Debt relief by purposely allowing accounts to go to collections and not paying?

[WAZ]

No matter what you "said" you're still trying to take the easy way out by not paying back the money you borrowed. Try to spin it however you want and say what you want - but at the end of the day you are looking to get out of $14k of debt by paying a fraction of that. And all of this could have been avoided had you never spent the $14k you didn't have in the first place.

It's not "luck" on how to pay for groceries or day care. It's called responsibility. You're on a tech forum here on a computer so clearly you have enough money to buy a computer and internet service. As someone else mentioned, I bet if you really looked at your expenses you could easily cut costs somewhere, as the majority of people can. They just don't want to because it is 'too hard' to do that.

And I did read your whole post. Your whole post is you basically you asking if paying $268/mo for 23 months to get out of a $14k debt is a good idea or a scam. Think about that for a second. How does that add up?

Lol, thanks for the "advice". I'm glad to have you as my personal financial advisor. Next time I have a $1,300 repair on my 14-year-old car so my wife can drive to work, I'll just hop on Craigslist and sell my computer (which I just recently piecemealed parts together almost entirely with Newegg gift cards I'd saved up, if you must know -- since you seem so personally concerned about my having a PC) for $200 and cancel my $29 internet for a couple months and I'll magically have enough to pay for it.

No? That math doesn't add up? Well the car still needs to be repaired the shop isn't going to do it for free, so we had to pay for it somehow. And aw damn, I just sold the PC I needed for my graphic design job, so now I can't work anymore because you told me having a computer was irresponsible. Crap. And my wife who works 50+ hours every week for continually stagnant/reduced pay having her kindergarten teacher's salary cut $7,000 per year is just her being irresponsible? I forgot you knew so much about us personally to be dealing life advice on a tech forum.

Of course someone would be looking to reduce their monthly payments as much as possible. Who wouldn't? We still owe thousands in student loans (which we're paying, and have been on time every month for 15 years, in case you want to note that in your financial assessment you're filing on me), but if we were offered the chance to have that debt reduced or forgiven? I don't care how it "adds up"; OF COURSE we would jump at the chance. As for paying it back, you must have missed the part where I said:

"Yeah, I don't think we'll go the bankruptcy route; we're otherwise completely fine on expenses, never one day late on a single mortgage payment in 11 years, nor on any car payments or student loans. It's just these damn credit cards that I think we can pay off. It's just the HOW. And this company's methods kinda threw a wrench in things.

I've spoken to Chase about applying for a settlement amount... basically seeing if they'll reduce the delinquent $5k to a lowered settled amount if I can pay it off in one lump sum. We've looked into options like a loan from somewhere like Lending Club, Prosper, or other comparable companies... e.g. a $15,000 loan paid off over 5 years. If we take it out in my wife's name, her 730-score credit is still good to get a decent rate. Then we use that money to pay off ALL the cards in lump-sums... possibly at lowered settled amounts, and just pay off that one single loan over the next several years. The monthly payments aren't reduced as much as we'd like, but they're at least comparable to what we're paying in minimum payments now... with the added bonus of actually paying them off instead of just paying minimums towards interest for the next 20 years."​

I know it can be hard to read all the way up there on your high horse, so I'll forgive you. Now if you'll excuse me, I'm sure there are people in other threads who could also give two sh*ts about your lectures. Thanks for your time, sport.

 

[Ns1]

hey Waz, you should just go to the link I posted. You're not going to get what you're looking for here.

 

[WAZ]

He'll still have the house/car/student loan payments/datcare that he can't get out of so I could very well be wrong. Hard to tell without seeing the whole picture.

Yeah, we're okay on all of that. We can afford our house, one car payment, student loans, etc. We can afford about $300/mo or so towards debt payments/consolidation, and I've been doing some additional graphic design work to get a little extra income. We just know that the current rate -- paying $350/mo indefinitely in minimum payments, all towards interest with no way to ever really pay those off -- is unsustainable. That's why we're looking into the lump-sum consolidation. We're obviously just wanting the lowest interest, lowest payment option we can find; if any of the debt can be forgiven then great. But just straight up NOT paying any of the creditors sounded super sketchy. We'd obviously love to pay $268/mo for 2 years and be done, but if it sounds too good to be true then it probably is. But $300-$350/mo for 5 years is looking like the more likely option. Probably more likely for the amount of debt than going the bankruptcy route.

 

[NoCreativity]

Not sure where you are getting the $15K loan from but have you looked into a credit union? Some of them tend to have reasonable rates for personal loans.

 

[highland145]

Yeah, we're okay on all of that. We can afford our house, one car payment, student loans, etc. We can afford about $300/mo or so towards debt payments/consolidation, and I've been doing some additional graphic design work to get a little extra income. We just know that the current rate -- paying $350/mo indefinitely in minimum payments, all towards interest with no way to ever really pay those off -- is unsustainable. That's why we're looking into the lump-sum consolidation. We're obviously just wanting the lowest interest, lowest payment option we can find; if any of the debt can be forgiven then great. But just straight up NOT paying any of the creditors sounded super sketchy. We'd obviously love to pay $268/mo for 2 years and be done, but if it sounds too good to be true then it probably is. But $300-$350/mo for 5 years is looking like the more likely option. Probably more likely for the amount of debt than going the bankruptcy route.

+1 bolded.

As far as your score taking hits....TD bank had a "what if" credit planner on their site. If I was 1 time 30 days late on 1 card, I'd lose 100 points on my fico. Kind of effed up after having credit for nearly 30 years.

 

[WAZ]

Not sure where you are getting the $15K loan from but have you looked into a credit union? Some of them tend to have reasonable rates for personal loans.

This one is from Lender's Club. Our 2003 car, which we bought 3 years ago, is now paid off -- that was with a $6,000 personal loan from Teacher's Credit Union, which gave us a pretty good rate. We should probably look into them again too. Thanks!

 

[WAZ]

hey Waz, you should just go to the link I posted. You're not going to get what you're looking for here.

Thank you Ns1, I will check out that forum. Hopefully posting there using a computer with internet service is not viewed by certain people as financially irresponsible...

But I have gotten some good advice here from (almost) everyone, and I do appreciate it.

 

[cbrunny]

Next time I have a $1,300 repair on my 14-year-old car so my wife can drive to work

This....

this is not wise.

WAZ, I've read everything you've posted. I won't lie, I don't have a ton of sympathy for you. I mean, owing money is terrible, and debt predators, etc... but you're years into this financial situation. Years. Surely you must look at your finances often enough that red flags would have gone off after a few months of being in the red - maybe even sooner. But anyhow, no one has a time machine and it sounds like lesson learned.. but still....

And while I'm not morally opposed to "sticking it" to behemoth banks or asshole debt collectors

This jumped out to me too. Regardless of how you got into this situation, this mindset is a problem. It isn't just you, but everyone is looking to be the victim of something these days. that mentality is not doing you favours.

Hold your head high, cut your budget, and pay things down. If you have home equity, that's a great place to start.

You mentioned you've already pretty well decided not to take up this company's offer, which in my opinion is the right choice not just for this reason but also because it sounds extremely sketchy and high risk and unlikely to actually work.

 

[dullard]

Ha, welcome to low finance. My guess is that the lawyers dump some of their fees into the BK and get payments when the customer pays the court. Then the customer stops paying the court after a year, the creditors have already charged the $$ off and the court kicks the BK out.

I'm holding one in my hand. Customer owes me $350.00. Her car may be financed but it's older and I know she's renting. No way she could come up with $1500 so some deal has been worked out somewhere.

Having never filed for bankruptcy myself, I don't know. But I always imagined that it was an up-front cash payment or no service.

 

[highland145]

Having never filed for bankruptcy myself, I don't know. But I always imagined that it was an up-front cash payment or no service.

I know payment arrangements were made in the past but I have no idea since the BK reforms a few years ago. I do know this lady couldn't come up with $1500. Called a friend that does BKs but he's out til Monday.

If I remember long enough...I'll ask some customers that have filed in the past.

 

[MrDudeMan]

Lol, thanks for the "advice". I'm glad to have you as my personal financial advisor. Next time I have a $1,300 repair on my 14-year-old car so my wife can drive to work, I'll just hop on Craigslist and sell my computer (which I just recently piecemealed parts together almost entirely with Newegg gift cards I'd saved up, if you must know -- since you seem so personally concerned about my having a PC) for $200 and cancel my $29 internet for a couple months and I'll magically have enough to pay for it.

No? That math doesn't add up? Well the car still needs to be repaired the shop isn't going to do it for free, so we had to pay for it somehow. And aw damn, I just sold the PC I needed for my graphic design job, so now I can't work anymore because you told me having a computer was irresponsible. Crap. And my wife who works 50+ hours every week for continually stagnant/reduced pay having her kindergarten teacher's salary cut $7,000 per year is just her being irresponsible? I forgot you knew so much about us personally to be dealing life advice on a tech forum.

Of course someone would be looking to reduce their monthly payments as much as possible. Who wouldn't? We still owe thousands in student loans (which we're paying, and have been on time every month for 15 years, in case you want to note that in your financial assessment you're filing on me), but if we were offered the chance to have that debt reduced or forgiven? I don't care how it "adds up"; OF COURSE we would jump at the chance. As for paying it back, you must have missed the part where I said:

"Yeah, I don't think we'll go the bankruptcy route; we're otherwise completely fine on expenses, never one day late on a single mortgage payment in 11 years, nor on any car payments or student loans. It's just these damn credit cards that I think we can pay off. It's just the HOW. And this company's methods kinda threw a wrench in things.

I've spoken to Chase about applying for a settlement amount... basically seeing if they'll reduce the delinquent $5k to a lowered settled amount if I can pay it off in one lump sum. We've looked into options like a loan from somewhere like Lending Club, Prosper, or other comparable companies... e.g. a $15,000 loan paid off over 5 years. If we take it out in my wife's name, her 730-score credit is still good to get a decent rate. Then we use that money to pay off ALL the cards in lump-sums... possibly at lowered settled amounts, and just pay off that one single loan over the next several years. The monthly payments aren't reduced as much as we'd like, but they're at least comparable to what we're paying in minimum payments now... with the added bonus of actually paying them off instead of just paying minimums towards interest for the next 20 years."​

I know it can be hard to read all the way up there on your high horse, so I'll forgive you. Now if you'll excuse me, I'm sure there are people in other threads who could also give two sh*ts about your lectures. Thanks for your time, sport.

You're getting hung up on what you think you've accomplished instead of what lead you to this place. He wasn't calling you out nearly as much as you think based on your response. The simple fact is you made a comment that will rub a lot of people, myself included, the wrong way. Saying you don't mind sticking it to a bank is another way to say you want to forgo your obligation at someone else's expense. Unfortunately, you can't tell yourself you've done well in all areas of your life aside from this one little thing and then use that as justification to do something bad.

There is most likely something you can cut out of your monthly budget to help with this situation and that was his point. He was not condemning your internet bill or PC cost as much as he was merely pointing out that you obviously aren't living in a cardboard box. Given the actual roof over your head, something can be cut out of the budget; something HAS to be cut out of the budget because you still haven't addressed the long term issue. Getting out of a debt requires a lifestyle change considering the view you've projected about your overall financial situation. If the debt was erased right this moment, you seem to still have a problem. Fixing the underlying problem (income being too low for expenses) will lead to a solution to the debt problem as well.

No one is calling you a bad person as far as I can tell. This is a math problem and most people here are mathematically inclined; you've come here to ask us to help balance an equation while making a few remarks about how the equal sign can suck it. See what I'm saying?

 

[skull]

Lol, thanks for the "advice". I'm glad to have you as my personal financial advisor. Next time I have a $1,300 repair on my 14-year-old car so my wife can drive to work, I'll just hop on Craigslist and sell my computer (which I just recently piecemealed parts together almost entirely with Newegg gift cards I'd saved up, if you must know -- since you seem so personally concerned about my having a PC) for $200 and cancel my $29 internet for a couple months and I'll magically have enough to pay for it.

No? That math doesn't add up? Well the car still needs to be repaired the shop isn't going to do it for free, so we had to pay for it somehow. And aw damn, I just sold the PC I needed for my graphic design job, so now I can't work anymore because you told me having a computer was irresponsible. Crap. And my wife who works 50+ hours every week for continually stagnant/reduced pay having her kindergarten teacher's salary cut $7,000 per year is just her being irresponsible? I forgot you knew so much about us personally to be dealing life advice on a tech forum.

Of course someone would be looking to reduce their monthly payments as much as possible. Who wouldn't? We still owe thousands in student loans (which we're paying, and have been on time every month for 15 years, in case you want to note that in your financial assessment you're filing on me), but if we were offered the chance to have that debt reduced or forgiven? I don't care how it "adds up"; OF COURSE we would jump at the chance. As for paying it back, you must have missed the part where I said:

"Yeah, I don't think we'll go the bankruptcy route; we're otherwise completely fine on expenses, never one day late on a single mortgage payment in 11 years, nor on any car payments or student loans. It's just these damn credit cards that I think we can pay off. It's just the HOW. And this company's methods kinda threw a wrench in things.

I've spoken to Chase about applying for a settlement amount... basically seeing if they'll reduce the delinquent $5k to a lowered settled amount if I can pay it off in one lump sum. We've looked into options like a loan from somewhere like Lending Club, Prosper, or other comparable companies... e.g. a $15,000 loan paid off over 5 years. If we take it out in my wife's name, her 730-score credit is still good to get a decent rate. Then we use that money to pay off ALL the cards in lump-sums... possibly at lowered settled amounts, and just pay off that one single loan over the next several years. The monthly payments aren't reduced as much as we'd like, but they're at least comparable to what we're paying in minimum payments now... with the added bonus of actually paying them off instead of just paying minimums towards interest for the next 20 years."​

I know it can be hard to read all the way up there on your high horse, so I'll forgive you. Now if you'll excuse me, I'm sure there are people in other threads who could also give two sh*ts about your lectures. Thanks for your time, sport.

Why don't YOU fix the car? I've been flat broke plenty of times, never racked up debt though. I did what I had to do and fixed my car myself while learning how to along the way. If its too much to fix yourself go buy a beater from an auction. I've bought multiple running cars for under $200 before.

 

[purbeast0]

It's clear that my point completely went over his head and he's trying to make himself out to be the victim now. Glad some of you cleared up the point I was trying to make though.

 

[Elixer]

Not trying to sound harsh, but, I also think you need a attitude adjustment, saying you want to stick it to anyone but yourselves is selfish. Nobody told you to spend what you don't have, and the CC companies were willing to float you a loan when nobody else would, and you knew the consequences of doing that.

Don't file for bankruptcy for that low amount, that is pretty much the worst thing you can do.

What @BurnItDwn says is pretty spot on, there are lots of ways to cut costs, but, if you actually want to cut costs, that is another question. Sure, it will be rough compared to what you are doing now, but, the more you put off the cutting process, the harder it will become. Skip all the takeout food, no more starbucks or whatever else, if it means eating rice & beans everyday for a few weeks, so be it.
Also, maybe your parents / grandparents can help out with the day care, as in, if it costs you $600/month now, maybe they can do it for free or something lower than $600/month?
They may also be able to float you a loan at a better rate than banks.

The people who do debt consolidation are just in it for the $$$, they could care less about you, they just want their paycheck. I wouldn't trust what they said unless it is written down on a document with all the expectations, and associated costs it will be for the period specified all spelled out. Read the fine print as well. Don't just take their word for it.

 

[cbrunny]

Also cut out all booze, and if you smoke, well, if you smoke you're on your own. Vices should be the first to go.

 

[ponyo]

You can just not pay the credit cards and wait it out for 7 years. But I wouldn't do that over $14k. That's not worth it. If you're couple months behind on Chase, you can stop paying and try to work out a settlement with them.

Best way to attack the debt is to increase your income. It sounds like it's more of income problem than expense problem. Perhaps you could get another job or second or even third job. Even if you have to work 80-100 hours a week for one or two years to pay off the $14k debt, it would be worth it for the peace of mind.

 

[WAZ]

It's clear that my point completely went over his head and he's trying to make himself out to be the victim now. Glad some of you cleared up the point I was trying to make though.

Nope, not trying to play a victim. Just not interested in judgment or life advice from certain strangers on a forum who know nothing about me. Thanks anyway, though, for your answers to questions I never asked. Sorry, but when you start a reply by calling someone a dumbass you've lost any chance of me taking your "advice" as anything more than holier-than-thou horsesh*t from an anonymous troll behind his computer. You lost me immediately. And I don't care (and I'm sure neither do you).

How you live your life or spend your money or manage your budget is your prerogative. How we've gotten into credit card debt is ours. I don't really care what you think about that, or me, and was not asking for your opinions on my lifestyle or my personal belongings. If I came on here and said I had $14,000 in debt from gambling losses and a cocaine addiction, and was going to change my name and flee the country with zero intent of paying any of it back, I still wouldn't lose one second of sleep over what you thought about that. Of course that is not the case, but whether or not YOU agree with HOW we got into debt -- whether you think it was responsible, avoidable, or not the way you think we should manage our budget -- concerns me zero percent. All I was interested in was if this debt program I was contacted about was as shady as it sounded, or if it was anything resembling a viable path to getting out of this debt. I got that answer so I don't really need any of the added peripheral judgment.

WAZ, I've read everything you've posted. I won't lie, I don't have a ton of sympathy for you..

Thanks, but I should probably clarify/reiterate that I did not post any of this looking for sympathy. Really the only thing I was interested in was if anyone had heard of such a "Debt Rehabilitation" program that this company offered to me... if anyone had tried it and it worked, or if it was indeed as shady as it sounded. And the answers have been pretty unanimous and in line with what I assumed anyway.

I did not SEEK this program out; I've been applying for legitimate lower-rate consolidation loans to help me pay off the debt (a point that several of you seem to have missed or ignored). This company called ME after (supposedly) being referred from one of the loan companies. This program seemed a lot like a f**ked up version of filing for bankruptcy -- almost a form of loan "forgiveness" and making payments towards, yes, a smaller sum of money to get my credit back on track. And debt forgiveness is something which, I'm not ashamed to say, I would gladly take if offered and legitimate. This one, though, as I've said, sounded sketchy, the math sounded too good to be true, and my wife and I had pretty much made up our minds not to do it anyway. I really just wanted to see if the interwebs agreed and make sure I wasn't missing something... and the responses I've gotten here and elsewhere have reaffirmed that, so, great. That should be it.

I do appreciate the other advice I've gotten as far as alternatives like credit unions, etc. I appreciate the tactful responses. And I appreciate the genuine concern a few seem to have for my financial well being. Beyond that, I guess I'm not super interested in hearing either the condescending ("it's your own dumbass fault") or the obvious (more income, less expenses = balanced budget). I know this. If life was that simple nobody would have any debt, and creditors and collectors would be obsolete. But it's not that black & white — certainly not in my wife's and my situation. So honestly I don't really care if the rest of the commenters don't have sympathy for me, or think my wife and I don't work enough at our more-than-full-time jobs, or wonder what we spend money on (side note: no drinking or smoking), or think I have the wrong mindset because I won't lose any sleep if a debt collector who bought my $5,000 debt for $50 isn't going to get his commission (and I mean that -- I truly don't care -- about them, or what people think about my thoughts on them). Maybe that IS a bad attitude, but again, not really something for which I care what online strangers think about me. I had my suspicions about this "debt rehab" program confirmed in this thread and that's all I care about.

If that program was legit and I could pay $6k, have $8k "forgiven", and make that $14k all square with creditors, I would do it in a heartbeat and never look back. No question. And I don't care what people think of me for having that mindset. That said, it doesn't work like that, and I know that. It's clear the offer (which again, I did not seek out) was too good to be true and almost definitely a scam, so it's all a fantasy anyway. I'm not running from my debt, but I'm not afraid to look for the most financially beneficial plan I can to settle it either. If a chunk of it was ever forgiven/erased, then awesome. If not (and likely not), then fine. I'm not disputing that. As it turns out, in the end the creditors will get (most of) their money back, we'll get a repayment loan, reach settlement amounts and pay off one lump-sum loan over the next few years, and the world will continue to turn. The financial institutions will be alright, and so will we.

Thanks again to everyone who's taken the time to send me legitimate and tactful advice.

 

[Herr Kutz]

Starting a gofundme would be the most logical thing to do at this point.

 

[FeuerFrei]

I'd call card issuers and ask them for a lower interest rate. Don't know how flexible they are these days, but it worked for me once. 14% > 10%.

 

[zCypher]

I've been in a similar situation, but only one income. I struggled with debt for years, and at least for me, the only effective solution turned out to be changing the way I thought about it and making big lifestyle adjustments. I had 5 different credit cards, a car loan, car repair bills, and low income. I was using balance transfer "deals" to transfer debt from one cc to another. Not only was this a bad situation to be in, but I had previously run through a bankruptcy years before, so this was a repeat of the same failed behaviour that led me there the first time around. When the next big car repair hit me, I decided to scrap the car instead of going further in debt to keep that money pit going. I led a carless life for the years that followed while I cleaned up my debt. I accepted the fact that I was doing it wrong and no one else was to blame but me. It took time, but I changed and so my situation improved. Now I don't carry any debt, I have growing assets, I use my cc for everything but never make a purchase that I wouldn't otherwise be comfortable making with the cash on hand, so i never carry a balance.

It took a while but I was eventually able to put aside enough of a buffer that unexpected expenses don't ruin me. I realized that planning for the unexpected ahead of time is really the way to go, instead of justifying carrying a balance on a credit card. It's not easy, especially if you're in a bad place as it is, but it's not impossible. The bottom line is that if a couple of unexpected bills puts you under water, you were already in a bad place before that happened.

Obviously strangers on the internet are not going to know about all the details of your personal circumstances, but what people are saying in this thread pretty much makes sense. It's likely there are places you can cut back. The bulk of repayments should be made to the highest interest portions first. Any accounts that are still in good standing (not delinquent / no missed minimum payments), the lenders are more likely to be flexible in any solutions that could help you out.

 

[Ventanni]

I paid off over $25,000 in debt (medical bills, car repairs, and my own personal mishandling of a previous IRS tax bill) in less than three years. It was very difficult, but I did it. I did that on my own income, so between you and your wife, here is how you can pay off yours.

1. Budget budget budget. Cut the vices, fast food, and things you don't need. All of it. Date nights do not require $50 spent at a local restaurant. Always remember to pay yourself first.
2. Cut up all credit cards.
3. Start saving a small slush fund for emergencies.

If you can't master steps 1-3, then you'll just get into more debt once you're out of it.

4. Don't pay off your debt by going into more debt. There are apps out there when you can plug in your debts, and it'll actually tell you which to pay first and with what amounts so that your debt can be paid off the fastest and for the least amount.
5. Actually pay your debts. If you do it right, you'll come out with great credit every time.
6. Don't file for bankruptcy. It'll take you 10 years to repair that. You can probably pay off $15k in 1-2 years and this nightmare will be a distant memory.
7. Breathe. You're gonna be alright.

Listen, no one here is criticizing you as a person. You're a brother here, and we love ya. Establishing strong money habits where you're building wealth is really key to enjoying life to the fullest. Unfortunately, there's no quick solution to that, but there are lots of resources out there to help you get to that point. The most important thing I learned by paying off over $25k in debt was that the money was irrelevant. The habits and monetary discipline I built were priceless in comparison to the debts that I owed. I now build wealth, have lots in savings, and have a strong future ahead of me where I will be able to live and retire well. But honestly? I may have never learned that had I not made these mistakes to begin with.

 

[s0me0nesmind1]

Bankruptcy and start over.

No, the cost of filing for bankruptcy is worse than simply paying off the debt. Plus your credit will be screwed for at least 7 years.

OP seek out creditboards that are all about helping people in situations like this. You do not need to hire a company to legally challenge the creditors, that is something you can do with mailed in letters.