topic Re: In a lot of debt most of it in collections overwhelmed where to begin? in Rebuilding Your Credit

In a lot of debt most of it in collections overwhelmed where to begin?

Anonymous — Tue, 05 Feb 2019 19:31:01 GMT

Hello all thank you for taking the time out to read about my situation and help us. My husband recently got a new job making more money so we now have consistant extra income monthly to try and pay down the mess we got ourselves into. I read some of the stories on here but I am not sure how I should be so I will explain my situation a bit.

So in April of 2015 my husband and I made a decision that put us into credit card debt. At the time we were not making a lot of money so it started a bad cycle of not having enough money so lets use/open a credit card.

First there were two cards and by the time we could no longer afford to make payments to all of them which was aproximately Feb 2018 we had 12 credit cards, and 3 loans. By 2018 we had also incurred some medical debt due to various medical issues that had occured.

Currently we are paying the minimums on two cards ($7988.48 in total owed) we have that were issued by our banks where we get our paychecks deposited. We knew we couldnt pay everything but we figured it would be best to try and pay those so our bank accounts stay open and the bank doesn't try and take our paycheck. As for the other 10 cards they are currently in or about to go to collections. Some of the collection agencies have sent us settlement paperwork in the past. I am not sure if it is still valid though. The three loans are paid automatically through our paychecks. And the medical debt (aprox $1500) is in collections .

Basically we want to pay everything off and then rebuild our credit because we would like to buy a place to live in the near future as we want a place of our own. Unfortunately we are not sure where we should begin.

My husband suggested bankruptcy but I am worried about doing that because I believe our income (aprox $78,000 together) would force us to do a payment plan and if anything happens to either of our jobs or if we get sick again and cannot work for a time it could be bad.

I thought it might be better to try to pay each debt off one by one from lowest to highest. Should we save up the money and take the settlement offers the collection agencies are offering us if they are still valid and knock the debts out one by one?

I am currently in the process of trying to get all the paperwork and letters together to see how much I currently owe and what the agencies are offering to settle for.

In summary I believe we owe about 65k total in credit card debt and loans. And we owe about $1500 in medical debt. We also both have student loan debt in deferment that totals about 135k together. We are basically overwhelmed. Where should be begin, how should we tackle this monster so we can get our own place to live? Thank you again and please let me know if you need more info.

Note- I edited this original message to change the medical debt to the correct amount.

Re: In a lot of debt most of it in collections overwhelmed where to begin?

dynamicvb — Tue, 05 Feb 2019 19:19:14 GMT

This is always a difficult decision. Question is that 1500 or 150K or 1.5 mil in medical? It's not really clear from your post. If its the later then you are already bankrupt. 150K would be hard to pull out of too. If you list out all your accounts, balances and credit limits someone will be able to help you prioritize.

But from the way it sounds, it might be a good idea to just go talk to a BK attorney. It should not cost you anything for a consult and they will be able to tell you your options. Depending on your area and the median income, you may not automatically be forced into a chap 13. That's where the lawyer will be able to guide you. Personally, I did a BK13 and for me, it was the best thing I ever did. I kept my property and was able to get rid of the unsecured debt, plus it taught me how to manage finances better. Regardless of whether you do a BK or let them charge off, your credit is going to be hurting for at least 7 years.

Most people here can relate to living above your means. I know I did it and have read posts from others who did too. Bottom line is people around here understand so don't beat your self up more, you just need to come up with a plan to recover.

Re: In a lot of debt most of it in collections overwhelmed where to begin?

Anonymous — Tue, 05 Feb 2019 19:26:15 GMT

Hi thank you so much for replying. sorry that 1500k for the medical debt was a typo. I owe $1500 in medical debt.

I'm really scared of bankrupcy and having our income tied into a payment plan when our living arrangement isnt stable (we rent the back room of someone's house) and we have lost income in the past when we were ill. I am worried that one of us not having income for a while would make us unable to make the bankrupcy payments.

I will try to get all the accounts together to list it in this post it will take me some time as I got so sad and stressed out that all the papers are just piled up all over the place so I gotta track stuff down. But I will list what I can asap.

Re: In a lot of debt most of it in collections overwhelmed where to begin?

CGeorge — Tue, 05 Feb 2019 20:07:02 GMT

I can so sympathize with you. I feel your pain, even though I can't even begin to imagine how overwhelmed you truly must feel. You do have some challenges ahead. But the people on this forum are terrific - and they are wise. So if you can give them a listing of your credit cards (SL and amount owed), loans, student loans, medical bills, and income - they will come up with some excellent ideas to help get your through this. But I agree with the previous response, it would be extremely helpful for you to consult with a bankruptcy attorney. Not only could be properly advise you, but it would give you some peace of mind, as well. Any step forward (no matter how small) in the right direction is a PLAN - and this gives us hope and resolve. Bankrupty is NOT the worse thing in this world! When I went through my financial crises, I simply IGNORED everything. I ignored every kind of notifications from the creditors. I then let everything go into collections, and then be charged off. And in the process, I voluntarily let a resort are rental property go into foreclosure. So I am talking about multiple collections, judgements and a foreclosure to boot. This was all in 2015, and today, I am as good as gold. I have more credit cards than a person could ever use, and my utilization stays right at 1%, or less. I tell you this because I think, perhaps, that bankruptcy would have been the better option for me. I know that I would have slept better. Bankruptcy was created for a REASON - to give people a fresh start. If an attoryney advises it, I would take advantage od that. You will live with the consequences for a number of years after that - but it is not a life sentence. Just write everything down on paper - and create a plan. And come back to this forum often for support!

Re: In a lot of debt most of it in collections overwhelmed where to begin?

dynamicvb — Tue, 05 Feb 2019 20:29:38 GMT

@Anonymous wrote:
Hi thank you so much for replying. sorry that 1500k for the medical debt was a typo. I owe $1500 in medical debt.

I'm really scared of bankrupcy and having our income tied into a payment plan when our living arrangement isnt stable (we rent the back room of someone's house) and we have lost income in the past when we were ill. I am worried that one of us not having income for a while would make us unable to make the bankrupcy payments.

I will try to get all the accounts together to list it in this post it will take me some time as I got so sad and stressed out that all the papers are just piled up all over the place so I gotta track stuff down. But I will list what I can asap.

Okay 1500 is doable :-) It sounds like you are thinking of the snowball method. If you search around you will find some calculators and spreadsheets to help you with that.

I know how you feel about the BK, I was there too. Took me a long time of trying to shuffle things around, working every side gig I could find, etc.., before I finally just realized there was no other way for me. I'm not saying this is what you should do as you should weigh out all the options, just sharing my experiences. I fought it way longer than I should have( several years), if I would have gone ahead when I was really BK then it would all be way behind me now. Its almost behind me now as in May it will be off all my CRA's and I'm in better financial shape than I have ever been in.

You may not have to do a 13. You report your previous 6 months of salary not what you make right now. Then the cost of living and median income from your state is taken into account. If you search online, there are a lot of calculators that will give you an idea of whether you can pass the means test. Even if you can't do a 7 you may be surprised at what you would have to payback since it sounds like most of your debts are unsecured and will likely be forgiven.

Re: In a lot of debt most of it in collections overwhelmed where to begin?

Anonymous — Tue, 05 Feb 2019 21:02:16 GMT

Hi thank you all for the encouragement. Well I put on my big girl pants and dug through all the papers to find everything I could. I got depressed cause we actually have more credit cards than I initially thought, I had forgotten about a lot of them. I listed the CA's that had taken over if I was able to find that information. The pension loans I had to approximate cause I couldn't get that data right now. Hopefully this will be enough to allow for some more troubleshooting to some options to get this down.

Our income

Me- 41044

Hubbie- 42000

Credit card debt aprox $47,000

MCU Pays as agreed SL-300 Bal-309

Macy’s Card Charged off SL-300 Bal-539 ARS national Services

Gap Card Charged off SL- 200 Bal-350 Genpact Services

Target Card Charged off SL-300 Bal- 607

JCPenney Charged off SL-570 Bal-798

Carecredit Charged off SL-2300 Bal-2495.56 Midland Credit

Chase CC Paying as agreed SL-8000 Bal-7826 Made agreement with chase

Hubbie Gamestop Charged off SL-250 Bal-490.22 Portfolio Recovery Associates

My Gamestop Charged off SL-2700 Bal-

Citibank AA Charged off SL-5000 Bal-8301.76 Cavalry

Citbank costco Charged off SL-5000 Bal-5908.46 Atlantic Credit & Finance

Hubbie Citibank Bestbuy SL-4000 Bal-6098

My Citibank Best Buy SL-2500 Bal-4651.67

PC Richard Charged off SL-7000 Bal-8600

Hubbie Chase Charged off SL-? Bal-2000

Medical Debt total 1500

My Debt-1300

Huband’s debt- 200

Student loans total 123300

My student loans-71000

Husbands Student loans - 52300

Pension Loans aprox 10675

My loans -5800

Hubbie loans- 4875

Personal loan hubbie -747.65

Re: In a lot of debt most of it in collections overwhelmed where to begin?

dynamicvb — Tue, 05 Feb 2019 21:09:40 GMT

Do you know where your Fico 8 scores are now? If not you can get a trial for a buck at CreditCheckTotal.com. Also if you know what is the first date of delinquency for each of these? And how much can you dedicate to getting them paid off each month? The interest rate on each is something to consider and I think one of the other posts said you had received some settlement offers.

I've been playing around with this for a while now and really like the spreadsheet on this site. https://www.vertex42.com/Calculators/debt-reduction-calculator.html

Re: In a lot of debt most of it in collections overwhelmed where to begin?

Anonymous — Tue, 05 Feb 2019 21:35:51 GMT

Hi, yea my fico8 scores aren't so good. Equifax-518, Transunion-533, Experian-552. I stopped paying everything except MCU(secured card) and Chase (unsecured) in Feb/March 2018 so that would be first date of delinquency.

In terms of how much we will pay to each we are waiting to see hubbies first check. But if we choose not to do bankruptcy I want to try to pay at least 400 a month minimum to each debt. The months we can pay more we will pay more but at the minimum 400. I don't know the interest rates anymore since everything has turned over to collections. Do debts keep the same interest rate that they previously had when the go to collections?

Re: In a lot of debt most of it in collections overwhelmed where to begin?

Anonymous — Tue, 05 Feb 2019 22:09:44 GMT

(Mod cut-This isnt allowed here on myFico.)

I agree with everyone else; you should go and at least speak with a BK attorney. You arent committing to anything by consulting one, & I think you are worrying too much about it being a CH13, where you make payments. You might be able to do a CH7 & have everything except your student loans wiped. BK doesn't have the same stigma it used to have- look at it as purely a financial decision. If you do go the BK route (either a 7 or 13), you are going to recover quicker than if you paid these all off over time. The end result is the same, only one takes a lot longer to get there. GL!

Re: In a lot of debt most of it in collections overwhelmed where to begin?

dynamicvb — Tue, 05 Feb 2019 21:55:15 GMT

Okay, well they are already charged off so not going anywhere. I would work first on getting the balances down on the open ones. Hopefully, you won't get balanced chased or those shutdown. Next, I would work on building up an emergency fund.

Once I had a decent emergency fund saved up, then start looking into trying pay for deletes to get rid of as many as possible. I'm not sure what happens to accounts that are charged off prior to a BK, so not sure if those would get zeroed out or not. Perhaps someone else can comment on this. Also, put together a strict budget so you can pay as much as possible to getting these knocked out so they stop dinging your scores. you also need to find out what the SOL is for your state so you can figure out your chances for someone filing a lawsuit against for you.

Re: In a lot of debt most of it in collections overwhelmed where to begin?

HR530 — Tue, 05 Feb 2019 22:08:01 GMT

My husband and I were in a similar situation a few years ago. We didn't know much about credit and the idea of BK/chapter 13. Never crossed our minds(solely because we didn't know what it even was LOL). We cut off all non necessary expenses overnight. We turned off the cellphones. we got rid of the cable and eating out and everything(never heard of Dave Ramsey or other gurus before). My husband got a second job and we started with the smallest debt first. Everything else was the minimum payment. Your balances don't seem to crazy. especially once you pay the small stuff. Your debt my not be something you can clean up fast to get into a house. I honestly don't know either way. But if you guys knuckle down hard. You can dig your self out of this I promise. And with each less bill/debt to pay every month. You'll be closer and closer to where you want to be.

Re: In a lot of debt most of it in collections overwhelmed where to begin?

Anonymous — Tue, 05 Feb 2019 22:25:51 GMT

While weighing your decision on what to do, keep in mind that many of these delinquencies are fresh - just about 1 year old. Several of the CAs you have listed are also fond of filing civil lawsuits in an attempt to obtain payment. If your state of residence allows for wage garnishment, that could upend your plans.

At least speaking with a BK attorney, and considering his suggestion, might be a wise decision.

Re: In a lot of debt most of it in collections overwhelmed where to begin?

CGeorge — Tue, 05 Feb 2019 23:54:20 GMT

Silvanamoon24 - this is something that you need to know now...you mentioned that you simply stopped paying some your debts in February, 2018. Please, just know, that the last day that you made a payment, even if it is $0.01 (a single penney!) - RESETS the SOL date! For instance, if the SOL in your state for unsecured debt is 4 years...and your last payment was in February, 2018 - they, or any subsequent collection agency, can no longer sue you after February 2022. However, if you are to even make any payment WHATSOEVER, then your SOL date is reset from that date. So, please, even pay - judiciously.....

Re: In a lot of debt most of it in collections overwhelmed where to begin?

Anonymous — Wed, 06 Feb 2019 00:29:31 GMT

Hi thank you everyone for your replies and thoughts. I forgot to mention that the state I live in is New York. I believe the SOL is very long like 6 years. I guess we will see what the bankruptcy attorney has to say. Like yall said it can't hurt to get a consultation.

Also if I go the pay off one by one route. I guess it would be best to have all the money for each debt upfront to pay instead of paying piece by piece. I am not sure if that interfers with the SOL. I obtained my score report so I am able to see my dates of delinquency most of the cards are feb 2018, two of them are march 2018, 1 was in apr 2018, 1 was in may, and 1 was in july 2018.

Question though how do I know if my state allows wage garnishment?

Re: In a lot of debt most of it in collections overwhelmed where to begin?

Anonymous — Wed, 06 Feb 2019 16:55:12 GMT

I am also in NY, and I can tell you that this state does allow it. I bet you can figure out how I learned that one a few years ago...

Something to know also - we in NY benefit from a statute that no one else does. In NY a debt record does not stay for 7 years on our reports. It stays for 5 - it’s called the Purge Law, and allows you to request exclusion of reported tradelines on your CRs after 5 years rather than the usual 7. Coupling this with the Early Exclusion allowances from the 3CBs, I was able to have old collections removed from my TU report at 4 years 6 months back in November (as TU allows removal requests 6 months early).

Re: In a lot of debt most of it in collections overwhelmed where to begin?

stellar — Wed, 06 Feb 2019 19:44:27 GMT

I would get a new bank checking account somewhere where you don't have credit card debt. Deposit your paychecks there.

Re: In a lot of debt most of it in collections overwhelmed where to begin?

Anonymous — Thu, 07 Feb 2019 19:38:15 GMT

If the student loan debt is federal, you aren't in anywhere as much trouble as you think you are. You can get this fixed, in as little as a week. There are several payment plans that are actually affordable and the payments are determined by your income. The sooner the better to get some positive information reporting on your credit report. Let me know if you would like me to walk you thru the steps. It's pretty easy.