I can't believe we are back in this situation again. With this economy, it's not surprising. Over ten years ago we went through debt counseling, mostly for my debt because my husband's credit rating was so crappy due to child support owed, no one wanted to give him any line of credit for anything. Originally I fell into 'house debt' after I purchased my first house. I had bought a brand new car the year before, and no other credit card or loan debt. All I had was the house and the car. Boy, I was living large on half the money I make now. My biggest problem was that I had a 1200+ sq ft house on a quarter acre and almost nothing to put in it. So, I took my $20k credit card and bought a new bed, a new
refrigerator, a living room set, a new bigger TV, a dining room table and china closet, a computer and desk and a new bathroom. Yes, I bought a new bathroom. It seems the previous owner was a clothes queen and they just used the room that was meant to be the master bath as a second walk in closet. My low maintenance self saw the use of an extra bathroom when my husband moved in and we had his twin boys over every weekend. About $5000 later there was the "girls" bathroom and the "boys" bathroom.
Needless to say, that $20k quickly got eaten up and I had trouble making the $700/month payments with a new husband and two new part time kids. So, I tried credit counseling. I had to close all of my credit cards, even those with no balance (they were few and far between). I couldn't even keep a gas or grocery card. I had even taken out a personal loan of about $10k to help keep up with the credit card payments and my husband's back owed child support while he was not working due to injury. To top it all off, someone had stolen a credit card offer out of my mailbox and opened a $5k line of credit in my name. I tried to get that closed as fraud, but no one would believe me, not the credit card company (since the signature they had on file matched the one that was used on the credit slips - but it wasn't mine!) nor the credit bureaus (sorry, we have to believe the credit card company - who are you that we should believe you?). So, I had an additional $5k to pay on top of $20k that I actually owed, and a $10k loan. I made about $90k/yr then, and my property taxes kept going up and up. We lived on Long Island then and my taxes went from just over $3k/yr to about $5k yr in two years. No such thing as a cap on taxes there!
To give you perspective, that house was worth about $150k, 1200 sq ft, one car garage with a 700 sq ft apartment in the basement that brought in $750/month when it was rented. It was a nice apartment, but keeping it rented was a real pain in the arse. Real estate companies wouldn't deal with me because the apartment wasn't "legal," IE, it only had one legal exit, not two as required by code. So, I was on my own each time a tenant left. I found one really good tenant through work, but they only stayed about a year and a half. After that I was left with the classifieds. Just weeding through the potential applicants for someone who seemed good was a chore. Remember this was around 1996-97, no real Internet searches available. Today, we have two houses - one rental I hope doesn't go into foreclosure, worth about $80k and about 1400 sq ft, two car garage on 1/8 acre, taxes just below $3k; and our main home at 2400 sq ft two car garage on 2.3 acres, worth about $250k, taxes $5200.
After we moved to TX, we had to rent for about 8 yrs before we could buy again, because my credit was so screwed up. We had to rent the whole house out in NY because we couldn't sell it. Unfortunately we got two bad tenants who both decided to stop paying their rent less than six months into their respective leases. I actually hired an attorney in NY and got the one tenant kicked out for non payment, but I never received any monies owed by that tenant. I put a judgment on her, but never saw a dime. The other tenants were still there a year and a half later when the bank took over the house. Technically it was a foreclosure, even though I voluntarily gave back the deed. The mortgage company still had to evict those tenants, though.
So, like I said, we used a "free" credit counseling agency. They got our payments knocked down by about $300/month, but when I could no longer make those payments because I was trying to pay my mortgage and my rent, they kicked me out of the program (when I missed three payments). A few months later we got hooked up with a debt reduction place that was for profit, but after six months of paying them $1200+/month we realized they were taking our money and not really paying much of anything toward our debts. They went out of business when I had over $1k left in my account with them, and I never saw it again. Finally, we just let our house go into foreclosure and I defaulted on two credit cards. The personal loan had been settled by that time. It took about five years before any credit granting entity would look at me again. I finally crawled my score above 600 and then we were able to buy the "rent to own" house we had been in for seven years. We still own that house, lived in it another two years and then happened on a steal from a coworker paying two mortgages (with no tenants) for over two years after building a new house. Hence, we are now on our huge property with a bigger house. It needs a lot of work. We just got around to knocking down the wall between the dining and living rooms to create a great room, removed all the carpet downstairs and installed bamboo engineered flooring in the new great room. This cost about $2k. I know we could put that money towards our debt, but we felt it was in the best interest of our family to knock that physical barrier down sooner rather than later. We did much of the work ourselves to keep the cost down.
Why did we need to knock down a physical barrier, you ask? Well, we recently adopted a 14yr old boy from Ukraine. We had "our" TV room and "his" TV room. With his computer in his bedroom, and a separate TV, he spent much of his time away from us and we were having trouble bonding as a family. Believe me the $2k investment in our family was worth it. We now spend time each day as a family, bonding in the new great room with our three huge dogs and two cats. There's even wrestling room in the middle for impromptu doggie wrestling, human on dog wrestling, or just tickling the sh*t out of our son.
It cost a whole butt load of money to travel to Ukraine and adopt our son, a total of over $35k. Yep, you read that right, $35,000.00! It wasn't all paid at once, but about $20k was due from last November until mid-March when I returned home with our son. It would have been about $5k more if my husband had traveled with me. We would have needed to board and/or have checked on three times daily four large dogs (dear departed Nala Bear, rest her soul in peace at the Rainbow Bridge only two months ago) and two cats; and the travel and added expenses for my husband. Not to mention his bugging me constantly while there. He doesn't always handle being out of his element very well for long lengths of time. Most of that money came from three separate signature loans totaling $34k. That only paid agency fees, facilitator fees, expediting fees, court fees, translation fees, embassy fees, medical fees and my travel, lodging and food while in Ukraine for almost seven weeks. It also paid for our son's travel lodging and food for the last two weeks in Ukraine. That boy can eat, that's all I'll say (he grew three inches in less than four months home). And, I had to pay for my facilitator's travel and lodging during the days that he was needed in region with me. Luckily that amounted to only about two and a half weeks time. The other month or so I was on my own. Not for the faint of heart, but I did learn to read Russian and I learned enough to speak basic needs to the hotel staff and buy items at the grocery store so that I could eat cheaply. A lone American woman traveling with over $11k in cash for months in a former Soviet country, and I only 'misplaced' $100. That still amazes me. The people over there were wonderful, but that's another blog (adoptyaroslav.blogspot.com).
Our real trouble began when my husband couldn't get a passport because of back owed child support. Funny thing was, he paid his ex-wife off in August three years ago. Finally, things are settled, but we had to pay an additional $5600 last August to get his ex to agree that she agreed to a pay off in August 2006. I paid for all of the incidental expenses for this adoption stateside out of our savings, $1500 for the home study, $4500 to host Yarek the second time late last year to make sure he really did want to be adopted by us (he has family still alive in Ukraine, so it was questionable if he really wanted to leave the country). Plus I paid for the application fees our state department required to make him a citizen, etc out of our pocket and not from the loan fees. Out of our loans, I used $21k to pay off all agency fees due before I traveled (luckily, there are none due after we got home). I had $13k left to travel with, but I left $2k at home with my husband for his expenses, plus he had access to the bank account. He ended up using over $3k while I was gone (we had an old sick dog that took a lot of attention, plus a young hyperactive dog that needed training asap because he was hurting the older dog on a daily basis, that ate up $2k total - so dear hubby bought groceries and gas and cigarettes on about $1k for seven weeks). The $3k my husband used all came out of savings. Then I closed that account, because carrying a zero balance forever seemed like a useless thing to do.
After we got home, the house had practically no food in it (you know cigarettes are more important than food, don't you?), so I spent about $1500 (I had $2k left from the $11k I took to Ukraine) and filled up the pantry and our 19 cu ft freezer as well as our fridge. The freezer food lasted a month, the fridge food lasted about 5 days and the pantry food lasted about 10 days. OMG, my son ate 11 bananas in one day. It took about six weeks before he stopped gorging on certain foods, mainly fresh fruit. Now he only eats the normal portions for a growing 14yr old boy.
And, to top everything off, my paychecks were over $1500 less each paycheck because I was not working and earning any premium pays. That's about $3k less each month I was pulling in. My husband was not working at the time, either. Our bills began to add up and I relied more and more on my credit cards until most of them are maxed out at this point.
We are now late on payments for our rental house, and I have had to ask one car loan company to delay payments for two months (Ford is great about that). Late on taxes for rent house as well. Owe almost $3k for that. Just pay as I can, but right now can't pay anything.
So, this led me to seek out debt reduction again. I will not let myself go into default or foreclosure again if I can help it. I'm willing to settle for less than the amount owed and have that reflected on my credit report right now, even though that's not good either.
Here's a breakdown of our owed debts:
Signature Loans:
HSBC $11,246.oo owed $338/mo
Am. Gen. Finance $5954.00 owed $229/mo
Prosper.com $4661.07 owed $487/mo
Total owed loans: $21,861.o7
Credit Cards:
AmEx $8716.22 owed $213/mo
Best Buy $2839.65 owed $115/mo
Home Depot #1 $1473.85 owed $57/mo
Home Depot #2 $583.31 owed $30/mo
Orchard Bank $1158.35 owed $43/mo
HSBC Card $728.00 owed $43/mo
Chase Amazon $1059.40 owed $94/mo
Target $857.07 owed $25/mo
Exxon $616.47 owed $60/mo
Tractor Supply $350 owed $15/mo
Total owed Credit Cards: $18,382.32
Grand Total Owed:
$40,243.39
Just paying the minimum payments each month costs about $1756.oo. I pay $1959.85 (escrow included) for my house each month. That's like a whole other mortgage payment.
Wow. That's all I had to say once I realized I owed that much money. Then I went Internet searching and found what I believe to be a reputable company called Credit Solutions. They are a for profit company, but they claim to be the largest in business today. They work for you and not the credit card companies. And the best thing of all, is your money is always in your own private bank account and under your control at all times. You do not send money to them so that they can "hold" it for you until they make settlements with your creditors. Credit Solutions is also a 'hardship' company. They will ask you what hardship brings you to this point and why do you believe it won't happen again once you are out of debt. Our hardship, obviously is self-made, but well worth it at any cost - our son. And, you can opt out at any time. You just have to deal with your creditors yourself. Credit Solutions does all the negotiating for you. Your creditors should not call you after the first month or two. CS also advises you not to speak to your creditors at all, let CS do all the talking. They're the professionals.
CS also advised me on initial contact that they would not be able to service a few of my credit cards and possibly one loan (Prosper.com). They do not service credit cards with balances below $600 because they generally cannot get the 50% reduction in monies owed that they like to negotiate. You are better off handling those yourself, and they will walk you through how to do that. The Prosper loan may be a problem because they do not have a working agreement with them at this time. I told them that loan was not the hugest on my mind because I only have 10 more payments left. If you take the Prosper loan out of the equation, my payments to get out of debt with CS will be lowered each month.
CS told me it should take me 4 years or less to get out of debt. They will be handling about $37k+ of my debt. (They do not deal with Chase, $1059.40; and they will not deal with these other creditors due to low balances: TS - $350 and HD $583.31. They also will not be dealing with Target - $857.07, because for some reason they could only deal with 8 accounts and I had nine that need attention. I elected to keep the Target card out of it, in the hopes of keeping that card for emergencies.) The total debt they won't be dealing with is: $2849.78. Plus my husband has a card with less than $600 owed on it, so our total will be just about $3500 dealt with ourselves.
Our previous total owed per month (including dear hubby's $75/mo) is:
$1831/mo
The amount CS will not handle each month is:
$215
CS proposed amount saved and used for settlement each month (including their fee):
$498.02
Yep, you read that right. Less than $500. So, now, even with the bills we will be paying/negotiating ourselves, our new monthly payments will be approximately:
$713.02
A savings of $1117.98 each month. That's a lot of breathing room.
We're going to open a savings account and put $500/mo in it to use to pay off our debts. That way I/we won't be tempted to do anything else with it. If we have more, we'll add more to it. We may even be able to save $100 or $200/mo for our son as well.
My plan with this blog, is to keep it honest and let everyone know how we are doing with our debt reduction plan. And Credit Solutions also will give us a referral fee for everyone who lists us as the referring party and stays with the program at least 90 days. Referral fees range anywhere from $150 - $500 for EACH referral. So, send your friends here and tell them all about it! Do it yourself and get their referral fees credited to your account!
Please, call Char Morris at Credit Solutions 1-800-270--6524 or email her at cmorris@creditsolutions.com and let her know I sent you!
Natalie Moloney
TX
