I'm in debt.., What should I do? Options

[Jen]

I am about $8k in debt. My credit score is a 600 , and my income is so crappy.. that I don't even want to post it.

I was in more debt, but I have paid a lot of it off.

Should I get a consolidated loan, and put all of my bills into one?

I asked someone, and they said they could only give me a credit line of $2200, or something.

I'm just so confused.. and I just want to not worry about making 5 payments a month.

Does anyone have experience in this kind of thing, and could help me out?

I'm going to go to the bank sometime this week and see what I can do, but I'd like a little advice beforehand.

I am STRESSED to the MAX.

[bseaman_5]

My advice is get rid of the credit cards.

[FreddyTheOthaMea...]

Taking out a loan to pay off debt = even more debt. 8k aint bad, i take it you have never been to college? cant offer much in the way of suggestions other than get it paid off and do it as fast as you can, provided you can make payments. but 8k aint bad and def nothin to get too freaked out over. go grab a beer and chill (sound advise for pretty much any situation)

[Jen]

My advice is get rid of the credit cards.

I don't use any.. I have one only at the moment.. and I either don't use it, or pay it off every month. All of the other cards are cancelled.

How does getting 1 big loan equal more debt? Wouldn't it be easier with one monthly payment and a low interest rate? My interest rates are between 13 and 23%.

I have been to college. I am in college. Idk what would make you say that.

[GriffGirl]

A consolidation loan will kill your credit, plus, if you can't get enough of a loan to consolidate all of the debt, there's no point in the first place. Basically you'd need a personal loan for 8k, and personal loans are really hard to get for people with decent credit, much less for people with bad credit (myself included).

If it's really bad and you're absolutely drowning and chasing your tail, you might want to consider filing for bankruptcy. It's expensive to do though - if you go chapter 7 where all your debts are wiped out (except federal debts - taxes and student loans) you have to cough up the cash up front, you MUST use an attorney (not by law but there's so much paperwork involved you could really screw yourself if you don't) and it'll run you about 4 to 5 grand. You will also have to list all of your assets, and anything you have worth anything (CAR) will have to be liquidated.

You can file for Chapter 13, which is basically a repayment plan of all of your debts, but gets all your debtors off your a$s and halts any wage garnisments. You have to list your assets also, but you get to keep most of them (maybe not the vacation house in Malibu ) and your repayment is based on your income and lasts not less than 36 months and not more than 60. Typically you will need to come up with a retainer fee TBD by the attorney but will be at least $300, the cost of the court filing fee.

Chapter 7 stays on your credit for 10 years; 13 stays on for 7. It's my understanding that Chapter 13 is a little bit of a softer blow to the credit score, because you're actually repaying your debts rather than erasing them, and you can start rebuilding your credit after about 2 or so years into it as opposed to Chapter 7, which is essentially the kiss of death for a good ten years. Of course there's lots to consider if you do file for Bankruptcy either way - don't expect to be able to keep any credit cards you have, don't expect to get a mortgage any time soon, and don't expect to find it easy to get new auto insurance or a new apartment if they run credit checks in addition to criminal checks. But then again if your credit is already totally effed up, you already have these problems. At least by filing you can start with a clean slate and start building back up.

A decent attorney will give you a free consultation.

[MercuryFree]

A consolidation loan will kill your credit, plus, if you can't get enough of a loan to consolidate all of the debt, there's no point in the first place. Basically you'd need a personal loan for 8k, and personal loans are really hard to get for people with decent credit, much less for people with bad credit (myself included).

Would it kill her credit more than bankruptcy would though? I would have recommended it otherwise. Even if you can't get enough to cover all your different debts, if you can consolidate 2 20% loans into one 13% loan you're going to be better off regardless...

Moral of the story, debt is bad kiddies.

[Supersprynt]

Where is your debt?

What are you driving?

[Jen]

How does a consolidation loan kill your credit?

Debt is in..
best buy
medical bills
school
clothes
shoes
ex-fiance's car
my car
oweing an apt complex money b/c of my ex
blockbuster [stupid ]

My ex screwed me over in MANY ways, and now my credit report is showing things that I paid MY HALF of, but because it was in both of our names, it is in BOTH of our reports.

[jgreening]

1. Do not charge or borrow another cent until everything is paid off
2. sell unnecessary items and put all proceeds to debt
3. get rid of discretionary monthly bills (cable, more than one phone, etc.)
4. get 2nd or 3rd job and put ALL of the income to the debt
5. pay off highest interest rate loans (cards) first

I agree that 8k is totally doable even on a meager income.

When I was in school, I was about 5k in debt (a few years back) and got out with about 18 lean months.

It sucks, but I would never want to file for bankruptcy unless there was absolutely no other way out. Once you do, good luck ever getting a mortgage if you want a house someday. The whole "it only stays on your credit report for 7 years" is BS.

[Jen]

Well, I'm definitely not going to file for bankruptcy. I'm just stressed about how many bills I have. I have been doing good though.. I paid off about 7k of debt in the last 2 years.. then again at that time I was making very good money. I'm just.. getting frustrated.

This post has been edited by Jen: Aug 18, 2008 - 10:23 PM

[lagos]

Don't do any debt consolidation. All those companies are out to scam you and just make money from you.
You might lower your monthly payment with them, but your over all debt will be higher then it is now and your credit score will be even lower.

First thing you should do is call up your credit card companies and ask them to lower your interest rate. This works about 50% of the time.
Then start out by paying off the card with the highest interest first.
And stop using your credit card. Even if you pay it off at the end of the month, thats money that should be going to pay back the other cards.

[Jen]

I wouldn't do it through a debt consolidation company, I would do it through my bank.

[lagos]

btw, you mention medical bills.
Did you ever try to negotiate with them to settle on a payment?

I had an 800$ bill from one consultation visit at a specialist (insane, i know). I kept calling them over a few months because my insurance wouldnt cover it, and I wasn't about to get robbed by them. Finally they sent me a letter saying that they are about to send me to collections if i dont pay the bill in full. I called them back and offered them 300 bucks. They accepted and the bill is settled without going to collections. I found that pretty much all medical billing is open to negotiation, since that's pretty much what insurance companies do with them on a regular basis.

However this only works with bills you have not yet made payment on. Once you send them any money at all, then you are legally bound to pay off that set amount.

[Jen]

Insurance has paid for most of my medical bills, and my family and I did negotiate with them.. but it's still pretty expensive.. over $2k. Before insurance.. it was close to 100k. But after insurance and negotiations, it was about 7k. My parents have helped with this one, but I am now taking responsibility for it because my dad is retiring and the funds won't be as abundant.

[FreddyTheOthaMea...]

wow im sorry that came off the wrong way. what i ment by it is tuition debt is usually pretty high outside of like mortgage, medical, etc etc. didnt mean to be insulting

[SlickRick]

fake your death problem solved

[Jen]

fake your death problem solved

Thanks for the help! Wow, this was the best advice so far! I shoulda thought of that..

[97Celica]

Get a sugar daddy...no,but seriously...how did your ex's car put you in debt? You paid or PAY for it currently?

[99GT]

Just spend on what you need. Pick up a few side jobs, or 2nd, 3rd jobs.

Stop going out.

I'm in the same boat.

[Jen]

Get a sugar daddy...no,but seriously...how did your ex's car put you in debt? You paid or PAY for it currently?

I bought him a car with a credit card.. huge mistake on my part.

Trust me. I don't go out. I have no life basically.

I'm just going to the bank today and talk to someone. From what I have researched, consolidated loans do not hurt your credit as long as you cancel and close out all prior accounts, and always pay the loan on time.