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“Dear Steve,

I have some debt that its been over 7 years old, most of them were when I was single, been married for 6 years. I just cant continue like this. total debt is 17,000.00

I being sued by a collection agency for 10,000.00, I was trying to get into one of those debt management program, but wife got laid off recently, I am working but Im barely making it. I looking for the option for bankruptcy, my credit is very bad and it s been like that for over 5 or 6 years, would like to know what are the negative and positives sides of filing for bankruptcy specially now with the new law for chapter 7 and 11i think they are called.

Thank you

Jonathan”

 

Dear Jonathan,

If you are barely making it, no debt management program is a good solution for you. If you enrolled you’d probably be unable able to make the payments within six months and then it would have just been money wasted.

While these are old debts, they may fall off your credit report soon, and they may be to old under the statute of limitations to sue you for them. However, a collector can attempt to collect for the rest of your life.

To check on the status of your debts under the statute of limitations, seek legal advice for an attorney licensed in your state.

Just based on what you have shared, bankruptcy should not be a problem for you to pass the means test. Find a local bankruptcy attorney that you like and make an appointment for a free bankruptcy consultation. Then go in and talk about your situation.

The advantage of bankruptcy is that it will close the door on these debts forever. Once that is done you can focus on rebuilding your credit again.

The other plan is if these debts are going to fall off your credit report you could just deal with potential future calls to collect on these debts, not go bankrupt and focus on rebuilding your credit.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: I Was Trying to Get In a Debt Management Program But Wife Got Laid Off. – Jonathan

You visited a few times and I would appreciate your thoughts on this post, why not comment?

“Dear Steve,

My situation revolves around my car loan. I got my loan back in July 2006, and the interest rate was high, understandably because I had bad credit. Now two and a half years later, it seems that it still is horrible, because NO ONE will refinance me. I tried LendingClub.com (I googled my problem, saw you recommended it to a contractor and I looked into it – minimum FICO too high for me), and nothing. LendingTree, nothing. I’ve scoured local credit unions, banks, my own bank, even relatives.

I’ve been making payments on time since my loan started and the lenders tell me I’m one of the their best accounts. I even spoke with my old rep and he told me since my account is so good, I could refinance with someone else because of my history. I’d qualify for “good rates”. NO LUCK. Last time I checked my FICO was close to 600 (590 i think), and while it’s not good, it’s not horrendous – ok, maybe it is.

Every website or offer or blog that tells me “we’ll help you get re/financed even with BAAAAAD credit”, I’m weary. I feel like I have a Scarlet Letter on my credit report. I’ve tried fixing errors but to no avail, so I feel the next option is to restructure some of my debt (which is only my $8k auto loan and $6k student loan, and one credit card) with fresh numbers and lower payments.

This situation has me so stressed out its ridiculous, I have until mid-November to figure it out. I requested a deferment from my current lender due to surgery expenses (I’m skipping October’s payment).

From what I’ve read, you seem like one of the good guys. People trust you, and I know you’re coming from where I am, because you’ve been there. So I know you’ll straight-shoot me on this. If I can, great. If I’m barking up the wrong tree, that’s okay too. I just want to know if I need to stop looking. Sorry this “situation” has been so lengthy, I thought I’d lay it out there though.I hope you can help me, Steve. Thanks.

Where can I go to get my auto loan refinanced, will anyone pay attention to my 2.5 years of solid payments, is it better to refinance (than to take out say, a personal loan and payoff), and if not, what is the best route to raise my score to qualify for a refi in a few months? Thanks.

Erik”

 

Dear Erik,

Well thanks. I try hard to be one of the good guys.

LendingClub.com is a great place to find financing for a number of issues, but everyone has their limits and credit scores seem to rule the world.

I think the logical first step is for you to get a consolidated credit report with the credit score option. This will tell you everything that is being reported about you. No one credit bureau has all the information on you. Creditors don’t report to every bureau.

By ordering the credit score option with your report is will clearly state why your score is what it is. Once we at least know the ballpark where you score is dinged, I can give you a plan to address that. I admit I’m a little perplexed at the moment since you have three loans and you’ve done a great job paying on the car loan. So something is out there bringing down your score, but we need to uncover what it is.

Don’t apply anyplace until we get through the credit report and credit score investigation. Continued applications will bring your score down. It will look like you are applying for credit and nobody will approve you. That does not make you credit attractive.

Some things that might be happening are serious. You might have an old outstanding account showing as in collections. Maybe you are a victim of identity theft. Getting to the bottom of your current score is very important for us to do, right now.

Does that make sense? Do you agree with this strategy?

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: LendingClub.com Could Not Help Me Refinance My Car Loan. – Erik

You visited a few times and I would appreciate your thoughts on this post, why not comment?

“Dear Steve,

My wife and I would like to make about $60 K worth of improvements to our house. The problem is, the house right now (with improvements over time that we’ve made) is already worth $11 K less than the maximum selling price it would fetch on the current market. We don’t necessarily improve just to meet market demands for a selling advantage; some of it is a quality of livability/enjoyment factor.

Also, our mortgage payoff is almost the same as the cost of our wish list of improvements ($61K). The improvements we want to make are the master bath (currently, an archeitectural nightmare) and the kitchen, two of the biggest payoff areas that can be made in a home. The current rate of appreciation in our area (at least, prior to the mortgage meltdown) was 5%/year. Money for improvements or mortgage payoff can be made from cash flow over abot 10 months. We love our neighborhood. Should we: a) pay off the house; or, b) make the improvements; or, c) do both, or d) do neither; just enjoy what we’ve got?

Nare”

 

Dear Nare,

Interesting question. This is one that needs to be answered emotionally.

The safest answer is to do nothing and wait to see what the market is going to do as far as returning to value going back up.

That being said, there is also a value to improving the quality of your property and your life through renovations. If you only have a $61K mortgage on your property then you might want to look into a cash out refinance and take the money out for the improvements if that plus your current mortgage would leave you under 80% of the homes current market value. You didn’t mention what the market value of the home is now.

I know some home improvement contractors and because business is slow they have been practically giving jobs away for cost just to stay busy. So acting now may give you some financial benefit as well.

For me personally, I plan to stay where I live for a long time. Even in this bad economy I have just made a major amount of home improvements including installing solar panels.

I think the only person that can answer your question is yourself. The answer will lie in the level of risk you are willing to undertake and the likelihood that you will be able to remain for enough years to see your homes value level off or rise a bit.

Ideally I’d like to give you a less ambiguous answer but as I said, this is more of an emotional situation than a financial one.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: Should We Payoff the House, Make Improvements, or Neither? – Nare

You visited a few times and I would appreciate your thoughts on this post, why not comment?

“Dear Steve,

Long story short: i have student debt from the mid-late 1980’s. after graduating, i ended up working in careers that helped people, but not myself (financially!). i deferred and defaulted, but finally consolidated and got back on track. i only borrowed $25000, but after all this time (and many years of payments) i owe $60000. this is really crazy. on my monthly statement it says the pay-off would be $67000, which is far more than i could ever afford.

Can this be negotiated? i have a benevolent relative who would help me pay this off, but together we do not have $67000. what are my options? in this economy i am hoping the dept of education would welcome any money!

Alexandria”

 

Dear Alexandria,

Yes, student loans are one of the nastiest debts you can owe. I’ve heard few, if any, successful negotiation stories with the government and private student loan collectors.

But the advantage is that if you have government backed loans and that gives you some options, including the IBR, Income Based Repayment Plan. It is a student loan debt repayment plan worth first looking into.

While in general student loans are no longer dischargeable in bankruptcy there is a difficult way to do it claiming that repaying the student loans creates an “undue hardship” on you. You’d need to contact a local bankruptcy attorney and discuss a Chapter 11 approach to doing this. If the bankruptcy attorney feels you have a chance at achieving this then that might be a reasonable approach.

It would be a mistake to allow your relative to invest money in a solution that would not resolve the problem. But if the local bankruptcy attorney feels the Chapter 11 approach for you has a shot then an investment by your relative might be a good investment in you.

The best plan of action would be to talk to the local bankruptcy attorney first and then pursue the IBR solution second.

Now you did mention that you worked to help others and that left you under-earning. If you worked in certain public service jobs your loans may have been dischargeable after ten years. See this fact sheet for more information.

To be eligible for public service student loan forgiveness the borrower must be employed full time (in any position) by a public service organization, or must be serving in a full-time AmeriCorps or Peace Corps position. For purposes of the Public Service Loan Forgiveness Program, the term “public service organization” means –

• A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges and universities);
• A public child or family service agency;
• A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code (includes most not-for-profit private schools, colleges, and universities);
• A Tribal college or university; or
• A private organization that is not a for-profit business, a labor union, a partisan political organization, or an organiza tion engaged in religious activities (unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing) and that provides the following public services –
  • Emergency management;
  • Military service;
  • Public safety;
  • Law enforcement;
  • Public interest law services;
  • Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kin dergarten);
  • Public service for individuals with disabilities and the elderly;
  • Public health (including nurses, nurse practioners, nurses in a clinical setting, and full-time professionals engaged in health care practioner occupations and health care support occupations);
  • Public education;
  • Public library services; and
  • School library or other school-based services.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Source: Debt Settlement and Student Loans. Will My Student Loan Lender Negotiate With Me And Reduce What I Owe? – Alexandria

You visited a few times and I would appreciate your thoughts on this post, why not comment?

Ashley wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty. If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help.

“Dear Steve,

I set up with Allegro Law through what i now know was a marketing tool The Credit Exchange. When I spoke with the credit exchange they told me they had millions of customers and specialized in my situation. I am a single mother who is losing her home since my fiance left and I did not want to take a full bankruptcy since I know I am responsible for my credit card debt.

We set up a payment plan and they told me it would take 17 months for my debt to be cleared. I was ecstatic that I could clear my debt and fix my credit in such a short time so I signed up right away.

I got nervous the following month when I had still not received anything in the mail from them so i called them. They told me not to worry they had already started contacting my creditors and my package would arrive soon. This is 5 months later and I have never received anything from them.
My first payment came out on May 5 2009 as a start up fee. The next month they it came out normal BUT the month after that they took it out 2 weeks early which bounced my account and cost me over $600 in bank fees. This left me with out a pay check for 3 whole weeks with was devastating. I spoke to Allegro Law and all they told me is I should have prepared better and did not even acknowledge that they took it out early. After being treated horribly by their customer service I decided to cancel. i sent in the paper work they needed to take me off but they still did not cancel my account. They told me they were in a processing hold and could not cancel me but would keep taking my money. I had the bank put a hold on anything from them and did not pay them another dime.

I finally got my account canceled in September…I originally canceled in July…and they told me they were not doing any refunds. I have almost $1000 into this company which I could have easily taken and used to pay off 2 credit cards but they will not release it. I have repeatedly tried to contact the new receivership but I am having no luck there either. I am currently being sued by my mortgage company and have been threatened by one of my credit companies to take suet.

I am really terrified and disgusted that a company would steal from their customers and cause so much turmoil in the end. All I want is to know if I am going to get any of my money back or if they have decided to eat it all away in fees for the last 3 months even though I canceled in July.
At this point I am looking into a full bankruptcy since this company has pushed me into it.
They should be ashamed of themselves.

How do I find out for good if I will get ANY of my money back. If I am not able to what action can I take to at least recover some of it and would it even be worth suing them for?

Ashley”

Dear Ashley,

I would suspect that you will not get a full refund when and if the court finally releases money from the Allegro Law seizure. Any funds to be refunded probably won’t be disbursed for a year or more. For now, I think all you can do is consider the money lost.

You brought up a very good point that I hear often. People decide that they want to launch on some debt reduction path, like debt settlement, in an effort to be responsible for the credit card debt they incurred. I understand that point of view.

But under the auspices of that belief, people do all sorts of silly and misguided things. Let’s take the debt settlement approach for you. In your life situation there was never an expectation that either you would be able to settle the debt, or that your creditors would agree to settlement offers. That left you open and exposed to escalating collection activity and lawsuits from your creditors as you redirected your payments to a third party debt settlement firm.

Responsibility comes in different forms. Some would say that the most responsible thing to do is to sacrifice everything and repay your creditors all that you owe. But I think there is another aspect to responsibility. It is just as responsible for someone to look at the situation for what it is and take some action that will remedy the situation so that all parties are treated in a fair, civil, and legally protected way.

A fact that eludes most people is that just because someone goes bankrupt does not mean they can’t repay their creditors to achieve their goal of fully honoring their debts. That’s what I did after my bankruptcy and boy was I surprised how my creditors actually told me not to send payments. But that’s another article.

Bankruptcy hurts your credit but so does not paying your bills to send money to the debt settlement company. But bankruptcy also prevents you from being sued, it ends collection activity quickly, and it allows you to get a fresh start. Using that “do-over” you can quickly rebuild your credit.

So in your situation we are faced with two issues. The first is the debt settlement mess and the second is how you are going to address the underlying ongoing financial mess. In my opinion you would have been better off going bankrupt from the beginning. It would have avoided all the pain and hassle you have gone through.

It is a shame that The Credit Exchange was not a bigger help in your situation. They appear to have just been a sales arm for Allegro Law and collected a marketing fee for selling you into the program. Allegro Law as you knew it does not exist anymore. Since being taken over by the court it is now just a different mess, not better.

Should everyone be ashamed on their actions and part they played? Hell yes. Even the court appointed receiver is doing a less than optimum job in my eyes. By the way, the Allegro Law court appointed receiver site is AllegroLawReceivership.com.

As far as suing goes, you could file a suit in your local small claims court and see what you’ll recover. Unfortunately I doubt it will be much, if anything, since the assets of Allegro are locked up by the court. It seems your only recourse would be to go after The Credit Exchange for the marketing fees they were paid to sell you into the program. That’s probably going to be an uphill and difficult battle.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big hug.

Steve
@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

Source: The Credit Exchange Introduced Me to Allegro Law. What Do I Do Now? – Ashley

You visited a few times and I would appreciate your thoughts on this post, why not comment?