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What now? More debt than money

Do not go into debt consolidation- do not sign up with a company that offers to lump all your debts into one monthly sum and then guarantee you the monthly sum “could be up to half what you are paying now”!
Do not go into debt settlement or with any type of company that will offer to pay your debts for you with one monthly lump sum that you pay to them and they “will do it for considerable less than you ever could.”
You can be your own advocate. Nobody wants to get you out of debt more than YOU!
I don’t care what that debt counseling agency is promising you- they really can’t do more for you than you can do for yourself. In fact, from my own very real and personal experience, they can make your nightmare much, much MUCH worse.
We thought we were going the smart route- because we found a “Christian” debt solution company to help us. We would pay them x amount of dollars each month and they would “work” with our creditors using the amount we give them (minus their monthly fee) to come to term settlements. The best part- with them we would be debt free in 3.5 years. I remember asking, “So I pay you x amount each month and you’ll take care of my creditors? I won’t have to DO anything?” To which they slyly replied, “Yes.”
I wish I’d recorded that conversation. Here we are 2 years into this and we’ve been threatened by creditors (who have also called our neighbors, my parents and my brother- all of which is illegal by the way, according to the government’s Fair Debt Collection Act- of which I knew absolutely nothing about at the time). We’ve had our bank accounts garnished- more than completely wiped out when the overdraft fees and misc. charges came into affect. AND we’ve been sued. Yes, they’ve been real helpful in paying off our creditors on our behalf. [My sarcasm is more than implied here- the sentence simply oozes with it!]
Are you at this spot? Please heed my advice- fight for yourself. Contact your creditors and explain that you are unable to make your monthly payments in their current amount; they will be willing to work with you, as they do like to be paid. Never not make a monthly payment- even if it’s only $5- pay some bit of money to them every month and on time. Do not get behind in your payments. The first  thing the debt counseling agency told me to do was stop making my payments- I didn’t look poor enough or in need enough, they said- they couldn’t help me unless I was at least a month behind, they said. DO NOT DO THIS!
Go to your library and check out or interloan request Dave Ramsey’s book The Total Money Makeover or the book, Debt Cures by Kevin Trudeau. Both of these books give you wonderful advice (and helpful letter forms) of what to do when you are at this point. [Side Note: I don't agree with everything in Trudeau's book  nor am I comfortable with the information I have found out about him, personally- but the book is indeed helpful in some respects so I will keep it listed here. Just be mindful to decide for yourself- this post is only my personal opinion and experience.]
You will need to be proactive. You will need to fight for yourself. You will need to show your creditors your budget and disposable income (money that is left over after meeting the necessities for living and taking care of your family) as this shows them in black and white that you are truly unable to make the monthly minimum payment. It is my understanding that most creditors will work with you on this as long as you pay them some amount on a timely basis every month.
You can even settle debts with creditors on your own. You can offer them a lump sum payment (that is less than the total amount owed), if you can come up with one BUT- Please, for your own sake, get this agreement in writing before you send them your money. You may need the proof to back you up later on. You must keep records and have proof of all your agreements. [Of note, if you are able to reach a settlement agreement you will be required to report this for income tax purposes. The company you settled with should send you a 1099-C form.]
I do not believe that I can speak much more on this particular part of the subject except to say that I dearly wish we had gone this route. I again refer you to the two books mentioned above for more on this.

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7:43 AM, 2008-Feb-9 .. Posted by Charity

Thank you for sharing!! I'll have check thoughs books out.

Right now I am reading "Natural Cures "They" Don't want you to know about" by Kevin Trudeau This book is very good!! Most of what he says can't be far from the truth. I may not agree with absolutly everything but as for a lot of it I do.

Thanks again for sharing!

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2:31 PM, 2008-Feb-9 .. Posted by Lynne

Amy,
I have read something that I find very disturbing. I have read that the checks we are supposed to be getting from the government are actually ADVANCES ON YOUR 2008 TAX REFUND.
That means that if you normally get $1200 back on your taxes, and you get a $1200 tax rebate check this June, you will get NO refund in 2008.

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4:43 PM, 2008-Feb-9 .. Posted by gabbie427

If you owe more than you can pay on, call the companies one by one and ask if they will take less. Ask if the credit card companies will lower your interest rate, and ask if you can make smaller payments. They might say no, but they might say yes!!!

I had to do this several years ago and most companies were willing to work with me since I was calling them in person instead of just ignoring their requests for money. Amazing huh???

God's Blessings,
Amy Jo

Lynne

4:46 PM, 2008-Feb-9 .. Posted by YPAmy5

Oh, I don't like that! What is you don't even get that amount- do they expect you to pay the difference?
Yikes.
I certainly hope that isn't true.

Lynne

5:12 PM, 2008-Feb-10 .. Posted by Anonymous

Amy,
I read on CNN that this is just an advance on your 2008 tax refund. So, if you are someone who has your taxes withheld at just the right amount so you owe nothing extra and receive no refund, then you will owe back ALL of the check you receive this June (on April 15, 2009).
This all makes me so mad. If what CNN is reporting is true, then the politicians are just trying to make the economy look temporarily "better" before the election, then April 2009 people are going to be hit with repaying this refund advance with no warning.
I have also read comments on another site that credit card companies are sending notices to card holders that they are raising their credit limit (so you can borrow more!) and raising the interest rate to 29% even on those with excellent credit ratings. Another person wrote in that he pays off his credit card balance each month in full, and that for the past two months he sent in his payment two weeks before the due date but was assessed a late fee. Apparently the credit card company just held his check and did not cash it until after the due date, and now it is his word against theirs that it was sent in on time. He said this month he sent in his payment certified mail, signature required and he is canceling his card once this payment is registered.
I think you are right, Amy, we all need to just quit using credit cards and put those companies out of business.