Embarrassed to be here but want help...
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| Sat, 06-18-2005 - 11:29pm |
Hey everybody,
Here's the whole situation, and I admit it is all a mess... When I was 18, I got a couple credit cards, defaulted on them, and ended up having them be charged off, or settled with them by paying them off in installments. I got a couple crappy credit cards, made payments on time, and within a couple years, I cleaned up my credit to fair enough I got a decent credit card... Well, then I met my husband. He's no smart cookie when it comes to money. I was starting to be overextended, fell madly in love, and just ignored every bill and let it all go to he**. EVERYTHING went into default, my new good credit card, my school loans, my other credit cards, my utility bills, and on and on.
Fast forward to life 4 years later, since I 'ran away and got married' I have yet to confront any of these bills. And to make it worse, I am the only breadwinner in the family right now (bad circumstances) bringing up 2 kids and husband too. We are scraping by, by the skin of our teeth, paying cash for everything and thanking God that the cash comes out 'just right.' Well, the creditors are starting to track me down. They are starting to call, and drive me nuts. And I am just ignoring them, cause I don't have a cent to give. We are literally scraping by.
About 3 months ago, I applied for a bad credit credit card. Well, I was 'accepted' and am not charging anything on it, just paying the minimum payments (its only got a $250 credit limit and due to the initial fees, its pretty much maxed out). I want to establish that I am trying to be better. Well, I was also accepted for another low-income credit card just a couple days ago. This one does

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Was just wondering Kathy...Your website says:"
Let us introduce ourselves a bit, and a couple of pics of the baby to be...
First of all, we have been married since December of 2001, and are truly best friends. We just bought a new lakefront house that we have had so much fun decorating."
http://members.tripod.com/katyglover-ivil/index.html
Hello Katy and welcome to the board.
All my best,
Danni
Hi Katy,
Welcome to the board. Sounds like you are really struggling right now and could use some moral support, as well as some real help figuring out your mess.
First of all, I strongly recommend you *not* apply for any further credit, no matter what, and not use the credit cards you have, no matter what. I understand you really wanted to show your good payment history, but having one recent card that you pay on regularly means nothing to a potential creditor looking at your report and seeing charge-offs, collections, and no-pays on all your other (older) accounts. They care more about your long-term relationships with cards than your recent actions in a new card relationship. And I know it's not what you want to hear, but they are not going to look kindly on new credit cards opened and almost instantly maxed out, even if it is with fees (which, by the way, you can hardly afford from the sound of it). In fact, it makes me really angry with the cc company that issued you the most recent card, because obviously they've worked hard to convince you that it would be good for your credit to do this, and I can assure you they are *not* acting in your best interest. If it's not too late, I would call and cancel that card and all the fees they've charged you, if you can (check your card member's agreement, there may be a grace period during which you can back out of the contract without penalties). They won't want to do it, so you'll have to stand firm and insist. Know your rights (read your cardmember's agreement and search the Internet for applicable laws).
What *will* help your credit rating at this point is to get caught up on the old cards and start paying them down. I know that's not what you want to hear. But if you keep running from them, they will eventually catch up to you. Garnishments is only the beginning of the headaches and heartaches they can cause you. The only way to win this battle is to turn and face what you fear.
Your first step will be to pull your credit report and see what is really going on--how many accounts you have, what their balances are, and what their statuses are (charged off, in collections, etc.). You may be unpleasantly surprised to discover that many of your balances have gone off the charts--when accounts aren't paid, creditors tend to start charging fees out the wazoo, and they can sometimes more than double the original amount of the debt.
Once you have done that, you need to sit down and work out a spending plan--including every penny you spend on utilities, groceries, etc. Search the archives of this board for advice on tracking spending, budgeting, and spending plans for detailed instructions, or check out some books by one of the many excellent debt authors--Mary Hunt, Jerold Mundis, Suzie Ormann, etc.
Once you've done that, you'll have a clearer idea of the difference between how much money you bring in and how much needs to go out. You somehow need to find a way to carve out enough money to start paying the debts. You may have to get creative. Either cut back more (look for ideas on this board for cutting spending in creative ways--from groceries to utilities, someone here has ideas that will work for you--or check out Amy Dascyscyn's excellent work "The Complete Tightwad Gazette" for radical ideas for building a wealthy lifestyle on minimal income), or find a way to bring in more, or both. You might consider a part-time evening job, cleaning houses for friends, odd jobs, having a yard sale, etc. Again, this board yields lots of ideas for raising money quickly, as well as ideas for bringing in additional income.
None of this is easy. Believe me, I know. We were once behind on all our payments, indebted up to our ears (far more debt than it sounds like you have--I'm talking more than 30k at its worst, and that's not counting car and home), with less income than expenses (our annual income was several thousand dollars less than our total cc debt burden). We sold lots of stuff, moved from house to apartment, refinanced our car, and I got a part-time job at night waiting tables at a bar--icky work that I hated and that took me away from my children for a while, but it got the bills paid and got us in a position where we could start to build wealth instead of constantly treading water.
It's hard work. It's slow work at first. But if you can pull together and do it, you will be so proud of yourself. And imagine the feeling you'll get from having faced your fears and tackled them, instead of letting them rule you. :)
The plan I've outlined is merely a sketch. You can find lots more detail in any of the wonderful books by the authors I mentioned (Dave Ramsey is another), and feel free to keep coming here and posting questions for specific steps of your process and making it work for your particular circumstances. This is a great board full of supportive, resourceful folks.
I hope you find a solution that makes you happy, and enriches the lives of your loved ones as well. You have beautiful children, by the way. Now that's something worth fighting for. :)
Blessings,
Heather
So, that's what I would do. If you had extra $$ at all, I'd recommend chipping away at the debt, but it doesn't sound like you can do that right now.
Just some clarification on what debtsucks is saying - after 7 years, these accounts are to be removed from your credit report.
All my best,
Danni
Hey everybody,
Well, I did it. I pulled my credit report... It is AWFUL. BUT, not enough to warrant bankruptcy. I will be getting together with the 'main' creditor and working something out, and then it will be done. A lot of the bills are charge-offs. Which of course, is terrible, but with time it WILL get better. I am glad I didn't seriously consider bankruptcy. It would have been the wrong thing to do. Getting the nerve to pull my credit report was THE RIGHT thing to do. I faced my fears, and feel a lot better.
Yay, you! I'm so proud of you! It's a hard first step, but you did it. Remember this feeling of power the next time you're tempted to stick your head in the sand. I've been on my debt repayment journey for three years, and I still sometimes want to stick my head in the sand, lol.
A quick note about charge-offs. Although a charge-off means that the creditor has decided that they are unlikely to collect on the debt, it does *not* mean that they *can't* or *won't* try at some time in the future. It is still possible, for instance, that they could sell the debt to a collection agency that specializes in old debts, and that that company could then come after you. It's also possible that if they've lost track of you, but then manage to find your contact information somehow, they might renew efforts to collect.
I think it is wise to focus first on the accounts that are still actively trying to collect, but don't completely ignore the charge-offs either. In fact, once you've worked something out with one creditor and gotten one debt paid, it might be worth your while to work out a settlement with the charged-off accounts. For instance, if you have a lump sum that is perhaps 20% of the total you owe one charged-off account, you could call up the company and offer to pay them that amount all at once in exchange for having it taken off your record all at once. This is called a settlement and if done carefully, can be a beneficial thing. Just make sure, before you do it, to get some specific advice on this board for it, because there are lots of potential pitfalls. At any rate, one way or another, you'll probably have to face those charged-off accounts as well, but they can probably wait until you've tackled the active accounts.
Anyway, I'm glad you're here, and I'm proud of you for the hard work you've already done. Keep coming back!
Blessings,
Heather
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