weeks, and if I dont pay, even if its a day late, they call and send my file to their pre litigation department.

    Its getting to the point where my normal household bills are in jeopardy(rent, utilities, car/car insurance, IRS bill, groceries,etc.). Not to mention, my actual job is on a short time frame; a month after the shutdown, my employer announced that they were losing the government contract in March2014. AND they took our benefits, our tuition assistance, and my separation pay. So now in addition to normal bills, I will now have to pay student loans as well.

    I am to my breaking point, and Im considering letting this Idaho debt end up in court, because I can no longer risk my livelihood to pay these people. I honestly feel my rent, my groceries, my energy bill, and my IRS bill are more important than this installment loan.

    I am afraid of not paying them, the threats ofbeing sued and having my wages garnished are stressful. But it is too much atthis point. They are the only creditor that refused to work with me.

    Any advice is appreciated.

    Sorry for typos. I am on my phone.

    #2
    Hi, Soopremebeing. This response probably isn't what you want to hear; but I mean it with the best of intentions in an effort to be helpful.

    Your situation sounds very stressful. I've felt overwhelmed by debt before. In fact, I filed for bankruptcy over 10 years ago. It was a difficult time, but a valuable learning experience.

    I am convinced that we can only solve our "money problems" by being honest with ourselves first. You've noted that the creditor "refused to work with you." Is it not fair to say that you refused to honor the terms of the loan agreement? Is it truly unfair of a creditor to take action to hold you responsible for paying as agreed?

    It may seem like a minor distinction. However, I've learned that when I honestly accept my responsibilities, I tend to handle my affairs better.

    I don't mean to kick a man when he's down. You're in a tough situation. You have both a debt problem and an income problem. (And you may want to honestly reflect and ask yourself if you have a spending problem.) There is good news, though: there are opportunities to increase your income and pay down your debt.

    Here's the order I suggest paying your bills:

    Groceries
    Rent
    Utilities
    Auto/insurance
    IRS bill
    Other debt

    The loan provider may threaten to take you to court. And they have the right to do so if you don't pay as agreed. However, they are not likely to take you to court if you pay *something* consistently. Let's say that you are supposed to pay them $200 a week. I would try to pay something .. even if it's $25 every two weeks for the time being. This effort communicates two things to the loan provider:

    1) You are making an effort
    2) You are having a difficult time financially

    I cannot guarantee you will not get sued. However, it's been my observation that creditors are not likely to sue someone they know to not have much money. So, this strategy may be helpful.

    The last piece of advice I'd like to give isn't purely "financial." It's more motivational. It's important to remind yourself that your situation isn't permanent. You have the opportunity to improve your financial situation. It may take some time, but you can do it.

    If you feel comfortable revealing the amounts of your bills and debt, I or others in this forum may be able to give you better or more specific advice.

    I've found that the budget item of groceries is where I and others tend to have the most control. You can cut your food budget dramatically and even eat healthier along the way. Some food staples that may help: tuna, eggs, beans, pasta, and nuts, oatmeal. Aim for "nutrient dense" foods such as these so that you stay healthy. These foods also tend to reduce cravings, making you less likely to snack.

    I also invite other members of this forum to provide alternative advice on your situation. There may be other options or approaches that I am not considering here. Hang in there, man! Things can get better.

    Comment


      #3
      One other thought: your student loan may be eligible for a "hardship deferral." Check with the loan provider. It is often the case that there's a provision along these lines. In such cases, you may be temporarily excused from pay some or all of your monthly loan payments. It might help.

      Comment


        #4
        There isn't enough info here for me to say one way or another, but I'm a firm believer in bankruptcy as a strategic financial move when the benefit to you outweighs the drawbacks. It costs nothing to consult an attorney.

        Comment


          #5
          Originally posted by hamchan View Post
          There isn't enough info here for me to say one way or another, but I'm a firm believer in bankruptcy as a strategic financial move when the benefit to you outweighs the drawbacks. It costs nothing to consult an attorney.
          Based on what the OP said, the debts in question sound like student loans. Student loans are next to impossible to discharge in a bankruptcy. He also will not get much protection on them.

          Hardship deferral should be an option available. There may be other options if these are Federal student loans, but it sounds like they are private, so hardship deferral may be your only real option.

          How much do you owe on the debts? And what is your income? If the loan payment is more than 10% of your income, then that is a good indication that you borrowed too much.

          Have you cut back your budget to only the bare essentials? "Bare essentials" does not mean going out for stone crab every Friday night. Bare essentials means that you do not see the inside of a restaurant unless you work there.

          Is there a way to get your income up? A second part-time job. Work more hours. Look for a different job. I think more income will solve a lot of these issues. Working as a government contractor has got to be tough, especially if that is the only way that your employer makes money. That affects you with a unsecure job, lack of back-pay, etc. Problems with the government have only just begun and I think that government jobs are going to become much more unstable as the deficits and debt increase. You may want to think about finding a different job with a different company.

          What type of work do you do? Who are your competitors? What types of skills do you possess and what companies would benefit from those skills? I think looking for a new job may be necessary. And it is not like I am saying quit your job today and find a new job tomorrow. But over the course of a few months, seek a new job while working at your current job.

          Talk to your competitors. Network. Find ways to get into a firm and work freelance for a short while just to give them a "taste" of what you have to offer. Get creative. Just do not go for the whole Monster and HotJobs sites- fewer employers are recruiting of those types of sites. Ultimately, you need your application to go to the top of the stack, not the bottom.

          You may think that you do not have the time, but trust me, you do. You just need to find it! I work a full-time job with hours that fluctuate (times I am busy, and other times I am in the weeds). I still find time to work on my dream. I partner with non-profits I the area, teach personal finance classes, run a small blog, and guest on podcasts. A couple of years ago, I thought this would never be possible. But you find time and you make it work.

          This is a tough situation for you. You may get sued and you will likely lose the court case because you owe them money. Take this experience as a lesson and use it as motivation! Remember- more income (and a stable job for that matter) will help fix your situation!
          Check out my new website at www.payczech.com !

          Comment


            #6
            They mentioned student loans as a seperate thing they now have to pay, so based on that I was not getting the feeling they are student loans.

            Comment

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