Okay, okay, so bankruptcy is not the best solution. I was trying to be a little sarcastic last night, but reading it now I can see that it doesn't look that way. However, I still stand by the claim that bankruptcy is a possible solution, definetly not the first, or second, or third, but's still there. I stand by the claim that it ain't as bad as it used to be. For example, 2 out of the 5 people we rent houses to were bankrupt. Through discussions with them, it seems that times now for them are much better than before. Their lives didn't end because of it, and they're working hard now and doing okay. I know this ain't scientific proof, but it just seems plausible to me. So if you're knee deep in debt, and there's no way out; and you might still be paying back loans for the next ten years, then why not. There, I hope this modifies the answer a little and I stop coming off sounding like a crazy dumbass with bad advice.
Kim, I don't think you are crazy. Bankruptsy can be a big help to people trying to get back on their feet. I just don't think it's a good solution for Gascon. I was in the same shape after college, with student loan, car payment, credit card bills stacked up, and general living expenses that add up. It just seems overwhelming, especially right out of school when you are earning a starting salary. It should get better, especially since he recognizes the problem, and has time to bite the bullet and fix it. But all bankruptsy would do of Gascon is cancel out one credit card, and leave him with bad credit and no car. The student loan (assuming it's a federally subsidized Stafford loan or something similar) won't go away, and will get worse. It sounds like he's kept up with everything but the one credit card. Bankruptsy is genrally for people in bigger trouble. You may be able to provide examples to help Gascon feel better -- because he's not in that bad of shape, even though it feels like it. Many people don't recognize the warning signs until they are forced to default on BIG debts, like mortgages and car loans, or have credit card debts in the 5+ digit range. Gascon, one other possible help, though I don't know your personal situation. When I was in that same boat, feeling very discouraged, I did suck it up and went to my parents. My dad didn't take care of the bills, and I didn't ask him to. He did give me enough to take the edge off of the credit cards, and they did little things to help me out like invite me to eat more and the occasional grocery store trip with mom. It also helped to know they were there for me, and I wasn't alone. I had to learn the lesson, and they knew that. But, they understood -- and most people go through a money crunch at least once in their lives. They didn't want me to suffer too much. It's a tough lesson to learn, but if you work to fix it yourself, you'll feel good about it, and you'll never put yourself in that situation again. ------------------ Stay Cool...
Surf, This is kind of embarrassing to talk about, but I don't know how those people get away with it. Personally I was found out be an employer. Get this, (it was a very white collar, investment firm on Wall Street), I had been working for them for three years. They instituted a new policy in their background checks which required, not only a criminal background check, but also a financial background check. They found out that I defaulted on my loans and fired me on the spot! Hence, I bit the bullet and finally arranged a payment plan with a bank that had bought my loan. Actually it turned out for the best. Before I would have been laughed out of the door if I had tried to apply for a home mortgage. But since I have been in good standing for the past 4 years, I was able to recently get approval for a loan. I'd like to know how those people who defaulted on their loans were able to do this? ------------------ 'Deeds, not words, shall speak me.'
I am pretty sure student loans are the one type of debt bankruptcy doesn't wipe away your obligation (on second thought this might be true for legal obligations like palimony). I don't think you can get around not paying your SL unless you want continued credit problems (even 7 years from now--which applies to debt of to credit cards, or 10 years form now--which is what I think how long bankruptcy shows up on your credit reports), so I would think making steady SL payments a top priority. Besides, you can probably deduct the interest (making the effective interest rate really, really low) and probably can negotiate a relatively small payment per month. So plan to make the minimum payments for your SL and focus your strategization (many approaches have been suggested) on other debts especially those with high interest.
I just want to thank all of you for responding so quickly...and seriously. Jeff, I'm going to take your advice and talk to the credit card company. I've put myself in this hole, and only dug it deeper by thinking that it'll just work itself out at some point. I've been far too complacent, and far too irresponsible with my money. Time to bite the bullit. It'll be hard for a while, but I should be able to manage. I just need to stop acting like I have money when I don't. It's the little things that kill me. I have a couple of other credit cards...don't worry, I'm doing okay with those....but I constantly catch myself thinking, "Oh, this is only a small purchase...no big deal...I can pay that off no problem." But after several of those "small purchases" I've got a big debt. I've been too irresponsible in keeping up with my spending, and I need to stop it before it gets worse. I'm in the process of moving right now, and I think my credit cards are going to get conveniently lost in the shuffle. Maybe stuck in the back of a box in the back of the closet that I have no desire to open. It makes me sick to my stomach to think that I can be so weak about something like this, but I need to admit to it instead of deny it...which has only gotten me into more trouble. Thanks again, everyone. I really appreciate all of the good advice. Even Kim's bankruptcy posts. ------------------ Sometimes I think I'd be better off dead. No, wait, not me...you.
I wish you all luck. I'm only 17 and have when I was 16 already had people wanting to send me credit cards. I don't have a job or anything so the credit card company would have held my parents responsible for the debt but I think it's a shame that these companies are trying to get young kids in debt. I guess the credit cards are very useful but those high interest rates are a killer. I've started thinking about how I'm going to pay for college. I was wondering about the student loans etc... Aren't some student loans no interest or very low interest? Hopefully I won't need a loan but if I end up going to an expensive out of state college or going to med school at some point i may need one.. ------------------ Shane "Save Our Rockets" "Life without basketball in Houston........without an arena that is what it will be" [This message has been edited by Rocket Fan (edited October 14, 2000).]
As long as you are closing the accounts out once the rate goes back up I don't believe it hurts your credit. Actually I think it may help your credit because lenders see those open credit accounts as loans and when you cancel it, they see that as a loan paid or a reduction in open credit. Whether you are actively using the account doesn't matter because they way a lender sees it, the total credit limit is in essence, a loan that you can use at anytime. The key to this strategy working is as follows... Do not charge more debt on the card. Keep up with when the introductory rate will expire on each card. Apply for a new, intro rate card about 6 weeks before your intro rate expires on the card carrying the balance. Cancel the card when you transfer the balance to the new intro rate card and the original intro rate is over. Another thing I have found out, once your intro rate expires and you go to cancel the card, the lender may extend that rate for up to another 6 months jsut to keep your business. This whole process takes some attention to detail and planning, but can save you alot of money if you carry a large balance. ------------------ Too often, we lose sight of life's simple pleasures. Remember, when someone annoys you it takes 42 muscles in your face to frown, but it only takes 4 muscles to extend your arm and pimp-slap the mother****** upside the head! [This message has been edited by RocketsPimp (edited October 14, 2000).]
Rocketspimp, I have a question for you. I also use the plan that you mentioned. My credit card debit is around $3,600. I agree that it is a good plan to keep shifting to the new credit cards with the low intro rates (usually the intro rates are for 6 months). My question is does this hurt your credit record (i.e. opening the new credit cards every 6 months or so)? ------------------ Titan's fanatic!!!! It was the first time the Titans sent an offense to the line of scrimmage with Eddie George in the backfield behind McNair to go with Wycheck at tight end and Carl Pickens, Kevin Dyson and Yancey Thigpen at wide receiver. So many choices, with a full season still ahead. "I think that might be scary for a defense," Dyson said.
Well, actually a couple of things can also hurt your credit, it is not so straitforward to just decrease your debt/credit ratio. Leaving too many accounts open or opening too many new accounts (they could see potential for taking on big debt in a hurry) and not having any one accounts with a long history (if you are always cancelling). So it is true if you have a sizable debt it is better that it does not take up all your credit (even if you take on new credit you won't use), but it is also better to only have 3 or so revolving credit accounts (e.g., credit cards). Fixed payment accounts (e.g., loans, loan consolidation) also work more favorably for you than credit cards so pay the former first if you can. Also, taking advantage of low intro rates can be a helpful strategy, but I would advise to only keep 2-3 credit cards open at any time while also holding on to your very best card for a long time (lowest regular rate, larger maximum hopefully). Further, make sure when you use balance transfers you avoid the 3% transaction fee, usually you can do this by calling but not via mailled applications--be sure to read all fine print. That 3% fee could potentially wipe out any savings that would be due to a the low intro rate. In sum, there is no easy way to improve your credit and you should be carefully about focusing on any one strategy (just taking on more credit to improve your debt/credit ratio) because it could hurt you any other ways. However, it is not rocket science either, if you make regular payments and keep a balanced approach to manange your accounts your credit will steadily improve. [This message has been edited by Desert Scar (edited October 16, 2000).]
