Which path to take at this crossroads . . . ?
Date: Tue, 11/11/2008 - 20:37
First, a little history. We actually have really good credit (too much credit) and have tried to make reasonable decisions about using it. Our problems started about 5 years ago when we used the profit from selling our home to move to another state and start a business. End result? We lived off of our savings and dug ourselves a big hole of debt before we gave up on the business. Okay, we've moved on from there and now have nice, steady employment and are even able to have me stay at home to homeschool our kids (which is really important to us).
So, the current situation is that we have $46,000 in credit card debt on 5 different cards. Just the minimum payments total over $800 which we have only been keeping current on by incurring a little more debt each month (groceries here, dental appointments there). I have been able through the years to secure low interest rates on all but one of the cards (2.99% to 8.99%) which are not introductory rates, but are good for as long as we have a balance.
My question is: What are our options for debt consolidation, management, and/or settlement? It seems that since our payments are current and our interest rates are already pretty low, the creditors have no incentive to work with us. However, maintaining the status quo is slowing digging us a deeper hole which we'll never escape from. I don't want to continue making minimum payments for the next 30 years!
So, we've made yet another budget to really wean ourselves from the credit crutch, but as good as we might be, I don't see it being very sustainable if ever last penny is used to pay the minimum payments!
I've been told that here in Texas, if we were to file for bankruptcy "they" couldn't take our house or our cars (which are the only things we have, as humble as they are). Would we even qualify for bankruptcy or do we have to stop paying our bills to even be considered?
We were just about to sign up with a debt settlement company, but we're dragging our feet on that now. I just printed off our credit reports and as much as we won't be needing a good credit score in the next few years (we already have our mortgage), I really don't want to damage something I've worked 20 years to build. But if we must, we must.
Knowing that the debt settlement company is just going to stop making payments in order to stockpile our payments for a future potential settlement (that is, if they're a legitimate company), we began to wonder if we could just do that on our own (and save the 15% fee).
Would a law firm be any cheaper? Again, would they even take us as a client if up to this point we're current on our payments?
I've been attempting to research all the options for days/weeks now, but as we're not dealing with collection agencies and/or creditors calling to harrass us, a lot of what I find doesn't apply to our situation.
Any suggestions?
Tired and Thrifty in Texas
Normally I would suggest a debt management Plan but it wouldn't
Normally I would suggest a debt management Plan but it wouldn't really benefit you because you interest rates are already pretty low. If you are considering debt settlement I assume you are struggling to make the minimum payments and possibly see your self falling behind in the near future are already are. If so I would definitely consider the debt settlement option. Yes there are good debt settlement companies out there if you want to hire one " although there are a lot of bad ones out there ". Just be sure when shopping around to check them out with the BBB to make sure they are either members or at least have a solid track record. Also not a bad idea to see if they are members of TASC or USOBA. If you have the time to spend doing the dirty work your self you can settle these debts on your own and save the typical 15% service fees that settlement companies or law firms charge.
Dear Tired...in short...you worked so hard to build good credit.
Dear Tired...in short...you worked so hard to build good credit...settlement and BK will destroy your credit for up to 7 years...think what will happen if you need to get a new(er) car or medical needs that aren't covered by your insurance. No credit available for that...
IMHO...I would consider getting a job for you and perhaps a 2nd job for your husband for one or two years and putting every dime I can towards that debt (make sure you have some $ in a savings account for emergencies - usually 6 months worth of living expenses)...no disrespect here...but 2 years to pay off that debt will keep you on the right path credit wise so if something should happen you have the resources to fall back on. I think home schooling might have to wait.
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Response to input
Thank you both for your suggestions. We're definitely open to anything that might help. I'm open to the idea of a debt settlement company, but whether or not they're any good seems to be a crap shoot. It seems no matter the company, some people love them and some people despise them.
And about that emergency savings account? Yeah, that seems really likely. Which do you think I'll have better luck with? 1) Explaining to my kids why we're going to eat nothing but mac'n'cheese for a month so that we can save $20 towards a rainy day? or 2) Explaining to my creditors why I couldn't pay all of their $390 minimum payment so that we can save $20 towards a rainy day? It all sounds great, but reality is a little different. We've already cut our budget to our mortgage, utilities, food, gas, and . . . oh, don't forget, our credit cards. There's no money for "entertainment" or "clothing" or "medicine" or "savings". As my mom used to say, you can't get blood from a turnip.
As for getting another job, my husband works crazy, long hours and his schedule changes each week, so we've looked into that and haven't been able to find another company that can work with his schedule.
I have my own home business which is starting to turn a profit, so I'm focusing on expanding that. I can understand where someone might say homeschooling can wait, since we all have our different priorities and such. We've schooled our kids for almost 12 years and have a great situation where we currently are. I'm not about to do anything to change that. Honestly, I'd rather go bankrupt then have strangers raising my children.
And believe me, we've done the math a hundred different ways. It'll take a minimum of 5 years to get this taken care of and that seems like a very long time to be eating mac'n'cheese and watching every penny.
Still chugging away . . .
Tired and Thrifty in Texas
Rule of thumb in getting control of your debt...if you can't cut
Rule of thumb in getting control of your debt...if you can't cut any more out of the budget, then you have to increase the income...only you know your situation, we're just offering suggestions on what has worked for us.
I think you misunderstood my point about the emergency savings...if you got a job and your husband a 2nd job...then there will be a significant increase in income coming into the house where you'll be able to save for that emergency fund, NOT have to eat Mac 'n Cheese for 5 years, as well as pay down the debt. If additional jobs is not an option, well that is your decision...IMO, I would try that route first rather than file for BK. Oh, and if you file for BK and you have to file Chap 13, well, money will be tight...you may have to resort to eating just macaroni...no cheese...
We are sharing ideas here...please don't shoot the messenger...
( Posts: 1129 | Credits: )
Which path to take at this crossroads . . . ?
We are sharing ideas here...please don't shoot the messenger..
Lol... funny one