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Personal Finances / Credit Cards and Consumer Debt


Subject:  Re: Credit Card Debt - Best Approach? Date:  10/6/2012  10:40 AM
Author:  Gingko100 Number:  306010 of 312188

1. What is the best approach? Credit Card Companies will not work with him.
They will if he is delinquent enough. Of course by then it will have gone to collections which is its own kind of stress.

2. Legal help then what does he file?
There is no legal help that will do him any good. He agreed to pay this debt. He can't pay it. Legally he is required to pay it.

3. How does that impact his ability to go forward and purchase a 8,000 to 10,000 vehicle he needs? He is using one that is 15 years old now so he has the sacrifice part down.
He will have to save cash for this, and I would recommend a $3K - $5K car instead. I have no debt except my mortgage, and I bought a 11 year old Volvo for $3K a year ago. He CANNOT and should not be planning on getting a car loan. First of all, with his credit issues he would only be able to get a bad rate. And secondly - he already has debt he cannot pay (and debt he accumulated when he actually had a decent salary!). If he gets yet more debt on a car he will end up having it repo'd when he defaults on that debt too.

4. How will this affect his future employment opportunities if they do a credit check?
Badly, if they do it. But almost no companies actually do this. Just financial sector or military contractors I think. I've never had an employer do it for me in 25 years of working.

5. Can debtors get his 401K, home if not paid for, car worth 3,000,no boat, no other property,
It depends on who the debtor is. 401K - no, that is protected.
House? Well, it is secured by the lender, so they can foreclose on him.
Other items? Only if secured, but he can be sued by unsecured creditors and if successful they can garnish his wages, thus leading him to need to sell some of those things.

And if sued, there's nothing to fight. If he said he would pay it, then he will lose and there's no legal anything he can do about it. Straight ahead contract law.

I recommend he pick up Dave Ramsey's "Total Money Makeover" or listen to his podcasts. He's got great advice for those looking to shed debt sensibly. Of course it takes hard work - there's no shortcut. It should be noted that Dave is also a very religious Christian, which he refers to a lot and can be a bit distracting if you aren't of his background (I am not), but his advice is still quite good, and very clearly laid out.
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