“Debt Management” Archive
Sep
18
Okay, so here is some more good news on the debt front. I spoke with Bank of America today regarding the unsecured credit account I have with them and they were willing to give me a 5-year payment plan at 4.5% interest. I do of course plan on paying this back sooner than 5 years but overall this is one of the better deals I have gotten from any of the banks.
Nearly all my debt is now at 6% interest or less with nearly 25K of debt with Citicards at 0%. I have done MUCH better than what any of the debt counseling services would have been able to do for me.
So, if you are a reader who finds yourself behind in payments or overwhelmed by the astronomical default rates–I had one as high as 34.99%–here is my ‘playbook’ for you:
- Before calling any creditors in an attempt to negotiate, spend time gathering your financial picture, i.e. your net income and all expenses. If you already have a budget, like I now do, this should be an easy exercise.
- When you call the customer service number, be prepared for the ‘hard sell’ to make a payment today to bring the account current etc. Calmly but assertively explain that you are experiencing and financial hardship and are looking for a long-term solution.
- My experience has been you will then be transferred to a special department that handles these types of situations. Be prepared to share your financial information, i.e. expenses and income. You DO NOT have to tell them your employer, no matter how hard they insist. If the person refuses to proceed without that information, ask for a supervisor.
- If you are indeed in a financial bind, the creditors I have worked with generally offer a 48-60 month repayment program with interest rates as low as 0%; I have 0% 4.5% and 6% programs active with Citicards, BofA and Chase respectively. Make sure you sign up for something you can actually afford as you don’t want to put yourself right back where you are. If the payment truly is too high, even if it MUCH lower than what you pay today, speak up and you might get an even lower rate assuming they are charging you interest.
- Be sure to ask about the fine print. What kind of communication will be sent? How are payments to be made? When are payments to be made? Most importantly, get EVERYTHING in writing.
- Ask whether or not your account is eligible for re-aging. In a nutshell, this process will clear up those past due entries on your credit report after you make 6-12 months of payments ontime, but there are some limitations to this, some of which are federally mandated. Not all creditors will re-age accounts but it certainly doesn’t hurt to ask. Even if a creditor doesn’t agree to re-age initially, you can always write a letter after the fact asking for this. I have been successful with this technique.
Given how much better the deals I secured have turned out in comparison to the rates the credit counseling agencies were offering, my final piece is advice is to always try and negotiate DIRECTLY with the creditors first. Yes, some are more willing to work with you than others, but you need to try and think like a creditor. They DON’T want you going bankrupt or having things written off to collections as that almost always means less money for them. Keep this fact in mind and keep a level head and you can almost always reason with these folks; I did say ALMOST always as AMEX has made quite clear 
Jun
30
For the most part, the comments I receive on this site are positive comments, not filled with sympathy or pity, but just kind words of support or encouragement. This blog was intended to chronicle MY journey to repay my debt, and wasn’t designed to mirror the way anyone else dealt or is dealing with their debts. I am a very resourceful person who understands my rights as a consumer and I am using all the resources available to me in order to conquer this debt.
The situation with AMEX seems to have stirred up the pot a bit for some people. Some folks see my negotiations with the collection agencies who are handling my AMEX accounts as an attempt to ’screw my creditors’. Here I must disagree, as I made a good faith attempt to work with AMEX in order to repay the entire amount owed. AMEX gracefully declined and their own collection folks advised me to wait until the account went to collections as I would then have more room for negotiation, INCLUDING a settlement offer.
One commenter in particularsees this tactic as an attempt to ’screw my creditors’. Again, I made several attempt to work out a payment arrangement whereby AMEX would be paid in full over a period of 5 years. They showed no interest in this arrangement so I proceeded to work with my attorney and the collection agencies on a settlement. A lump-sum settlement for less than the total amount owed would seem to make no sense given my offers to repay in full, but when you consider the time-value of money it does indeed make sense from the perspective of AMEX.
Now, where I do take issue with this commenter is his attack on my character and the mention of my daughter. As I stated in my Privacy Policy I will never censor any of the comments posted here unless the comment promotes hate, uses foul language or promotes something illegal because I want to promote healthy debate on the site. None of my readers know anything about my character, my skills as a parent, the love I have for my daughter or my interactions with my family, other than what I mention here, so I was a little surprised at this reader’s reaction. What matters is that I know I am a caring, loving parent who will show my daughter how to avoid some of the mistakes I have made in life. If that isn’t ‘honorable’ so be it, but that is my plan as a parent.
Jun
14
Last night I watched ‘Maxed Out’, written and directed by James Scurlock. For anyone in credit card debt, this should be required viewing. One of the elements of the film I found most interesting was the segment on credit card marketing on college campuses. In the post ‘How Did I Get So Far In Debt’, I mentioned that I feel my problem with credit cards began in college, where is was AMAZINGLY easy to secure credit cards. The film has a great segment on how and why credit card marketers focus on college students. The bottom line, as you might well imagine, is that they are incredibly profitable.
WARNING: SPOILER ALERT
The really disturbing part about the segment involved two mothers from Oklahoma, both of which had children (a son and daughter respectively) in college who found themselves getting credit card after credit card. At one point, one of the students had secured 12–yes you read that right–credit cards. Both of these students were struggling to make ends meet, while attending college full-time. Ultimately, both of these students ended up committing suicide because they couldn’t keep up with their debts. This is where I just about fell out of my seat.
I can completely relate to the feeling of being trapped and helpless because of the tremendous amount of debt I find myself in. Yes, I have, at various points, contemplated ending my life to escape from it all. This is the major reason I am now undergoing intensive outpatient treatment (I’m writing this before I head to my treatment today). The Poll of The Weekis only a few days in, but the results so far confirm exactly what I thought would be the case; debt can cause serious mental health issues. There are only 21 votes so far on the poll, but an AMAZING 81% of folks report having their mental health impacted by debt, some even reporting their physical health being impacted simultaneously. I’m truly floored by this. If anyone out there feels so overwhelmed by the debt that you feel trapped, are depressed or even more serious, are considering suicide as the answer, PLEASE GET HELP! If you are in a crisis, please pick up your phone and call a Crisis Line.
I am coming to terms with my debt and the fact that there IS light at the end of the tunnel. It will involve hard work and sacrifice to get there but I WILL get there. I don’t think that I have mentioned this in any prior posts, but when I am debt free, I will be revealing my identity publicly. Greg Hunter at CNN mentioned he would be doing at least one follow-up story with me so hopefully I will be able to reveal my identity to everyone in a very public setting.
Jun
14
My DMP wasn’t supposed to start until mid July so I figured that before then I would try once more to secure a better deal than the credit counseling agency was trying to secure for me. I AM GLAD I DID!
A five minute phone call–a pleasant one amazingly–to Citibank who holds nearly 23K of my credit card debt, resulted in a great deal. As I mentioned in an earlier post, Diners Club agreed many months ago to knock my debt down to 0%, paid over five years; Diners Club is a division on Citibank. Well, I’m happy to say that Citibank agreed to knock down my rates to 0% on two of the cards I have with them. AMAZING!
So, there does appear to be some light at the end of the tunnel. The Diners Club card and these two Citibank cards represent nearly 45% of my debt, so having a 0% interest rate on this much of my debt is a fantastic opportunity. The payments that I will owe to Citibank are more than $100 per month less than what the credit counseling folks were offering me. In addition, Citibank will report my account as ‘Closed by Consumer Request’ and will report my payments as paid as agreed. In addition, they will allow me to keep my Citibank AAdvantage card–it has a $1,000 limit–open for emergencies.
Now, adding in AMEX in with Citibank, which is currently being negotiated with my lawyer and I anticipate will be settled for 45-50% of the original sum, and these banks collectively represent nearly 66% of my debt. AMEX will be settled and paid within two months in my estimation, depending on how much back and forth negotiation. Citibank has given me 30 days before I need to make payments, i.e. no payments until July, so I will have some time to get some cash together for an emergency fund as well as completely paying off all of the smaller limit cards.
After being in such a serious funk over the past week, this was certainly some welcome news. I don’t plan on using the entire five year window to pay Citibank. I plan on using a debt snowball for anything above and beyond my budgeted payments/regular income.
Jun
12
So I will not be having to check myself in anywhere but I will be doing an intensive outpatient program over the next 7-10 days in order to sort through the rather serious funk I find myself in. As I said, I think it is a combination of many different feelings, regret, anger, frustration, feeling trapped, guilt, shame and whole host of other emotions. In addition, my daughter’s birthday is coming up in two weeks and I think that realization just reminded me about how bad I have messed things up, at least to this point. That said, there is a glimmer of hope. I CAN change things going forward and frankly when I look back on my posts from two months ago, I really had NO plan whatsoever to conquer this debt. I now have a plan, actionable takeaways and although the light is distant, there is some light at the end of the tunnel. If nothing else, I am going to learn the value of hard work, discipline and sacrifice, all good lessons for my daughter to learn.
I wanted to thank ALL of you who made comments earlier today. They really kept me level headed and made me want to take charge of things and get well again. I plan to do a lot of exploring of the emotions I have surrounding this debt. I know several of my readers are craving some more context to my debt and want to know the impact it has taken on me, other than in my pocketbook. Well, stay tuned because I think you are going to get exactly what you want. This blog truly is like therapy for me and I am truly humbled by the fact that my writing has inspired, soothed, or otherwise given hope to someone. I’m glad I could rely on my readers today for some ‘handholding’. Thanks again everyone and stay tuned for some interesting and revealing posts over the next few weeks.
Jun
12
I think my biggest issue right now is that I feel like a complete failure. I did things during my marriage, both financially and non-financial to cause my marriage to end, so I failed as a husband, as a life partner. I also feel like a failure as a father. Due to the distance and expense, I only see my daughter once a month at best, and even then it is usually for 2-3 days. This debt is like a huge ball and chain and I cannot support my daughter the way I would like. I can barely meet my child support obligations. I just feel like I have let my daughter down tremendously by putting myself in the situation I am in. She is too young to understand things, this is true, but it doesn’t change the fact that I have tremendous guilt and shame about all of this. It is the guilt, shame and seeming inability to control it all, that has my head spinning these days. I know ‘Rome wasn’t built in a day’ but it is difficult to see any light at the end of the tunnel. The math just doesn’t work. Maybe I should have put a donation button up after all in case some ‘angel investor’ came my way. Ah, wishful thinking I know but it made me feel better for a second.
Jun
12
As I revealed somewhere in a prior post, I have bipolar disorder and this, at least in my opinion, when undiagnosed contributed to my overspending and reckless financial and other behaviors. Well in the last few days, the reality of this whole thing has really hit me hard. My bank accounts are nearly depleted between paychecks, my credit score is now under 500 and although there is a plan to pay off this debt, it does seem completely overwhelming and over the past two days I have been overwhelmed with guilt, shame, anger, depression and thoughts about things I shouldn’t be thinking about. I’m about to call my EAP (Employee Assistance Program) and hopefully I will be able to meet with my doctor today.
I’ll keep everyone posted but depending on what happens, I may have to take a temporary break from posting.
UPDATE: After speaking with my EAP, they have advised me to go to an Emergency Room so I can get some immediate care. I’m arranging for someone to care for my dog in the event I end up in the hospital for a few days.
Jun
9
As you all know the debt has had me pretty stressed out the past few weeks but with negotiations underway to settle the AMEX debts and the details of the DMP to be settled on shortly, I do see some light at the end of the tunnel. The good news is that on Friday I officially signed the retainer for my attorney (all covered by my group legal plan) and I no longer have to deal with the clowns at the collection agencies. For now they will remain nameless but I have checked them out on several sites, including My3Cents.com and RipOffReport.comand it looks like my opinion of these firms isn’t far off. My lawyer called both firms while I was in her office and informed them that no contact should be made with me going forward; she also fired off a letter to this effect as well. She seems like a ‘touch cookie’ just like me in terms of her negotiating style, so I am confident things will get resolved to my satisfaction with my credit relatively intact and my payment only amounting to a fraction of the original debt. Again, I cannot help but wonder why AMEX would want to NOT work directly with me and collect all their money, but based on other readers’ response to AMEX, I’m actually kind of glad that in some small way I will stick it to them. I will, of course, keep you all posted on how the negotiations progress and I hope to share the lessons learned from this process with all of you. I realize not everyone in my situation will find themselves fortunate enough to have a group legal benefit at their disposal so I hope to share some tactics, letters and other tidbits that may allow others to deal with a similar situation on their own.
Jun
8
Thank goodness for my legal plan and the fact that in a few days, I will not have to have any further contact, phone calls or otherwise, with the collection agencies that AMEX has assigned to my account. The first firm, is clearly an outsourced operation to India. The folks that call me sound like they are 10,000 miles away and have a clear Indian accent. The thing that most amuses me about this firm is that the representative’s name is Ken Smith; how nice of him to choose such an American name. This company, which will remain nameless for now, absolutely refuses to send me ANYTHING in writing regarding a settlement. They constantly try to pressure me into settling directly with them, without any review of documents by my attorney. Hmmm, I wonder why? Could it be that my attorney is going to abide by the law and also use her negotiating skills and drag this thing out a bit. Of course!
The other firm is equally as slimy but since these folks are located in New Jersey, they choose to take the east coast, no nonsense, rude, in your face approach which frankly carries no weight with me since I too am from the East Coast. I just let these folks read their ‘riot act’ and tell them ‘have a good day’ or ‘ you can speak with my attorney’. These folks claim that in order to be able to offer me a settlement of less than 50%, they require a documentation regarding my hardship. When I say ‘okay, can you send me that in writing’, you get the run around and excuse after excuse why they aren’t going to do that. My favorite line is ‘you are the debtor here, you don’t dictate terms’. That is where they are wrong. If these folks want to get paid, then yes, they will indeed have to negotiate and agree to some of my terms as well. They just try and talk tough and perhaps they think I am bluffing about having an attorney. Oh well, soon it will all be out of my hands and the only thing I will have to respond to is my attorney’s questions and emails. That will be a nice relief. I am a very strong willed, educated person who understands the law and my rights in these matters but I can certainly imagine how these firms try and strong-arm people who don’t know their rights and understand what these clowns can and cannot do. I’d put a collection agency up there with a used car salesman in a strip mall. You can’t trust them as far as you can throw them.
May
31
My debt load has some obvious impacts on my finances, i.e. a lot of money I make goes toward paying my debts and not toward saving, investing for retirement or saving for my daughter’s college expenses. That said, there are some other, less obvious ’side effects’ from my ‘debt disease’ that have a fairly significant impact on my life:
Job Choice — Although I am by no means miserable at my current job, I would certainly love the opportunity to do something different that gave me a deeper sense of satisfaction. Unfortunately, for the moment I must take a job that pays me well, has AMAZING health benefits for me and my daughter with a company that has virtually no risk of a layoff. No, this isn’t such a bad thing, but my ability to ‘experiment’ or otherwise revamp my career is on hold until my debt is gone. I often wonder if I would be a happier person if I could actually pursue a career where pay was not the overriding, motivating factor.
Stress — Does being this far in debt keep me up a night, cause me some sleepless nights and cause me undue stress? YOU BET IT DOES! This stress used to cause me to take on other destructive behaviors such as binge eating which in turn led to weight gain. Through my diet and exercise program I have found new outlets for this stress. Even with my debt progress however, I still have the occasional sleepless night thinking about the mistakes I’ve made and how I will manage to get myself on the right track again.
Retirement Savings — Given that I must put a good deal of my earnings toward repaying my debt, my ability to save for retirement is very limited. I do contribute to my company’s 401K plan because I don’t want to give up the ‘free’ money I get from the match, but for now that is the extent of my retirement planning. By being in debt at the levels I am, I have easily added 10 years to my working life, or alternatively, significantly increased the levels of saving I will have to achieve in future years in order to reach my retirement goals.
Are you experiencing any of the same ’side effects’? Any others?
