Oh and in regards to people saying that the companies don’t do anything you can’t do yourself…When it comes to getting your bills paid, yes you’ll still be responsible for sending in the money but they can and DO reduce your interest rates and payments with companies because they work directly with the company. If I remember correctly, when I first started out, I had to make my full min. payment for all my debts on time for 2 months as a sort of good faith commitment. After they saw I was serious about getting my debt paid, they worked with the debt counseling company and agreed to lower my interest rate and my min. payment.
I know people have bad opinions about these companies and I know there are quite a few out there perfectly deserving of these bad opinions but really, some DO help you out a lot.
If they are government loans with a low interest rate, defer or reduce your student loan payments as long as possible. This is your cheap money.
Pick one of your credit cards (with the highest APR) and concentrate on paying it off. Oh ya, cut it up first and throw it away. Once it’s paid off, pick your second credit card and do the same.
Use a debit card to buy gas. Never use your credit card unless it is an emergency, and then set aside the money and pay it off that month.
Move to cash only. You want something that’s not an essential food, clothing, shelter or job related, save for it.
Maybe what you did wasn’t an orderly repayment of debt schedule, Aunt Flow, but it really sounds like one, and they do hurt your credit rating (I discussed this with my local non-profit, Credit Counselling Services of Alberta, when we were massively in debt and really struggling). Rules on things like this may be different where you are, and you know better what you did than I do, of course, but I don’t want SweetHomeColorado to take a chance with his credit rating that he doesn’t need to take.
SweetHome, I received your email, and while your debt situation is serious, it doesn’t look hopeless at all. I’ll send you an email with some ideas and suggestions.
Yeah I think I know what you’re talking about. It’s always good to look into situations like what I did and make sure you ask the right questions. I don’t think it was anything as official as what you’re describing though. But hell, it’s been five years since I did that and I’m not known for my good memory in the first place!
I did an orderly repayment of debt (in Ontarian, a “consumer proposal”) through Credit Counselling Services in Ontario, (well, actually through a trustee they referred me to) and I was told that it was basically a choice between that and declaring bankruptcy: my credit rating was already crap. I had hit the stage where the increase of debt due to compound interest was outstripping my ability to pay.
Bankruptcy has additional restrictions, such as sale of assets. I chose the consumer proposal. It took me almost five years to pay it off. I still can’t get most consumer credit, though, except if I want to go to those payday loan places.
And a mortgage or car loan is, I expect, still out of the question. I haven’t checked–I’m a little reluctant to. At least I can get (and have gotten) a prepaid Mastercard for when I want to use that method of payment (mostly online).
Things just require a little more planning and patience.
I’m saving money, too.
This is what the other side of surviving a debt crisis looks like.