Debt relief? Consolidation? Or just Screwed ? ?
Okay. I graduated college in 2006. I am working for the university and have a pt job. I had to buy a car (Living in LA, you must have a vehicle).
The car and student loans I can deal with. It’s the stupid credit cards that are causing me to drown… I can and have made ALL my payments and I am not late, but after all the bills are paid, I literally have $106 a week to live on.
So, to make ends meet I buy gas and junk on credit.
Here is a little break down of what I owe:
28K credit cards/personal LOC
17K student loans
9K car loan
TOTAL is approx 56 K.
I make about 35K a year, but I have to live, typically on Credit Cards.
I have looked into two companies (Nova Debt, and Freedom Debt Solution)
One of them (NOVA) said I could pay off my credit cards in 4 & 1/2 years by paying 700 a month. But all my accounts would be basically closed/frozen. Q: Would that mean my “credit” would not longer be good? Would it affect my credit score?
Freedom Debt Solution is a company that basically has you stop paying your creditors, then tries to negotiate with them to settle your debt for a fraction of the cost. Again, it would freeze/close my credit cards and wreck my credit.
Keep in mind, my credit score is good! I have never been late and I always make min payment plus $10.
I also live with family and pay no rent. I’d really like to be able to move out and on with my life. With the job market, it’s not looking good for me to find a new job anytime soon, tho I am looking.
I need help. I am totally open to questions, comments, concerns.
Steven
Tags: Debt Relief Consolidation, Nova, Tho
January 25th, 2009 at 2:55 am
You are way over your head and this will cause you stress.
Cut those credit cards now and don’t use them anymore. You are obviously living above your means. Maybe an on the side job to help pay quicker? Reconsider your wants and needs. Take advantage of the fact you live at your parents! When you don t have rent to pay and toilet paper and all a 35k job is quite decent!
Consolidation might be good for you. Those credit card interest rates are a killer. If you consolidate your interest will be lower. You ll have to check it.
One way or the other your credit score will be affected if you don t rethink your ways now.
Take care of yourself and good luck…hope you make the good choices.
January 26th, 2009 at 8:27 am
Why pay NOVA $700 a month when you can pay your credit cards $700 directly? Am I missing something here? You do realize that more often than not, you are paying more in the long run for relief now? Bad idea…you will lose money. Just keep hacking away at those CC’s and loans…find another part time job on the weekends if you have to.
January 28th, 2009 at 6:20 am
Have you really, and I mean really, looked at your spending and cut back all non-essential expenses like lunches at work, excessive cell phone expenses like ringtones, texting and such, nights out with friends, etc???
It may not the the easy thing to do but if you really want to get out of this, you have do to some deep searching.
Do you really need a vehicle to get to work? Can you park farther away from your job and save on parking and gas? Or use the ride and share program, or take the bus?
If you still live at home, are you helping out with the bills or not? If you are making 35K, you are taking home about 1700-2000 a month depending on your tax status, it sounds like you should be able to stay afloat.
I was in debt with 35K a few years back and making only 20K, but after making a budget and really sticking with it, I’m down to my last 5K and have even saved enough for emergencies.
Best wishes to you.
January 30th, 2009 at 10:41 am
Minimum payments on credit cards plus $10 on cards you are actively using will not even begin to pay off 28k in credit card debt. Your interest and new charges will leave you with an ever increasing debt load. Cut up the card and start a serious budget any person living with their parents should easily be able to surveive on $100 a week if they are serious about addressing their debt.
January 30th, 2009 at 6:07 pm
Whoa there, pilgrim; hold your horses!!! If you continue this way, your fragile subsistence economy will definitely implode. An item of interest is that you are thinking of recruiting an outside debt-management company to help you with this credit card debt . . . I actually did that myself to help with this Merchants’ Credit Guide collection agency which had been commissioned by the Everest Institute to recover an outstanding accounts receivable balance right when I was being held responsible for three student loans that had a combined value of $4.35K. Back in September 2008, I got a $500 windfall to finally pay off Merchants’ Credit Guide after several months of paying $58/month.
You should seriously consider loan consolidation as well. I had Wells Fargo buy my student loans away from Sallie Mae (a company that I hope you did not borrow money from because they are ridiculous with their view of the Federal Family Education Loan Program rules) and I am making headway in getting out of debt. IMPORTANT DISCLAIMER — these counter-measures are useless if you are just going to keep spending money you do not have, so abandon that practice!!! It is not how much revenue you have coming in; it is how that revenue is allocated that decides whether you sink/swim. You can do it. Good luck!!!
February 3rd, 2009 at 10:55 pm
Jane Y, Debt relief is a difficult problem many americans are now facing. Every legitimate debt relief service providers will consult with you for free. Try calling multiple debt relief services and ask them your questions and listen to thier answers. You will be able to determine which ones are providing good advice.
Good Luck.
February 6th, 2009 at 3:50 am
You have 3 different choices here:
1. Negotiated Debt Settlement
2. Consumer Credit Counseling
3. Debt Consolidation Loan
Except the loan, both, credit counseling and debt settlement, are going to negatively impact your credit. In credit counseling, you are paying a third party to make payments on your behalf, and in return the credit counseling firm is supposed to get you discounts on late fees and interest rates to “ideally” get the debt paid of quicker. These programs usually do not work, primarily because, no one agency has great relations ships with all creditors and more so because more than half of them were funded by credit card companies themselves. These programs can take anything from 4 - 6 years to complete.
Also, many of your future lenders and creditors are going to see that you enrolled in a credit counseling program, and are basically going to think that you cannot handle you finances well.
Negotiated debt settlement, basically saves your money in an escrow account and then makes lump sum settlement payments to each of your creditors ONE AT A TIME. I cannot stress that enough. Most people do not understand this concept, as while you are saving money, no payments are bieng made to the creditors. This will definitely impact your credit. But you have to look at it in a sense that you take this time to get rid of your debt completely, and you can repair/recover your credit after you have gotten the debts paid of. Debt settlement programs take about 18 tp 36 months to complete, so you are looking at a definite timeline to eliminate your debts.
Keep in mind that both these options will only work with credit card debts and not your student or auto loans.
The third option is to get another debt consolidation loan, but given your limited income and high amount of debt, I doubt that you will be successful in getting approved for a low interest loan for 25K (which is what you need to get all your credit card debt into one loan.
You can also try to consolidate your student loans seperately.