How to get out of debt?


#1

This is a very long story, so I won’t go into the details. I was wondering how does one get out of credit card debt? I know how to avoid it (now, after the fact), but once you are there, how do you get out of it?

My wife and I are in our mid 30’s, we have 5 children (#6 due in early December). We are a one income Catholic family and are on public assistance (food stamps, children’s health insurance, WIC, utility help). My wife is unable to work due to health reasons and since she is pregnant she is ill at this time so I do a lot more around the house, so as of now I can not work a second job. If I could work a second job, we would lose all our assistance. If that happens I will be working just to cover the losses there and then never home and we will still be in the same financial situation we are in now. I can’t afford to go to college ($13,000 in credit card debt). We are VERY close to no longer being able to make our minimum credit card payments. All this debt is taking a toll on me and I am unable to figure out how to stop it. We don’t make enough money, so we still use our credit cards (almost maxed out) to pay for gas, diapers, clothes. We don’t do anything for fun (can’t afford to). I don’t own a cell phone, I’m at the library as I type this.

We looked into consolidating our credit card debt and it will cost us more per month than what we pay now monthly for credit card minimum payments. I don’t know what else to do. Any advice (and prayers) would be very helpful. Thank you.


#2

I highly recommend that you go to www.daveramsey.com and find out if there if a Financial Peace University class near you that you can attend. It’s 13 weeks and teaches you how to get out of debt and stay out of it. It’s a VERY successful program run by a Christian man.


#3

** I will pray for you!

My husband and I live off of his income and I have health issues that prevent me from working. We have been one paycheck away from losing our home in the past. I know how stressful it is. And you have 6 children to worry about. We didn’t have any at the time.

I pray that you can find a solution. My parents recently went through bankruptcy after years and years of trying to get their heads above water… can you go to one of those non-profit credit counseling firms to discuss your options?

Also, I don’t know the nature of your wife’s health issues, but can she get a disability pension/assistance?

My husband is in the same boat as you as far as having to take over the household responsibilities at times as well as work full time. It’s hard. Again, you have my prayers…

Malia**


#4

Honestly, we filed bankruptsy two years ago. We should have a long time ago but I wanted so badly to try to pay it off on our own. We were getting no where even though we hadn’t used any of the credit cards in three years. My husband was working his tail off and all the money was getting sucked into paying just the interest. Between him having been laid off for several months without being able to find work and my health keeping me from working more than a few hours a week we were sinking fast.

Finally after a guy from one of credit cards companies said we should file for bankruptsy, that is was there for people in situations like ours, we sucked it up and found a lawyer to begin the process. Really I wished we had done it sooner. Being out from under the wieght of all that debt was a huge relief. We no longer have any credit cards (and I won’t apply for any even though applications come almost daily) and we actually have a pretty good savings account for the first time in many years.

I did have to borrow money from my dad when our 13 year old car kicked the bucket last year in order to get a new (well new used one) but we’ve been paying him back steadily as well.

I know I really felt like a loser for filing for bankruptsy but walking out of the hearing knowing we were finally free was the best feeling in the world. We now only buy what we have the money for and we don’t have it, we don’t buy. I never, ever want to get in that position again.

I will pray for you and your family, I know how stressful it is.


#5

I’m sorry you’re having financial problems…but, truly, you are doing everything you can to provide, and that is truly commendable and you both sound like awesome parents…congrats on #6 coming along soon! I would say that you would be a candidate for bankruptcy, because you truly did not cause the debt, so to speak…it’s not due to irresponsibility. It’s due to just not being able to ‘make it’ anymore. That could be a possiblity…and there are also debt consolidation companies that help people in dire need, by consolidating all the debt into one payment.

I will keep you in my prayers.


#6

I was hoping Rayne would come with her very positive bankruptcy story!:thumbsup:

The only thing I can add: Nowadays, before you can file, they make you take a basic class in finances, setting up a budget, and the types of help available to you. It usually cost about $50, but is well worth it. Some local credit counseling services offer it for free, and there is a way to take it online. It can be very enlightening, I am told. The book that came with it seemed that way (I read somebody’s). This is just to let you know that if you do choose bankruptcy, you won’t be walking into it not knowing anything about it, or how it works.

Phil Lenahan offers financial counseling and suggestions similar to Dave Ramsey, but from a Catholic perspective. If you’d like to take a look over there first, he’s at veritasfinancialministries.com/. He’s got 7 kids, so he’s got you beat by 1.

December babies are nice. I was a December baby!


#7

I highly recommend conslidating your credit cards and pay them off with a line of credit/loan. We did that and got a great rate and it saves us hundreds of dollars a month.

Two years ago I believe the bankruptcy laws changed and I know its been made a little tougher to get a chapter 7 now than a chapter 13.

Are you getting TANF? Remember you can only use it for 5 years in ones lifetime. I’d also look into the SSI payments if your wife is disabled and cannot work.


#8

Thank you everyone.

What is TANF?


#9

Talk to someone who can help you assess your financial situation and determine if you can pay your cards off yourself with a structured plan, pay them off through a debt management plan with a credit counseling agency, or if you are insolvent and bankruptcy might be on the horizon.

Contact a credit counseling agency through www.nfcc.org. They can help you establish a budget and give you an assessment of your situation. I know several Catholic Charities throughout the country do credit counseling so you can check your local Catholic Charities too.


#10

I cannot recommend Dave Ramsey enough. With the issues you described, you should start with Financial Peace. I’ve never taken the classes but have heard they are good. The book will walk you through how to take care of these debts. You can do this and you will feel great when you can say, “We’re debt free!!!”


#11

Temporary Assistance for Needy Families. You can ask your case worker about it.


#12

This is such good advice. Don’t just rush into bankruptcy if at all possible. It is tougher now, and will follow you, on your credit report, for years.

Get credit counseling from a non-profit, first. Often, your payments can be negotiated downwards in a way to save literally hundreds a month, without a big hit on your credit file. Looking into SSI disability is good advice, as well, if your wife’s health prevents her from going back to work.

Perhaps she will be able to look into doing something from home to generate a little income (difficult, I know, with little ones…)

I am praying for you; there is help out there, and you have gotten some excellent advice from these good folks on the board.

God bless!


#13

Check your local credit counselors. They should be non-profit. They will renegotiate your interest rates for credit cards and you will make affordable payments. Watch for scammers. Maybe check with Better Business Bureau.

Do not purchase, but check your library for financial books by Suzie Ormon. One I know is “Nine Steps to Financial Freedom” Also, there is a new one specifically for women and money. She also has a TV show that is full of useful info.


#14

I love love love Dave Ramsey - he is awesome. Seriously go check him out on the web, on the radio, or in books at your public library!!!

Its not only for you - but so that you can start a new chapter in your life for your children. They need to learn how to get out of credit card debt, take responsibility, and get off public assistance. I know you can do it - but it will take time and a lot of hard work!!!

Vester


#15

I feel your pain. I’m in debt up to my eye balls with nothing to show for it. All my debt is car and cat related. I need a car for my job and I need my job to eat. I had to spend thousands on my car this summer to get it licensed. Well that ate my savings in a minute not to mention a cat with health concerns who needs special food, meds and had been to the vet about 10xs the last 2 yrs. I’m also working an extra job but things have slowed to a point there where I’m considering geting a third job for the holiday season. Anything I save get swallowed up by emergincies right away.


#16

I don’t think this would be an answer from a priest or the Church but here is what I suggest.

  1. Take a look at your debt and deciede which debt you still need. (ie: car loan and mortagage would still be needed)

  2. Then take all the other debt, such has unsecured credit cards, and don’t pay them. Nothing zero do not pay.

  3. Start saving money, as much as you can possibly afford and still maintain your family’s health. You’ll have money because you are no longer paying your debts.

  4. After a while the credit card companies will discharge your debt to a collection agency. The agency will buy your debt for pennies on the dollar.

  5. After you have a little nest egg saved start negotiating with the collection agencies to pay off your debt.

Example, you have a $1,000 credit balance. You stop paying and over the next 6 months you save $700. The collection agency calls and demands $1,200 to be paid in full. You tell them you will send in a check for $700 today if they agree to mark the debt “paid in full”. They will agree every time.


#17

Is there anything you can sell? My husband and I are getting out from behind 45K in debt. We have been able to cut that in half this past year. We give every extra dollar we can to pay off debt and have been selling all sorts of stuff on ebay to make it go faster. We did start with the smallest debt first and have been working up. We only owe 1K on our car and once that is gone, we can hit our 10K credit card hard. Not sure in your situation how much is left over after all the minimums are paid how quickly it can be done. Call Dave’s show! He has great advice.


#18
  1. Take a look at your debt and deciede which debt you still need. (ie: car loan and mortagage would still be needed)
  1. Then take all the other debt, such has unsecured credit cards, and don’t pay them. Nothing zero do not pay.
  1. Start saving money, as much as you can possibly afford and still maintain your family’s health. You’ll have money because you are no longer paying your debts.
  1. After a while the credit card companies will discharge your debt to a collection agency. The agency will buy your debt for pennies on the dollar.
  1. After you have a little nest egg saved start negotiating with the collection agencies to pay off your debt.

Example, you have a $1,000 credit balance. You stop paying and over the next 6 months you save $700. The collection agency calls and demands $1,200 to be paid in full. You tell them you will send in a check for $700 today if they agree to mark the debt “paid in full”. They will agree every time.

I am sorry, but does anyone else think this is just wrong? I mean, if you borrowed $1000 from someone and only repay $700, you still owe them another $300 and not paying that is dishonest. At least it seems that way to me. That is someone else’s money you are stealing from them.


#19

if you do not cut up credit cards and stop using credit you will always be in debt, it will get worse every year, you might undergo bankruptcy but will be in same position a few months later.

no credit cards means if you can’t afford it you don’t get it and yes, that also means necessities such as food, clothing and medical care. public hospitals have to take you for emergencies, and the church, Catholic charities and other agencies can help you with prescriptions, mommy and baby care etc, but basically, it is called being poor, but it beats being poor and in debt.


#20

Please, Please do not get you CC discharged from the Credit card companies. Depending on what state you live in it will show on your credit report for 5-15 years. Even if you get the collection agency to have the debt “paid in full” this doesn’t help improve you credit at all.

If you negiotate with anyone, you can try the credit card company first. It will show up on your credit report that you settled with them but thats better than having a discharge on your credit report.


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