Have decided to start a major financial journey, advice...?

[amo_mea_filiis.]

I owe money to some places and people. Nothing needs to be paid urgently. Unfortunately it's all in collections (except the 2 small personal loans).

 

I can't afford enough monthly to satisfy the debt collectors, so I'm going to save and then call with an offer to pay it off. This is going to take time.

 

I can't save in the bank because of the kids' disabilities and our income. I need to save in cash. The last thing I could handle happening is to save all this money and have a fire or a break-in, so I need to get a fireproof safe. Can you recommend one? It doesn't need to be big.

 

My first step in this process is to reduce the day to day expenses. I called DirecTV and reduced my package to the lowest available (can't cancel until September 2012).

 

We already do not eat out, and I will cut my frequent but not daily gas station coffee.

 

Since we have food stamps and that is budgeted separately, I don't include that in the cutting of costs, but I will be trying to reduce the non-food needs (toilet paper, shampoos, etc.).

 

Are there any oher tips you could give me? I have electric, gas, water, garbage, TV, and phone/internet. I don't have a car payment or insurance.

[justasque]

I can't afford enough monthly to satisfy the debt collectors, so I'm going to save and then call with an offer to pay it off. This is going to take time.

 

Have you discussed it with them? Might be worth a try. Go in with a number in mind that you *can* pay. If you can pay a bit at a time, there is no need to waste money on a safe.

 

I don't understand the no banks thing, but can you get a safety deposit box at your bank? Probably cheaper than a safe, and can't be stolen.

[Delighted3]

Our Aldi had fireproof safes for $20. They were big enough to hold important papers and some cash. They still had some in my store when I was there a couple of days ago.

HTH,

Joy

[Ginevra]

You need to call the debt collectors first to try and work out a solution. You can't just save up money, hoping that they'll accept that once it's already saved up. I have not done this before myself, but my BIL did this for my sister. Her first husband died in an accident, which left her with debts (car and credit cards) that she thought would be paid for by them both. They were willing to re-negotiate, but they have to be called to know that you're trying to do something.

 

I don't understand the "can't save in a bank" thing, either. How would that work with your debt collectors, anyway? Wouldn't you eventually have to put it into the bank in order to write a check or pay the loan(s)?

[Impish]

I'm guessing that the no bank is due to assistance. Assistance looks at bank accts, and reduces amts by what is in the bank.

 

Most ppl would say, however, if its in collections, it is urgent.

[AnnaM]

You need to call the debt collectors first to try and work out a solution. You can't just save up money, hoping that they'll accept that once it's already saved up. I have not done this before myself, but my BIL did this for my sister. Her first husband died in an accident, which left her with debts (car and credit cards) that she thought would be paid for by them both. They were willing to re-negotiate, but they have to be called to know that you're trying to do something.

 

I don't understand the "can't save in a bank" thing, either. How would that work with your debt collectors, anyway? Wouldn't you eventually have to put it into the bank in order to write a check or pay the loan(s)?

 

 

This is just my experience. We have 2 NICU babies which = LOTS of medical bills. I called and tried to negotiate. They would not negotiate with me because I couldnt not pay it off right then and there. They basically said here is what we will do today but you will have to call again when you actually have the money to pay it. We pay $1 per bill on most of them and then pay a larger sum on one. As we pay it off we "snowball" it into the next one. We have gotten calls from the collections agencies but it is my understanding that as long as we are paying SOMETHING on it, it can not be reported to our credit. Once I tell the agencies that I am paying what I can pay, they usually leave me alone for a few months.

[amo_mea_filiis.]

I have attempted to discuss payment with debt collectors still actively trying to collect. I've offered as much as $25 per month (yes, very low, but my total debt with every penny included is under $5000, so each thing is not a ton) and was turned down and told I was refusing to pay.

 

Everything is already on my credit report, so time is not urgent because these are loooooong outstanding debts. They start calling twice per year- Once around tax time (I don't get a return, or even have a need to file) and again nearing winter, I assume thinking I have christmas money (we don't celebrate).

 

Imp- You're right. Ds's disability would be reduced on any month that I have a certain amout in the bank.

 

I'm not trying to screw anyone by "hiding" the money, I just have to be careful or I'll have nothing after paying bills.

 

Someone offered to buy the safe while I was discussing my plan of attack to catch up on debts, so I will not be spending money to save it.

 

What most, or all creditors don't understand (or care about) is that when I tell them my income and income sources, they think I'm lying.

[Parrothead]

No, no, no! Do not call a collection agency on the phone. All correspondences should be done in writing. If they are calling you and harassing you, send them a cease and desist letter.

 

Before paying anyone off negotiate for a deletion of the tradeline on all your credit reports (Transunion, Equifax, Experian, Innovis).

 

Before negotiating a pay for delete, ask for validation from the collection agency. it may be that they no longer own the alleged debt.

 

I can give you a bunch of sample letters, a detailed list of instructions on how to handle this to your benefit, a list of instructions to get your credit back up to par. Send me a PM if you want all this info.

[StephanieZ]

Go bankrupt.

 

Then pay off those personal loans (I am assuming they are to individuals, not businesses.)

 

Honestly.

 

I am a small business owner, and I've never walked away from a debt. But, really, that is what bankruptcy is there for. It is not a moral thing, IMHO, it is a money thing.

 

Your credit is already shot. Just start over.

[StephanieZ]

Ps. If these are really old debts, don't pay a penny on them until you are sure you don't want to walk away. I think that after a number of years, they can no longer collect, and must remove the marls from your credit too.

[Parrothead]

Ps. If these are really old debts, don't pay a penny on them until you are sure you don't want to walk away. I think that after a number of years, they can no longer collect, and must remove the marls from your credit too.

You are correct. As I told Amo in a PM, the alleged debts are almost out of SOL for collection. Once that happens all she has to do is dispute with the CRA's for deletion of those tradelines from her credit reports. She will be golden. (There may occassionally be a collector who "specializes in dead debts" who wants to attempt to collect. The appropriate letter to the appropriate persons will solve that problem rather quickly.)

 

 

Another thing to keep in mind is that if they are paid now there is the possibility of the accounts re-aging. If that happens she will have to wait another 7 years depending on her state's SOL for debts.

 

You are also correct in your above post. This is not a moral obligation. She has a moral obligation to take care of her family as best she can. The alleged debts are a business obligation. Those fall though all the time.

Edited November 16, 2011 by Parrothead

[amo_mea_filiis.]

Ps. If these are really old debts, don't pay a penny on them until you are sure you don't want to walk away. I think that after a number of years, they can no longer collect, and must remove the marls from your credit too.

 

You are also correct in your above post. This is not a moral obligation. She has a moral obligation to take care of her family as best she can. The alleged debts are a business obligation. Those fall though all the time.

 

I'd feel really guilty walking away from everything. Couldn't I just save in cash, and try to negotiate with each account when I have a decent amount? Part of negotiations would be removal from the report.

 

I think I could do this in under 7 years, so less time than bankruptcy (sp?).

 

These debts are doing not much more than hanging over my head. Because of my financial position and type of income, my bank accounts can't ever be frozen or garnished, so this isn't really impacting my day to day life.

[amo_mea_filiis.]

Another thing to keep in mind is that if they are paid now there is the possibility of the accounts re-aging. If that happens she will have to wait another 7 years depending on her state's SOL for debts.

 

This is what I have to think about.

[StephanieZ]

Why not simply make payments to those personal loans with your spare funds each month? Get them paid off first. Then worry about stashing the cash for the other debts if you are so inclined.

[amo_mea_filiis.]

Right now, my only extra is the $36 reduction from the TV bill. One of the 2 personals will be paid off soon, the other will be low monthly payments (this 2nd personal just happened).

[Halcyon]

This is not a moral obligation. She has a moral obligation to take care of her family as best she can. The alleged debts are a business obligation. Those fall though all the time.

:iagree:

[Parrothead]

I'd feel really guilty walking away from everything. Couldn't I just save in cash, and try to negotiate with each account when I have a decent amount? Part of negotiations would be removal from the report.

 

I think I could do this in under 7 years, so less time than bankruptcy (sp?).

 

These debts are doing not much more than hanging over my head. Because of my financial position and type of income, my bank accounts can't ever be frozen or garnished, so this isn't really impacting my day to day life.

Anything that has gone to a collection agency has already done the damage it will do to your credit. The collection agencies buy debts in bulk for pennies on the dollar. The original creditor has already taken a tax write off for the loss. They have their money from your taxes.

 

If you have any debts that are still owned by the original creditor you can possibly save your credit rating by paying the account up to date. (This will take negotiation with the creditor.) Then paying on time for the duration of the note.

[amo_mea_filiis.]

Anything that has gone to a collection agency has already done the damage it will do to your credit. The collection agencies buy debts in bulk for pennies on the dollar. The original creditor has already taken a tax write off for the loss. They have their money from your taxes.

 

If you have any debts that are still owned by the original creditor you can possibly save your credit rating by paying the account up to date. (This will take negotiation with the creditor.) Then paying on time for the duration of the note.

 

How do I know which accounts are where?

[Parrothead]

How do I know which accounts are where?

That info will be on your reports.