[moonmadman]

My daughter has recently come to me for advice. She is 27 yrs old, a single mom and has a good steady job. She, over the last 5 years, has aggregated $19,000. Worth of debt on two credit cards. She tore up the cards two years ago, and has been paying, as agreed with the card issuers, $100./mo. Every year her balance goes up $1500.
She owns no property, has no assets except an old Subaru and is now being harassed by
Collection agencies. Her credit rating is terrible at best. I don't know anything about bankruptcy, except that it hurts for a decade.
This girl is beside herself with the weight of this debt. It seems to me that if one were to declare bankruptcy, this would be the time.
Advice, please?

[NadiaT]

Bankruptcy laws have change a lot and it's not in your benefit so please do not consider that option. Your daughter's debt is not a lot so bankruptcy shouldn't be consider. Since your daughter does not have any assets she have an option of contacting a debt negotiation company which will help your daughter send letters to collection companies to stop all collection calls. She can save at least 40% - 80% of her original debt. During her time with the negotiation company all she have to worry about is saving money each month, same amount every month, no late fees, no interest. They are able to work with your daughter regarding her financial situation. As for the service fees, yes they do charge you, it depends on which state you're from, they are limited to charge their clients certain % or set amount. After negotiating all her debt some company can help her fix her credit or she can go research online to learn how to fix her credit herself. Hope these information help you.

[ScottGem]

The first thing she needs to do is establish a budget that includes higher payments on the cards so she starts paying down the balances instead of having them build up.

[moonmadman]

Thank you both for your responses. My daughter has already contacted two debt consolidation companies and they have responded by arranging for her to make $600./mo.
Payments towards the debt. Problem is that she only has $300./mo. To spend on food and utilities, after rent, childcare, health insurance, etc. Making larger payments towards the debt is not possible, and this was not a viable solution.
What's so terrible about bankruptcy? It seems only degrees away from her present credit
Disaster?
Thanks again (in advance)..
Any personal stories out there?

[Fr_Chuck]

Well then she does not have a "good" job, she has a steady low paying job

And no bankruptcy is not the end of the world, and if you owe almost 20 K with no assests and the such it is a very good maybe. There are requurements that you have to work with a court approved debt couselor first. And there are two types. Also there are income restrictions on bankruptcy but she should be OK with that.

But I guess why are debt colletors calling is she is paying what they asked for ?

Take a trip to an attorney, most will offer a free first meeting to explain what it can and what it won't do. Often your credit is no worst than having nothing but negative on it anyway.

The most important issue is not to be in that problem again. She also needs to try and plan on finding a better job if that requires more education or what ever to be able to better provide for the family.
Also is she getting child support, if not, she should have him in court.

[moonmadman]

Thank you for the good advice. Just to clear up the issue, yes, she does receive child support, which goes specifically towards the child's needs. It is not enough to assist with the other expenses.
RE: the phone calls from the collection agency, it is both me and her mom that have been badgered by these guys, which is how I became aware of the problem. They apparently figured that if they were obnoxious enough, they could shake the tree and see what falls out of it. I threatened a harassment suit and they disappeared.. (we are not co-signers or share the daughter's debt in any legal way).

Well, I guess I will call the attorney tomorrow.
Wish me/us luck and thanks again, all...

[NadiaT]

And no bankruptcy is not the end of the world, and if you owe almost 20 K with no assests and the such it is a very good maybe. There are requurements that you have to work with a court approved debt couselor first. And there are two types. Also there are income restrictions on bankruptcy but she should be ok with that.

I would like to response on your view regarding bankruptcy. First, the record of the filing is public records and will be on your credit report for at least 7 - 10 years depending on which chapter you filed and CANNOT be repair or removed by ANY credit repair company. Second, you would have to spend time to meet with a counselor that's "certified" by the bankruptcy court, I think the time is around 1-6 months or something like that. Lastly, I would not recommend anyone to file bankruptcy by themselves and so does the court. Attorney are required for filing, as far as I know, which I have to mention that he/she have to declared that he/she have knowledge of the information on the filing is correct and true. The result of that is he/she will charge you more than they would charge you prior to the change of the bankruptcy law. If you missed file any of your debt or any information are incorrect the creditor can come back after the case been discharge and request to collect the debt. I haven't even mention about the income requirements... :eek:

Like I said earlier debt negotiation is the best result to my opinion. After that, fix your credit report. Worst come to worst, for a 20k debt, it would take about 24 months to save up for the debt and paid for the service fee at the same time. My estimate would be about 400-500 per month. My estimate that you would have to pay about 40% of the debt back to the creditors.

Note: Debt NEGOTIATION & Debt CONSOLIDATION are NOT the same program.

[Fr_Chuck]

Yes, it does stay on your record, but so does bad debts you are paying on but late and not enough, So the bad credit is already there.

Next there are online programs that are available and if they review it and there is not enough money in the budget to pay, they will not keep you in the problem, I know dozens of people that are released the same week they send in the finicial info, and the attorney knows it and is already working on the paper work.

And of course attorneys are not needed for filing, they make it easier, and I would advise using one, but a person is still allowed to either fill the forms out thierself or use a paralegal. I have known several people who have filed their own and in one case the judge told them that their paper work was better than most of the attorneys paper work that comes though his office.

And of course if this poor lady is barely paying rent and child support she has nothing to worry about in the income issues, and with chapter 13 there is no income issues. And normally a case is not dismissed, but the paper work is merely refiled unless some fraud was done, and addition debts forgotten at original filing can be added by filing the proper paper work. Dismissals are not common and even when they do, seldom unless some fraud was done, they can merely refile the paper work correctly.
** of course if an attorney is doing it, there should not be incorrect paper work should there?

And like they said, they don't have 500 a month to pay,

And most negotiation does not work well till the debt is not being paid at all and there is a year or two from the last payment, The longer unpaid the better chance to negotiate a settlement.

I am sorry but often bankruptcy is a good way to give a person who made some seroius mistakes but has learned a new start, It is still available, and still not that hard to be approved.

From your scare tatics on it, can I assume you work in the debt negotiation business?

[NadiaT]

Sorry I don't work for a debt settlement but I went through that situation and was researching online for other options. I Negotiate my own debt one by one until it's all clear which is this past July. I'm having my credit report disputes upon my own knowledge and other experience. I spoke with a lot of debt negotiation companies in California and did my own research on that option. It worked for me. I'm not trying to scare anyone but giving anyone the information who might need it. I don't get anything out of it. Hehehe for me bankruptcy wouldn't work because I need to help my family with the loan they have to re-finance soon.

[moonmadman]

Thank you Nadia..
I am glad that your hard work and determination has paid off.
Good luck.