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Without going into to much detail....I was unable to work for over two years. Every company that I owed money to knew why, a few wrote off the debt. But the rest didn't seem to care about my situation. Thankfully things are better and I'm now employed. But I'm in complete financial ruin. My house was foreclosed on, I have right at $13000.00 in collections, and I have $26,000.00 in student loans. The student loans are in forbearance's now but when it ends in April I will have to figure out some way to pay that. The total monthly payment for them will be around $600.00, which I won't be able to pay and keep a roof over my head. Since my credit is so horrible everything is on a cash basis if I'm even given a chance. My dilemma is that everything I read says that paying off those accounts that have been in collections won't do a thing to help my credit. From a moral stand point I get that I owe the money and need to pay it. Putting morals aside financially paying them will only make it harder to pay current living expense's not to mention making some kind of payment on the student loans. With my current income and current bills (rent, utilities, phone, car insurance, food, gas) I only have about $200 left over every month. So...Pay them or don't? What is the best course of action to start over?
I am not an expert so I will let the well seasoned re builders respond regarding collections. But for your student loans at 26K you can enter in an income based repayment plan. This will significantly lower your payment. Since you are in forbearance now this is the best time to look into this payment option.
...pay yourself first ...always ...put 3 months net in savings for emergencies ...that will take a while ...in the meantime start cleaning up your credit reports with the GW/Verification/Validation tools you will find in these forums ...as for paying the debts that remain, thats an ethical question ...you owe them ...if you simply can't pay them then you have to consider bankruptcy ...thats a last resort but with your debt/income ratio it may be your only viable option, especially if you get sued as you well may ...if/when your income improves and you've not filed bk, then start requesting PFDs and try to pay those who cooperate with you ...by then you'll know more than most here and be well on your way ...hth
I'm not a seasoned person on the this forum, but I second the suggestion to to check into income based repayment plans (usually called IBR by your loan company). My gross income is about 28,500 and my student loan payments are about $55/mo. I know with only $200 that's not the greatest but it's much better than $600. Also, I have been using this website, undebt.it If you put all of your income and bills into the program, it helps you see how much you have left over and how long it will take to reduce all of your debt. It was different methods you can select (manual, snowball, avalance, etc...) Good luck!
There is life....and sometimes it's hard. Bad things happen to good people We don't expect it, but it's THERE. You have to LIVE. You need a roof, food and medical.
If you cannot pay the 13,000 in collections, filing bankruptcy may be an option for you. Paying these collections aren't going to help your credit report. You need to figure out the student loans. work on what's most important. Roof. Food. Medical. Loans. A bit of savings.