topic Re: Debt Relief Program My Only Option? in Personal Finance

Debt Relief Program My Only Option?

Clancaster23 — Mon, 04 Nov 2024 23:54:44 GMT

I'm a truck driver working for the same company for about seven years now. It's a local home every night position but I'm paid by the mile so basically the more I drive, the better the pay is. A few years ago I had a pretty good mileage run but lost it when the company decided to rebid the runs and I'm pretty low in the seniority list so my run was taken by someone else and I was forced to taking a lower paying run. I was able to adjust my finances to what my lower pay checks were. A year after that, they again rebid the runs and I was once again forced to take an even lower paying run. This is the position I'm at now. I can barely afford to keep all my cards/loans paid but am doing it without missing any payments. I got word a couple weeks ago that once the first of the year comes, my run is going to be reduced even further but they are going to try to make up for it in other ways. I have been there long enough to know that that may not be possible although they say otherwise. All said, I don't want to leave there due to the time I've been there and benefits. Along with that, it still pays as good or better than if I went somewhere else.

My credit score according to Experian is 715. I have about $7,900 in credit cards (4) that I pay about $300 a month in payments on and about $20,600 in personal loans (4) paying about $500 a month on those. All my accounts are current and in good standing.

I don't think bankruptcy would be an option considering from what I've read, you have to apply all your accounts that your name is on to the bankruptcy and I can't do that since I have one other personal loan, two trucks and a motorcycle that are in both the wife and my names and I do not want to include her in this as she has worked hard to have very good credit. Along with that, a bankruptcy is seven years, doing this other way would be about half that from what I've read.

I can't get any more loans to try to pay this debt down anymore so I'm kind of stuck right now and am considering one of these debt relief plans like National Debt Relief or Accredited or Freedom. I'm aware that it would drop my score significantly for a couple years but that's not a huge concern right now. Would this be the best option or is there another way to go?

Re: Debt Relief Program My Only Option?

GZG — Tue, 05 Nov 2024 00:22:23 GMT

any sort of debt relief you do will just be like a bankruptcy, if not worse.

$30,000 is not insurmountable debt, particularly if you're not currently late on your payments.

you need a better job or you need to spend less money, there's really not much else that's going to fix this.

you can take your finances to a couple of BK attorneys for their perspective, but I would just figure out how to make more money or spend less money because that's what you need to do to fix this.

Re: Debt Relief Program My Only Option?

JoeRockhead — Tue, 05 Nov 2024 00:59:12 GMT

Going the debt relief route with the expectation that your credit will recover in a couple of years is simply untrue, and unrealistic. It will tank your scores for 7+ years.

They'll advise you to stop paying your bills. From there, unlike a BK, your accounts will charge off one at a time staggered down the calender. The charge offs alone will put you on a dirty scorecard for two years from the time the last serious delinquency/status reports, provided there are no more serious delinquency (60 days late or worse).

Also unlike a BK, you'll have no legal protections from collections, or being sued over the debt. There's also no guarantee the creditors will be open to "settlement for less" right away, or at all.

I'm not advocating you file bankruptcy, but rather consider your options more carefully. Including other ways you can increase your income to tackle the debt, without ruining your credit.

Re: Debt Relief Program My Only Option?

NoMoreDebt — Tue, 05 Nov 2024 11:43:59 GMT

I'm in the same industry. From what you have offered up you have 2 choices, find another job that pays better possibly by the hour and you need to get rid of some extras it sounds like when you say 2 trucks and a motorcycle? Being local I don't see how anyone could survive on just being payed mileage. This is why i say find an hourly gig, that's what I have. Even Walmart pays miles AND activity pay on top of that to their Regional OTR guys.

Not being harsh as I have been in your shoes, but at the end of the day unless the mindset is fixed that allows for 5 personal loans and carrying balances on cards and extra vehicles or "toys" ie motorcycle, more pay from another job isn't going to fix the issue.

Re: Debt Relief Program My Only Option?

FicoMike0 — Tue, 05 Nov 2024 17:19:36 GMT

First of all, I have two friends who are truck drivers. I can't believe what you guys put up with. Both of my friends change jobs frequently. When they hear they're losing a run they like, their looking elsewhere. Keep in mind, you guys are in demand. One of them just quit a local day job for a solo, otr, home every weekend gig. He says he needs to make some money, get a little ahead.

Re: Debt Relief Program My Only Option?

FicoMike0 — Tue, 05 Nov 2024 17:34:01 GMT

On the other side of the coin, as @NoMoreDebt said, you need to figure out how you got in this mess. Living on credit is a disaster waiting to happen. The first month you don't pay your credit card in full, you should declare defcon 1. Not, "oh, it's a small payment, I can afford it". If you could afford it, you could pay in full. Look at the interest rates you're paying these b@st@rds! It's robbery and you're agreeing to it. Don't be a sucker, just say no.

Re: Debt Relief Program My Only Option?

Clancaster23 — Tue, 05 Nov 2024 20:32:25 GMT

GZG/Joe: I agree with everything you guys say. I have good credit and I have worked hard on bring it up over the years when I was down around 550 and I don't want to ruin it now but not many options to avoid it. I'm leaning towards not doing any of it and just trying to work it out one way or another. I like to do some woodworking on the side and sell stuff I make so hoping that can alleviate some of this.

Nomoredebt: I don't have two trucks alone, one is mine and the wife has the other. I just mentioned them because both our names are on both trucks and the bike. As far as finding another job, I am looking but for the right one. I've had my CDL for 18 years and have never done OTR and never will. Not my kind of thing. As for finding a better job, I live in one of the poorest counties in PA. I actually work in the next county north of me traveling 25 miles one way every day. I look and see what places that are hiring drivers and it's not much better than what I make now. It's not worth going somewhere else when it would basically be a lateral move. As I said in the initial post, even now on this run I'm on, I make a good rate. One other bad thing about changing jobs would be the fact that before I started where I'm at now, I job hopped a lot and that's not what I want to get into. I'm obviously more mature now and likely wouldn't do that but it's always in my head. I have been for a while now set on not going crazy with money. I got these vehicles and these cards when I had my good run and I could afford it then. Now that I know better, I'm going to fix it and reduce what I spend but it's going to take time. Lesson learned.

Fico: As I just said above, I'm well aware of how I got here and it is something I have learned from.

Like GZG said, it's not an insurmountable amount to pay, I just need to figure out the best way to do it. I am looking at other jobs so something may happen. If it doesn't, I'll try to think of other ways to make extra. Thanks all for the opinions.

Re: Debt Relief Program My Only Option?

FicoMike0 — Tue, 05 Nov 2024 21:07:41 GMT

Good luck with it. We're all on you side.

Re: Debt Relief Program My Only Option?

FicoMike0 — Tue, 05 Nov 2024 21:46:10 GMT

Re: Debt Relief Program My Only Option?

sjt — Thu, 07 Nov 2024 18:01:56 GMT

I would look into a Debt Management Plan (DMP) from a non profit credit counseling service. They negociate a APR reduction (sometimes to 0%) and develope a payment plan to off your credit cards with one monthly payment. It also has little impact on your credit.

https://www.nfcc.org/resources/debt-management-plans/

Re: Debt Relief Program My Only Option?

Jobenwish1987 — Sat, 21 Dec 2024 15:27:28 GMT

Hey,

I am terribly sorry to hear that you're going through this.

I was in a bit of a similar situation.

I had no choice but to pull the plug and hire a consolidation company.

I had a 740+ credit score for years, so seeing it plummet really hurt, but boy, was it worth it!

I hired a company to consolidate my debt and they did a wonderful job.

They took my debt of $26,000 and reduced it to $11,000(fees included) over 48 months of $229.

My debts are pretty similar except for they were all personal loans and no credit cards.

For me, knowing that my monthly payments were reduced from $611 to $229 was enough for me to do this.

After 12 months of making my payments the company paid the remaining balances off for me, and at an interest free loan, I repaid them back over 36 months.

I had good credit within 18 months from the start date. I am now back on my feet with credit cards that get paid in full every month.

***Disclaimer - I don't advocate for debt consolidation especially not with every company out there as most of them don't deliver on there promises. I'm sharing my experience and appreciation for the company that I hired and saying that some companies really could help you.

I hope your story turns out as happy as mine.

I wish you the best of luck!

Re: Debt Relief Program My Only Option?

Clancaster23 — Sat, 21 Dec 2024 03:29:00 GMT

You mind saying which one you went with? I still haven't started it as I'm still waiting and hoping that things will work out. I'm wanting to wait til I'm absolutely sure I can't wait any longer.

Re: Debt Relief Program My Only Option?

IsambardPrince — Sat, 21 Dec 2024 22:18:41 GMT

Bankruptcy doesn't mean you have to turn in the vehicles.

They just become the sole obligation of your wife if she's the other person listed on the loans. Your name would still be on the titles and you could keep paying on those and get the title in the end while the unsecured debt (personal loans, credit cards, and so on) goes bye bye.

It would likely be best that you did not re-affirm any debt related to the vehicles or your part in this liability mess could survive the bankruptcy without you being eligible for another discharge for eight years.

In fact, having your wife's name on the titles severely complicates the trustee's job of trying to seize even if you can't exempt enough of the car's value, because your wife has equitable interest in the property. It would be tantamount to stealing from a non-bankrupt debtor.

You'd just have bad credit for a few years.

Depends on your state exemptions and how much of the loan is actually paid/equity you actually have as to if the trustee could place your house in jeopardy or not. Normally, your wife won't need to file bankruptcy over your debts unless you live in a community property state or there's just no other way to exempt the full amount of the house (or at least enough that the trustee isn't going to take it).

Many bankruptcy attorneys do a free consult and I think it's an option worth considering if your situation has deteriorated to the point where it's hopeless and this is the only option for a quick turnaround. Just realize that you won't be taking on a lot of debt again for a while most likely, but do you really want to?

In the future, I would advise not signing any more loan agreements that assume your job and income will remain steady. It seems like your employer has cut your income several times already and is a fair bit of economic trouble themselves, that or they sometimes do this to start giving someone "the hint" that it's time to "resign", and then they don't owe UI. Either way, it's never a safe assumption that your income today will continue unchanged.

As for creditors, they just do what creditors do. Load you with as much debt as they can legally justify. They love car and house loans because most people will go without food before they lose those, so they only have to repossess sometimes. Loans are essentially "stealing from your imaginary future income". They assume that life and the world exist in a steady state. So unless you have a crystal ball with you in the finance room, you should be wary of long term commitments.

As with everything in life, you have to watch out for these people because they're not in your corner. You have to pick your battles and know when to take calculated risks and when to show restraint, and if all you're doing is taking on loans because "I want, I want, I want." you become very exposed.

Sometimes I see things, on Facebook, that make me fully cognizant of how people out there behave with money. The other day, someone was actually begging for money so they could make a down payment on a 30 year mortgage. They can't even go out and work and save that much, and they expect other people that are caught up in trench warfare against the banks, making their own payments so they don't lose their houses that month, are going to go for this.

Or a guy I know in San Francisco where he said "Oh I make a lot of money." at one of those tech companies that makes no money and is a cash furnace running on loans itself, with no profit. So he goes and gets himself a $3 million mortgage and then another one for a cabin with wildfire damage out in some park where the wildfires even melted the phone lines and he can't get a phone and now he thinks the California government will make AT&T build 7 miles of copper lines under "carrier of last resort" and that's not what this is.

Sometimes, you just want to know, morbid curiosity, what went through these people's minds that made them think financing all this stuff on an iffy job was a good idea. I mean, this is like "invading Russia in winter" bad.

Re: Debt Relief Program My Only Option?

IsambardPrince — Sat, 21 Dec 2024 22:25:52 GMT

@Jobenwish1987 wrote:
Hey,
I am terribly sorry to hear that you're going through this.
I was in a bit of a similar situation.
I had no choice but to pull the plug and hire a consolidation company.
I had a 740+ credit score for years, so seeing it plummet really hurt, but boy, was it worth it!

I hired a company to consolidate my debt and they did a wonderful job.
They took my debt of $26,000 and reduced it to $11,000(fees included) over 48 months of $229.

My debts are pretty similar except for they were all personal loans and no credit cards.

For me, knowing that my monthly payments were reduced from $611 to $229 was enough for me to do this.

After 12 months of making my payments the company paid the remaining balances off for me, and at an interest free loan, I repaid them back over 36 months.

I had good credit within 18 months from the start date. I am now back on my feet with credit cards that get paid in full every month.

***Disclaimer - I don't advocate for debt consolidation especially not with every company out there as most of them don't deliver on there promises. I'm sharing my experience and appreciation for the company that I hired and saying that some companies really could help you.

I hope your story turns out as happy as mine.
I wish you the best of luck!

The truth about debt relief companies is a bad one. The industry is basically operated as an extension of the creditors who wrote all the loans in the first place. They know full well that most people don't complete their payments and file bankruptcy anyway, but this lets them get what they can out of them first. And it is notated on your credit reports that those accounts went into a debt management plan, which is horrible for your credit, AND you still end up paying a lot of it back.

As the saying goes, when the bank owes you money, you have a problem, when you owe the bank money, the bank has a problem.

Sometimes if it's just a few things you need to sit down and address, it's better to negotiate directly with them if you're sure that you can avoid a bankruptcy. Some creditors are fairly lenient and while it may damage your reputation with them, a DMP surely will and worse (because many advise default and THEN letting them step in). Most creditors advise coming to them and asking for help before you start missing payments.

Having the creditor modify it before the bureaus start logging negatives is much better than "LATE LATE LATE LATE CHARGE OFF....Oh look, now he's in a DMP."

Re: Debt Relief Program My Only Option?

Clancaster23 — Sat, 21 Dec 2024 23:41:01 GMT

"Having the creditor modify it before the bureaus start logging negatives is much better than "LATE LATE LATE LATE CHARGE OFF....Oh look, now he's in a DMP."

So you're saying if I was actrually going to do this, I'd be better off starting it before I fall behind on payments?

Re: Debt Relief Program My Only Option?

IsambardPrince — Sun, 22 Dec 2024 08:20:53 GMT

@Clancaster23 wrote:
"Having the creditor modify it before the bureaus start logging negatives is much better than "LATE LATE LATE LATE CHARGE OFF....Oh look, now he's in a DMP."

So you're saying if I was actrually going to do this, I'd be better off starting it before I fall behind on payments?

Yeah, because by the time you default they have no reason to work with you. So you're just basically begging them to say "Fine, deal with the collection agency." and end up in bankruptcy anyway.

So as my posts have stated, you have two roads here. Negotiation or bankruptcy. If you choose negotiation I'd be on the phone with all the creditors you think you can get a modification or hardship program out of going "I'm in sort of a pickle here and before anything goes late, I want to see if you'll work with me.", but they're under no obligation, but many of them will do something especially unsecured creditors who could lose the entire thing and have nothing to immediately claw back without going to court or selling the debt for pennies to someone who will actually deal with that themselves.

So the idea, what you'd be looking for with negotiation, is to try to get some of the credit card or personal loan companies to quit breathing down your neck so hard so you can get this debt cleaned up faster. Don't waste the time they give you if you can get some agreements going and they'll actually help you get where you need to be (debt free).

But the alternative, bankruptcy, is basically where you go tell a judge you can't pay your bills and you can protect what the law says you can. It's an option if you qualify (like I did for a Chapter 7), where the debt goes away, but you'll be living lean with limited access to credit for a while as you rebuild.

The good news is with "Default and bankruptcy." is if you go that route you have probably a year or two before people get around to suing, so you should be doing the consult with the lawyer now to start asking how your situation would play out, and if you decide to do a bankruptcy, be sure not to take on any new debt. But I wouldn't do this on a lark. My cousin thought she'd just declare bankruptcy and defaulted on everything without asking any lawyer for advice, then the lawyer told her she'd lose her house if she did because she made a huge decision based on too little information. So now she has people suing her and garnishing things.

Re: Debt Relief Program My Only Option?

JoeRockhead — Sun, 22 Dec 2024 14:18:17 GMT

@Clancaster23 I just want you to be fully aware that legitimate credit counseling agencies that administer true DMPs are generally always non profit organizations. Many of them are approved by the Dept. of Justice. If you go that route I would search the DOJ, or your State Attorney General's office for a list of approved agencies to assist you on that path.

Please also be aware that there are spammers who come here regularly to promote their business of "helping" people get out of debt. They will often tell of incredible success stories which lead vulnerable people down the wrong road. The continued attempted references by another poster regarding their success with their "angel" is one such prime example. That business isn't even accredited with the BBB, let alone by the DOJ, or even the NFCC. Take testimonials such as these with a grain of salt, and huge amount of skepticism.

Re: Debt Relief Program My Only Option?

IsambardPrince — Sun, 22 Dec 2024 22:47:40 GMT

@JoeRockhead wrote:
@Clancaster23 I just want you to be fully aware that legitimate credit counseling agencies that administer true DMPs are generally always non profit organizations. Many of them are approved by the Dept. of Justice. If you go that route I would search the DOJ, or your State Attorney General's office for a list of approved agencies to assist you on that path.

Please also be aware that there are spammers who come here regularly to promote their business of "helping" people get out of debt. They will often tell of incredible success stories which lead vulnerable people down the wrong road. The continued attempted references by another poster regarding their success with their "angel" is one such prime example. That business isn't even accredited with the BBB, let alone by the DOJ, or even the NFCC. Take testimonials such as these with a grain of salt, and huge amount of skepticism.

Well, it's a case of where "If it was really that easy, everyone would do it."

I filed bankruptcy in 2020. If there had actually been someone out there that would have saved my car and convinced the credit card people to back off and let me pay them pennies on the dollar, I would have.

It's just a case of "too good to be true". I've reported several of these fake debt settlement scammers on these forums. It's probably people in some other country where nothing will ever happen to them after they cheat Americans and laugh about it.

Re: Debt Relief Program My Only Option?

Jnbmom — Sun, 22 Dec 2024 23:14:39 GMT

Excellent advice @JoeRockhead

Re: Debt Relief Program My Only Option?

Realist — Wed, 01 Jan 2025 08:48:18 GMT

Why not take your loans, and debt consolidate them all into one loan? Your are likely looking closer to personal loan rates, but a 9% for a $28,500 loan, at a seven (7) year term, you're looking at a payment of $458 per month. Or a savings of $342 per month. This is all within your control, all legit, and improves your standing.

Option 2:

You can use a credit care agency, but what's going to likely occur is that they're going to tell you to stop paying on your debts, and to keep pooling all of your income up to pay off creditors negotiated proposals. The longer you wait and outlast, the better the offers - until they call you out and say put up or shut up. It happens. Meanwhile, they're going to attempt to renegotiate rates from usery level, down to still stupid level. At least that's what they did in the past, maybe times are better today. Still saves you some money, but your overall debt still increases due to missed payment or late fees.

Meanwhile, they are going to attempt to negotiate with your creditors, at settlement amounts higher than you can acheive yourself. You will have to determine whether this is good enough for you. Additionally, you may come across creditors that will not, will never, will not entertain the idea of negotiating with a credit care agency. They will insist all negotiations are done with the account holder. This envokes your action, meaning if you have to negotiate your debt directly, and ask why even have a credit care agency representing you? You don't have to be so neutrual, and you can pull for more to reach a "settled in full" outcome. Times will change with the economic climate. Those that hold jobs are better targets than those that do not. It's hard to bleed a rock. If they feel they can tap value with you, they may choose to puruse a court judgement. Or they may not and accept your settlement proposal.

The outcome of this, will place your score in neutral status for seven years. Should you receive a settled in full mark on your report, which will tank your score, yet you will also find that counterbalance in debt elimination which will elevate your score. It may end up higher than you initially started, without the debt overhanging any longer. But, any settled debt is treated as income, so you will report it out as such, and pay taxes on it as such.

Option 3:

Bankruptcy should be last on your list. Reserved for the "oh dang" option. I think you can find resolve well before this needs to become an option. If things go very south with Option 2, then maybe.