7 Responses to “HELP! out of control debt, what should I do?”

It sounds like you are already working hard to get your finances straight. Don’t go to a consolidation/counseling service. They are all scams; you have the ability to pay this off by yourself. Try selling the car and some other things for extra cash. When you sell your current car, buy a cheaper, used car. You should also consider taking a break from college until you get out of debt. Education is a great thing but never worth getting into debt. Good luck.

Left by Debt Slayer on January 12th, 2010

1. have you called the cards you are behind on to see if they do any type of in house hardship programs? I used to work as a debt collector for a card company, and once you were 30 days late, we had hardship programs, which would drop your interest rate to a low 6%, and you could start making low monthly payments as long as you gave us your checking info to make the payment automatically.

2. If your cards won’t or don’t do that, see if you can qualify for a Get Out of Debt Loan. Not a lot of places do these, but the ones that do offer a 12% interest loan to pay off all but your student loans, and this will help you by only having to make one payment.

3. If you can’t do any of the above, you should go through a Consumer Credit Counseling agency. Pick one that has a good reputation by researching them through the Better Business Bureau and get some referals from their customers. This really is not a terrible option, as they then will work with the creditors that won’t help you directly, and you’ll only have to make one low payment to them, and they’ll send it to your creditors for you, and they’ll normally drop your interest rates, etc. Sometimes they can get some late fees reversed which will help you get caught up too.

4. If the worst comes, you file bankruptcy, and the only thing you’ll have left is the student loans which are not able to be claimed under a bankruptcy.

good luck.

Left by ALFimzadi on January 14th, 2010

What you need to do is debt stacking. Essentially, you need to free up cash flow. Right now you are making a bunch of payments to creditors. You need to focus on one balance and pay it down, while paying the minimums on the others. I would focus on small balances first regardless of interest rates. Then focus on the highest interest rate balance. See if you can consolodate the debt to one card, or two cards. Then pay the minimuns on one while accelerating the debt paydown on the other. Now you said you were past due, does that mean you can’t afford to make even the minimum payments? If so, you really need to look at where your money is going and try to free up some cash. You’ll be suprised if you take all your bills and your income and compare them, the resulting difference is unaccounted money. That is what you have to focus on. Make sure you know where every dollar is going and find alternatives to spending. You dug yourself a very deep hole, unfortunately the only way out may be to live like a pauper for awhile.
Debt reduction programs will ruin your immediate future, I wouldn’t do them.

Left by Ryan M on January 17th, 2010

First, I congratulate you for acknowledging your mistake.

Yes, spending more than you can afford, or to live a lifestyle beyond your means will lead to debt up to your eye-balls.

I have to say, you’re not alone! Many people have the same problem you do. Heck, I did, and I’m still having to pay off all this debt I incurred when I was spending foolishly a few years ago. Although I am getting a better handle of the cashflow, I have dug a big hole to climb out of, and it’s a very long and painful recovery. Trust me, I know how it is.

Yes, you do need to expand your means by getting new sources of income. Getting odd-jobs will help. But you also have to reduce your spending. Cut back on a lot of extras. Stop spending on things you can’t afford.

Then, let your creditors know that you are in this current situation. Make a plea to stop the interest on the credit cards, and tell them you will pay them x amount every month.

Here is a simple debt elimination plan: start with the smallest amount. You need to get an extra $50 to $100 a month over your monthly expenses to get through this. First, write down all the balances on all your cards and debts.

Example:
Card 1: $500
Card 2: $750
Card 3: $1000
Card 4: $1500
Personal Loan: $2000
Car Loan: $5000

So, start paying off the lowest balance card (Card 1), and pay minimum on all others. Pay an extra $50 or more on Card 1 above the minimum payment. When Card 1 is paid off, close the account. Then, use the freed up cashflow to pay off Card 2. Repeat the process until all debts are paid off.

This is going to require you to change the way you live and spend, and you will have to make tough sacrifices and tough choices.

I joined a network marketing company to get some extra money on the side. But it all depends on YOU on how hard you are willing to work to make through this tough situation.

Good luck.

Left by Think Richly™ on January 20th, 2010

It depends on how much credit card debt you owe. It’s really important that you pay off any overlimit amount because they’re charging you fees for that, which is only compounding the problem. If it’s within your means to pay your cards to within your credit limits, do it as soon as possible. After that, focus on one debt at a time, making as high a payment as you can on that one and paying minimums on the rest. It’s really important that you make your payments on time so you’re not hit with more outrageous fees. Don’t cut up the cards when you pay them off, cut them up now so you’re never tempted to use them.

If you can’t do that, then you need to consider getting a debt consolidation loan. That way your cards are paid and you’re not paying the ridiculous fees anymore. You will pay some interest on that loan because it’s a high-risk venture for financial institutions, but at least you’re not paying hundreds of dollars in interest and penalties on your credit card accounts.

You might consider selling your car, too. Just don’t do it if you owe more than it’s worth. If you owe less than 75% of your car’s Kelley Blue Book value (as a trade-in), trade it on a less expensive and finance it at a lower payment. You can also refinance your car. If you’ve been making payments for, say, 18 months and you’ve paid off some of the balance, you can finance the remaining balance with a different creditor starting over again at 48 or 60 payments. It will lower your payments significantly and free up some cash to help with your other debts.

Also consider cutting unneccessary things from your lifestyle. Get rid of the cable and the high-speed internet and get a library card. Eat in and carpool to work. Buy your clothes on consignment and do your own hair. There are a million ways to cut corners. Just keep telling yourself it’s not forever, it’s just until you get out of debt.

Left by Rachael on January 22nd, 2010

visit daveramsey.com to learn ur hard lessons from others mistakes.

Left by robert w on January 23rd, 2010

you should talk to a credit counselor–i went with Debt Counseling Corp–i had 11 credit cards and super high interest rates. they lowered my interest, my payments and consolidated all of them into 1 payment–it was great.
call them and see if they can help

http//:www.DebtCounselingCorp.org

Left by Blondie on January 25th, 2010

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