Hello again:A couple of weeks ago I started a lengthy thread about my particular CC problems called "Get me off this crazy machine". Very briefly, I'm a 34 year old overwhelmed with $60K in CC debt, has a $250K 401K, and is considering chapter 7 BK.Many Fools asked me to tell them how I managed to get my self in to such a mess. I had to leave town on business and promised that I would answer after June 4th.I just got back last night. I don't anticipate getting a couple of free hours the next two weeks to compose a well written explaination. I will though. I need to do this to force me to come to grips with this debt.I browsed the messages on this board this morning. One fool described how his CC problem grew so large. I couldn't have described the process better. He mentioned that having multiple CC's allowed him to raise his monthly living expenses to eat up all montly income. Numerous small "emergencies" charged to the cards over the last 5 years built up to some very serious debt.In general, I got in to this much debt the same way. My "emergencies" are unique to my family of course, I and won't bore you the details here.I would like to thank the fellow Fools for making this forum possible. Knowing that I can discuss my problems and get sold ideas and encouragement has given me a ray of hope of achieving a debt-free future.
Cable,<<I would like to thank the fellow Fools for making this forum possible. Knowing that I can discuss my problems and get sold ideas and encouragement has given me a ray of hope of achieving a debt-free future.>>That is one of the main aspects of this board. I dont think I could have survived this long without this support mechinism (for lack of a better term). Alot of ppl (not all) who post on this board are in way over their head w/respect to Debt and fighting to reduce it (I'm this boat). Everyone is welcome here to add their plights, strategies, and methodologies to get out of debt (or how they got into it). A large majority (it would appear and myself inclusive) have take great pains to own up to their debt and pay it off at some unfavorable, and other at more favorable terms. Other still have choosen the route of going to a Consumer Credit Group like CCS to have them manage their debts and aid in renegotiation. Where you might see blackness and dispare... There really isn't. As you said you see a ray of Hope, Hold on to that for all its worth. You can & will get through this. It wont be tomorrow, nor the day after that. But slowly you'll begin to see the opening at the end of the tunnel and WILL emerge! <<In general, I got in to this much debt the same way. My "emergencies" are unique to my family of course, I and won't bore you the details here.>>Actully, I think all of us can benefit from them in general. Granted the specifics dont need to be there of all the options and discussion you and your wife made. But the generalities and of course whatever you are comfortable discussing here. If nothing else it might make ppl aware of some hidden costs in an emergency repair and aid you getting some pent up frustrations airred. I do wish you luck. Hope you give an update to your situations soon.RobBottles
Cable666,I went back today and read through the entire "Crazy Machine" (Part 1) thread, and I don't see any reason to bother continuing it with a Part Deux. You seem to be very well set on what you're going to do. You're not going to pay your debts (unless a court forces you to do so).My point of view:Your retirement fund was built with the credit card companies' money. Let me say that one more time, a little differently: YOU BORROWED FROM YOUR CC COMPANIES TO FUND YOUR PRECIOUS 401K.You did this by ignoring your monthly bills (which you placed on the CC), and contributing to the 401K instead.You can do one of two things here, Cable666: Either you can be a responsible person worthy to be called a "Fool" and pay the money back, or you can be an irresponsible schmuck and try to use lawyers to get you out of the hole which YOU dug.Credit card companies take a pretty good beating around the MF, especially on this board. But that's no excuse for STEALING $60000 from them to fund your 401K. What you did is no better than (were it legal....) taking a $60000 cash advance off a card, directly depositing it into your 401K, and then filing BK b/c you figure with your "Dream Team" of lawyers that the CC company won't be able to touch it.But you seem to have already decided which road you want to take......ShealyP.S. If you take $100000 out to pay the debts, plus penalties and tax, you still end up in 30 years with an inflation-adjusted $1.1 million at 4.5% inflation and the historical stock market return (12%). This assumes you never save another penny for retirement again. Put that in a 6% money market fund, and you're making (again, inflation-adjusted) more than you make in salary now. I have no sympathy for your "retirement predicament" whatsoever.....
>> Your retirement fund was built with the credit card companies' money. <<Perhaps I would not have put it so brutally, but I can't help but agree with Shealy.>> If you take $100000 out to pay the debts, plus penalties and tax... <<Please, please give this consideration! If your predicament were mine, this is the only solution that would keep my conscience clear. I'd feel awful enough if I had to write off debt that I rightfully owed (although sometimes we have no choice), but I'd feel even worse if I did so despite having the financial means to pay off those debt.Yes, the law would be on your side if you declared bankruptcy. You could write off the debt and keep your quarter mil. However, I can't deny Shealy's comparison of this choice to outright theft. You would merely be taking advantage of bankruptcy laws and twisting it in a way that those laws weren't meant for.Check with a professional on this, but you might try borrowing against your 401(k) and pay back as best you can - usually the rates are around 8%. Strictly speaking, I don't think one can really default on a 401(k) loan. If you fail to pay it back, I _think_ you just get hit with the taxes and penalties. I _think_ it doesn't show up on your credit report since you were only lending the money to yourself. You could even try a combination of withdrawal and loan to keep the payments lower. Like I said, check with a pro.Please let us know what decisions you make.--Mike
Shealy's response to Cable666:<<But that's no excuse for STEALING $60000 from them to fund your 401K. What you did is no better than (were it legal....) taking a $60000 cash advance off a card, directly depositing it into your 401K, and then filing BK b/c you figure with your "Dream Team" of lawyers that the CC company won't be able to touch it.>>And<<YOU BORROWED FROM YOUR CC COMPANIES TO FUND YOUR PRECIOUS 401K.>>I couldn't have said it better myself. Thanks for putting the cards on the table Shealy.Christine
Great post, Shealy.
Shealy wrote:"I went back today and read through the entire "Crazy Machine" (Part 1) thread, and I don't see any reason to bother continuing it with a Part Deux. You seem to be very well set on what you're going to do. You're not going to pay your debts (unless a court forces you to do so)."The post seemed somewhat rough, Shealy. Though I amy agree with you in spirit about paying back what is owed if in a position to do so, in Cable's defense I will say at least he came here in an effort to get some input on alternative courses of action. That speaks well of him, at least.Cable, you said before, you commit 6% of your pay to your 401k. This was in the neighborhood of 3827 in 1997 if I remember correctly. you also said your company matches. May I ask how much they match? Is it 100%, 50%, 25%? You also stated you are looking at a 4.5% inflation rate and an estimated return of 8.5% (though, as you know, you could do quite a bit better). I went to http://www.smartcalc.com/cgi-bin/smartcalc/SAV1.cgi/Kiplinger and ran these numbers (age 34, retire at 63, 4.5% inflation, 8.5% return, $320 per month invested ($3827/12), assumed your federal tax rate at 30% and state at 8%, and showed $150K to invest now ($250K - $100K)). I came up with $1M by 65. So I bumped the monthly by 25% (assuming your employer matches at this rate) to $400. This puts you at $1M at 64. Finally, I doubled your monthly ($640), assumming a 100% employer match. This puts you at $1M by 61.If you can increase your ROI to 10%, you are at $1M by 58.(all this is not including the $100K being paid back.) You stated a loan from the 401K isn't an option since you may have to change jobs, though you didn't state why. You also stated your CC bills were over $1000/month. However, once you CC bills are paid, you don't have that $1000/month going to them. Use that to pay back your 401k. (If you can come up with a little more, use that as well.)Sure you may have to stay a little longer, but isn't that worth a clean credit rating?
Sorry for the long post before, but I just had a new idea. If you liquidate your current 401k and pay off your CC debt, you end up with $40K after taxes, penalties, etc. If you the invest the $40K (in a tax-deferred investment), then make additional monthly investments of $1320 ($1000/motnh from CC's and the $320/month from your current 401K), at 12% annualized (perhaps an index fund?), you end up with $5,149,256 at age 63. If you do no better than the 8.5% you're at now, the number is $2,412,951 at 63 or even $2,889,629 at 65. I found these numbers at http://www.smartcalc.com/cgi-bin/smartcalcpro/sav2.cgi/FinanCenterRogue31
Shealy, I can't agree with you more!! In a post from a week ago, I mentioned that I felt Cable666 is not looking for advice and suggestions but rather looking for someone to agree with the bankruptcy option. CC companies lose too much money from people who abuse the Ch.7 system and pass along their losses to the rest of us in the way of outrageous APRs. Rogue, I'm sorry you took the time to crunch the #'s to determine when cable can become a millionaire. My salary is in the low 20's with a CC debt hovering around $20K. With that, I am now working 2 jobs to pay off the debt by Christmas. I fully intend to pay every penny and once its paid off, then I can start putting away for retirement. I could never accept a payout of $1 mil knowing that I walked away from a large debt that I incurred. Shealy, thanks for voicing what I believe is a consensus opinion.
Punchy, I meant that he could still be looking at a large payout AFTER he pays off his debt.Rogue31
Rogue,My mistake. I apologize.
<<Perhaps I would not have put it so brutally...>><<The post seemed somewhat rough, Shealy.>>Barry Goldwater died last week, and if there was ever a guy who "said what he meant, and meant what he said", it was him. That post was in his memory. ;^)(Plus, the normal Gemütlichkeit of the CC board didn't seem to be getting through to cable666. I figured calling a spade a spade was appropriate....)In all seriousness, though, most of the people who post around here are hard-working people who've gotten in over their heads with easy credit. They use this board for strategy and therapy to help them get out of some pretty tough predicaments. There are even a few people around here where the phrase "pretty tough predicament" is a definite understatement of reality.....Then along comes this guy who's using (abusing) his credit cards to finance his stock portfolio (hey cable666, did you ever think of writing off the CC interest as Investment Interest? Run that one by your lawyer....), and now he doesn't want to pay the loan back!If we were all only so lucky! Imagine what kind of returns we all could have if we could max out margin on our accounts.....AND NEVER PAY BACK THE THE LOAN!No sympathy.Cheers,Shealy
<<I would like to thank the fellow Fools for making this forum possible. Knowing that I can discuss my problems and get sold ideas and encouragement has given me a ray of hope of achieving a debt-free future.>>Cable,Welcome back from your trip!It's more than just a ray of hope, Fool, it will happen. I say this because you've made the Foolish commitment to see that it does, and we'll be here along the way cheering you on.Hopefully, you'll keep us posted with the score, and what encouragement it will be for many others to see the progress as it happens. When you reach your ultimate goal, it will be an inspriation for many new Fools.Good luck!Tony...but I still am...Off2Aruba
Shealy,Ouch!!!! ... but well said ... and I'm the bleading heart liberal :-).One small point: <<< If we were all only so lucky! Imagine what kind of returns we all could have if we could max out margin on our accounts.....AND NEVER PAY BACK THE THE LOAN! >>>However, I think that most people's current intent is very different from their original intent or negligence (what I would lack of specific intent or lack of awareness of finances).Many people do simply take the easy credit to finance a lifestyle that they could not otherwise afford. In essence borrowing from their future to pay for their present. When they wake up and smell the coffe we (on this board) help many out, give much encouragement, etc.Even though I disagree with Cable666's apperant course of action. I truly doubt that he intened to end up where he is now and hope that he does the right thing.Fool On!-ChicagoBob
Shealy,Couldnt Agree with you more... Albeit in some of the harshest, but more than likely deserved tones I have seen on this board. This person obviously needs help.. ALOT of help. He also needs to Take FULL accountability for all his past sins... More than likely, if he opts for the easy way out he'll end up doing it again.BottlesRob
Watch out, you might get hit by a stone.
"Great post, Shealy."Couldn't agree more.Truth may be harsh, but it's still the truth.Corvette Barb
<<Albeit in some of the harshest, but more than likely deserved tones I have seen on this board.>>You can blame it on WadaPhooliam (smile, Michael ;^). After I took a nasty shot at Credit Card companies the other day over on the WWF Board (alias: The Communion of Bears), he invited me to come over and check out the Credit Card board for a while.So I come over and visit, and I find a bunch of people who are in the same boat that I was in 3 years ago. My wife and I, fresh out of college, had about $50000 worth of unsecured debt (credit cards + student loans). Right around the end of '97, we finally got into the black. (BTW: It would have been nice to know about this board back then. Three years of frugality can be awfully lonely. A couple of WOOOO HOOOO posts in celebration late last year would have been great.... ;^)Then I come across this thread about a guy with a quarter-million dollars in assets against 60 grand in debt (equity:debt = 4:1). And he won't pay the debt.How many of you all saw "Clear and Present Danger?" Remember when Harrison Ford (playing Jack Ryan, the "Good Guy") finally realizes that he's been set up, and that he's actually up to his neck in a Colombian scandal (like realizing you're up to your neck in CC debt...), and he heads into the CIA office to print out some incriminating files for evidence? And then (I believe his name was) Cutter comes in and starts deleting the files?Right after that, when Ford comes blasting through Cutter's door and proclaims that Cutter's going down with him, Cutter whips a letter out of his safe from the President which gives him (and only him) authority to conduct the Colombian operation (essentially a "Get Out of Jail Free" card), and says mockingly "Got one of these....JACK??"And then you, as the movie-watcher, think "Oooooooooooooh.....SCUMBAG!"Well cable666 is no different. He's up to his neck in CC debt like a bunch of other people around here, except he's got a letter, too. One from Congress, which says that retirement funds aren't to be touched in BK cases. And he's looking at everyone who's on this board who wasn't "smart enough" to funnel their credit card companies' money into a retirement fund, and saying mockingly "Got one of these....JACK??"To which I reply: "Oooooooooooooh.....SCUMBAG!"Not because I'm jealous, or b/c I didn't think of it first (heck, any 12-year-old could figure this scam out, if 12-year-olds cared about taxes, finances, bankruptcy law and retirement shelters). But rather b/c he IS a scumbag for not wanting to pay back his legitimate debts. ("Wanting" is the key word in that sentence. "Wanting" implies that you recognize that you took on legitimate debt with another party under a contract to pay the debt back, and that you feel that you would be wronging the other party to not use any reasonable means to keep from defaulting on that debt obligation. To do otherwise, in your mind, would be classified as "stealing".)Cable666 doesn't have a financial problem at all. He has a moral and ethical problem in that he sees no reason to pay back a valid $60,000 loan, although he fully has the means to do so.My two cents.....Cheers,Shealy
ShealyThat is an interesting and apt analogy. Point well taken.StanBTW WOOOOOOOHOOOOOOO!!!!!! Its never too late to celebrate freedom from debt.
Thanks for the feedback, both harsh and encouraging. In my defense, I would like to make some points.First Point: I have not filed for BK. I am considering it as a worse case option. I have not filed because I still have options open, and there is still room to manuver. I realized that at best, I will have late payment history on my CC's, and at worse, BK chapter 7.I owe the CC's a lot of money. I know that they were not going to be very nice to me when I went delinquint. My 401K assets were considerable enough to hire a good attorney to advise me. I needed to know what they could, and would, do to me. I needed to know how much of my assets they could take, and what other consequences I would suffer if they did this. I needed to know how much of my pay they could garnish, and what else they could do. He advised me to simply cut to the chase, file chapt 7, and get on with my life.There is no way I can pay them back on their terms as currently written (22% APR plus lots of pentalties). I have to do something else. What I want is for them to stop and reverse pentalies, and lower the interest rate so I can pay all of them off over a long period of time. Currently we are far, far apart on a deal.Second Point: I stopped paying my CC's for a few months in order to get other aspects of my financial life in order. I was stretched so thin meeting CC payments that I was serously risking missing a rent payment and loosing my home. I was also behind on many other bills and had zero emergency savings. I made the decision to postpone CC payments for 6 months so I can get my other bills caught up and put $2K in the savings account for any emergancies. By late 1997, my family could either be homeless, or late on the CC bills. I chose the latter.I'm now caught up on the monthly bills, balanced my budget, and am ready to resume payments, but not at the levels I was before (otherwise I'll be in the same jam as before). I am negotiating with the CC's to come up with a re-payment plan I can live with. I have no desires to get another credit card. Just to get some financial sanity in my life. The CC's are playing serious hardball with me right now. I need my attorney to help me negotiate with them.Third Point: I didn't fund my 401K with my credit cards. It just ended up looking like that because of the bull market, profit sharing, and some great company stock. Over my lifetime I have contributed only $32K before taxes to my 401K. That works out to about $20K after taxes over the last 11 years. I stopped my 401K contributions for almost a year to increase my take home pay to pay for an "emergency" 3 years ago. My paycheck went up a whole $50 bucks. I figured if I can't set aside $50 a check for retirement, then I am a super idiot.I'm extreamly reluctant, apparently much more than other Fools, to tap in to my 401K because I don't want to make TWO major financial mistakes in my life (CC's being the first).All the decisions I face are irrevokable and all have very serious long term consequences. I must weigh all the facts, and consider all options before proceeding. That is why I didn't walk straight from my lawyer's office to the BK court. That would be too easy and it wouldn't address the roots of the problem. I need to know it is possible to get out of the jam I'm in. That is why I am here on this board.I'm sorry if I gave the impression that I want the easy way out. I really don't want to use the escape hatch. My highest priority in life is to keep my family housed, fed, and healthy, both today and tomorrow. If I can not do that, then I have to take whatever actions I need to protect them, even if it means BK for me.
Has anyone had experience with a hardship distribution of a 401K? Who make the decisions? A judge? Thanks!
>> Has anyone had experience with a hardship distribution of a 401K? Who make the decisions? A judge? Thanks! <<Hardship withdrawals are clearly defined - things like medical payments, college tuition, and buying a first home (although the last might only apply to IRAs).High credit card debt, which may be a hardship to the borrower, does not qualify as a hardship for the purposes of penalty-free 401k distributions.Even with a qualified hardship withdrawal, you still owe taxes.--Mike
CableI, and I am sure others here, am really glad to hear that you want to cure this problem.One thing is sure-this is not going to be painless, regardless of your decision but you can get it done. Others here know much more than I about 401k options, but if you can borrow from yours and retire a significant portion of your cc debt, you will be well on your way to solving the dilemma.Understand that almost everyone here is or has been where you are now. We have all had the hopelessness and anxiety. YOU CAN FIX THIS!I have created an excell spreadsheet that I use to track my finances and it did wonders for us, I will be more than happy to send it to you so that you can get a really good handle on where your money goes. You will need a major infusion of cash now to settle most of the debt but you can regain any positive investments you have after that by sound management.Now that you have erased the impression that you were looking for a "free ride" I am sure that the fools will jump in with some sound advice.Stan
YOU ARE _NOT_ IN FINANCIAL TROUBLE!>> I realized that at best, I will have late payment history on my CC's, and at worse, BK chapter 7. <<I wouldn't regard BK as an option. I think the point many people are trying to make (and I'll try to be a bit gentler about saying it) is that you are _not_ having financial problems. Your situation is far different than someone who has a lot of debt and no assets (a negative net worth). Not only do you have plenty of money to pay off your debts, you'd have an enviable amount left over in your retirement account.FWIW, I have no credit card debt, but my net worth is far less than yours. I'd trade places with your financial situation in a heartbeat.>> my family could either be homeless <<Not unless you choose that route. You've got _plenty_ of money to pay your bills.>> My highest priority in life is to keep my family housed, fed, and healthy, both today and tomorrow <<Cry me a river. I've got a stay-at-home wife, two kids, and far less money than you. We're living comfortably, thank you. We even managed to buy a home, eat out occassionally, and save for our kids' college education.>> I owe the CC's a lot of money. <<But your assets are 4 times greater than your debt.>> There is no way I can pay them back on their terms as currently written <<Yes, you can. Withdraw from your 401k.>> I need to know it is possible to get out of the jam I'm in. <<By withdrawing from your 401k.>> I'm extreamly reluctant, apparently much more than other Fools, to tap in to my 401K because I don't want to make TWO major financial mistakes in my life (CC's being the first). <<Tapping your 401k is _not_ a mistake here!>> I have contributed only $32K before taxes to my 401K. <<Wow! And now it's $250,000! Just think of all the money you made tax-deferred over the years! The tax-deferred aspect ought to have made you far more money than the 10% penalty the IRS will charge you for the withdrawal.Had you reduced your 401k contributions and just kept up with your debt, you'd actually be in a lesser financial position than you are today. You lucky dog! You can pay the IRS penalty for your 401k withdrawal and _still_ come out ahead!>> He [lawyer] advised me to simply cut to the chase, file chapt 7, and get on with my life. <<Of course. He's pointing out a loophole in the law that allows you to cheat the CC companies. Sad to say, but he's just being good at his job.YOU ARE _NOT_ IN FINANCIAL TROUBLE! Your lawyer has simply told you how to avoid paying money you rightfully owe.You might consider re-examining your standard of living requirements and retirement goals. It sounds to me like you've set your sights higher than your income will allow. I you don't lower them, this cycle will repeat itself.--Mike
Cable,I think there are even a few unexplored avenues that havnt been touched on yet and maybe of some use. One that stand out to me is that your a computer programmer making about $65K a year if I remember right. Have you ever considered adjusting your income in all this? By that I mean perhaps looking for a new job with an nice be signing bonus that is typical in your field. Perhaps even going as a job shopper/contractor (little or no benefits) but you income goes from the $32.50/hr (est) your at now possibly as high as 45-50/hr or more as a contractor. As for Health insurance (probably the largest concern) you would have to pay for it with a COBRA but you could be covered for I think up to 18 months.Perhaps even a 2nd job for a limited time. Many ppl on here have done that. Not that that doesnt come with a downside... One other option and its debated often here (soo look into past posts) would be to goto a consumer credit service (CCS). Dont know a web site for them or would post it. But they are better at negotiating with CC companies as many will atest too. There are pluses and Minus associated with them but I think its alot better option than bankruptcy. Although the consequencs of this route are very similar to bankruptcy from what ppl have posted. They seem to be the only ones I hear with routine success in renegotating terms with CC companies. <<I'm extreamly reluctant, apparently much more than other Fools, to tap in to my 401K because I don't want to make TWO major financial mistakes in my life (CC's being the first).>>I Don't ever Consider paying off your CC Debt to ever be a mistake whatever the means that are used to do it. Whatever your choose has many impacts and implications... So u work a few extra years to retirement... if you choose this. As I see it this is your least painful alternative.There are many ppl in your same shoes. I am one, with the exception - Bankruptcy was never an option and I only have roughly 40K in various 401Ks. As long as I can keep shrinking that debt every month even by a few $$s I wont touch the 401Ks.One note. My wife is in the same field u are. Computer programming and she switch jobs in Jan '98 to a consultant/Job Shopper and makes around that $50/hr mark. This was our solution. It was a job she hated to leave and has put some strain on us but we did what we had to do...Good Luck and thanks for some clarification. RobBottles
>> Perhaps even going as a job shopper/contractor (little or no benefits) but you income goes from the $32.50/hr (est) your at now possibly as high as 45-50/hr or more as a contractor. <<Funny you should mention that, Rob. Overwhelming CC debt was precisely what motivated me to become a contractor. I was pretty content at my old job (which I left 2 years ago), but I took a chance becoming a contractor only out of desperation to raise my income.I say desperation because I perceived contract work as "risky". Well, it isn't - at least not in the Dallas/Ft. Worth area. Now that I've made the leap, I realize my job is just as safe as the "captives." I put my resume on the Internet and my phone started ringing off the hook with offers.>> As for Health insurance (probably the largest concern) you would have to pay for it with a COBRA but you could be covered for I think up to 18 months. <<Be warned that COBRA payments are _not_ subsidized by your employer - you must pay the full amount. Also, after 12 months, your premiums increase by 50%. After 18 months, your coverage stops completely.You _could_ consider an individual policy rather than relying on COBRA.This is a rather moot point since it is very easy to find a contracting company that offers (unsubsidized) group medical insurance benefits. I'm on my contracting company's group plan and I can assure you that the coverage is adequate. Believe me, you never know how good your medical coverage is until your wife has a baby! Our insurance paid for almost all of the prenatal care and delivery. It even paid for a specialist to see my son after some post-delivery complications (BTW, he's fine now). It's _not_ an HMO, it's a PPO.In addition to medical, I also get dental and 401k benefits (the 401k matching is a pitence - but, hey, better than nothing). The rate is $50/hour W-2. Things vary somewhat company to company, but consider this an accurate example.So, Cable, sounds like a great opportunity for you.If you, or anyone else, is interested in becoming a software contractor, feel free to send me a personal e-mail. I'd love to share what I know.-Mike
>>One that stand out to me is that your a computer programmer making about $65K a year if I remember right. Have you ever considered adjusting your income in all this? By that I mean perhaps looking for a new job with an nice be signing bonus that is typical in your field. Perhaps even going as a job shopper/contractor (little or no benefits) but you income goes from the $32.50/hr (est) your at now possibly as high as 45-50/hr or more as a contractor. >>Actually, I have my own business I started two years ago contracting. I write specialized software and internet system for the sports industry. That is my second job. My day job is a mainframe VM/VSE systems programmer. Between both, I work 15 hours a day, 7 days a week.My second job's income is seasonal. I make most of my profit in the second and third quarters the year. I've considered part time contracting during the off season, but there aren't many mainframe shops on the central Calif. coast. I would have to commute over 200 miles a day to LA. Besides, my first job is keeping me far too busy to even consider taking on more.I've considered going independant, but as you can tell, I have no liquid cash reserves. Until I get my financial life on order, and build up a cash reserve, I think I should stick to the job I have. Besides.. they like me.Some one else asked why I felt I might have to switch jobs. The reason is that if I loose my lease on my home, I could not afford to stay in the area. Small run down houses (2bd/1ba, no yard or garage) are getting almost $2500 a month in rents. Small one bedroom apartments rent for $1100, if you can even find one. I rent a nice house for $1000 a month, way below market value. It functions both as my home, office, and storage area. I never want to miss a rent payment to my landlord!My wife can not work.... long story. I'll explain it later.
Mike,Too funny!!As far as the COBRA, I knew there were some issues about taking it but at a minimum it allows you to keep the insurance your atleast acoustomed too and there is sumthing to say about that. I knew it was limited to 18 months but didnt know the details. Right now the wife and I plus a little one are under my insurance at my employment, also get a little Life insurance for Her and the littleone through my company in addition to my Group life. We went out and bought a term life policy for like 400/year for my wife and more for the little one, it was cheap, amazingly cheap. Also set up LTD (Long term Disability) that was ALOT more expensive 150/month for my wife. Turns out she (or anyone our age, were in our early 30s) is more likely to be disabled by something than killed outright... Anyways.....She has a 401K available but we are looking into a Roth IRA instead as a different vehicle for retirement savings for her. The contracting firm she uses doesnt match at all. BTW, we are also in the DFW area. The salary you quoted is pretty comprable to hers. She likes her new job and so do I. I am begining to believe your point about your job as a contractor being just as safe as us normal working stiffs... *knocking on wood* just in case... That is sumthing that worries me. IT is by far the single thing we did that saved us from bankruptcy though. My wife likes it much more too..She only worries about her stuff now and not everything. Plus no Office Politics too. Another plus she says and I agree with her.Congrats on the new lifestyle (Jobwise) and good luck knocking off that debt. I bet you continue contracting even after you get out of debt to be honest.BottlesRob
>> your a computer programmer making about $65K a year <<>> Between both, I work 15 hours a day, 7 days a week. <<Cable, you're making $11.90/hour. You could make more money delivering pizzas. Something is very, very wrong here. I think you've really sold yourself short somewhere. Perhaps you could raise your rate on your second job to something more competitive?$65K would be competitive just for your _first_ job - 40hrs/week. But, $65K for two jobs at 105hrs/week?Perhaps you could try reading the "Ask the Headhunter" message board here at TMF. You could get great job search tips to help you earn what you're really worth.--Mike
I would like to apoligize to all those who read I was just trying to affirm my plan to weasel out of my debts. I was not in a good mood when I first started the thread.I consulted my attorney last Decemember. He wanted to file chapter 7 right away. That was over 6 months ago. If I really wanted to be a scum bag, I would have done it then. I don't want to and I think that I can still recover.I had written letters to all 3 CC's in early January telling them exactly what I was doing and why. I told them that I will resume payments by the 3rd quarter of 1998 and would appreciate any help they can provide to restructure the debt.The day I started the thread I had just gotten off of the phone with one of their collectors. The phone call consisted of nothing but a 30 minutes of obsenities and threats being screamed at me by a very, very hyper and angry agent. He said they would never work with me and that their attorney's would screw me over six ways from sundown.I haven't lied to them or tried to mislead them. I told them that I don't have the money right now. I'm working as hard as I can to rectify the situation, and I would like some help. I also told them that I was consulting an attorney and any negotions would need to be reviewed by him. Thus, I will not negotiate terms over the phone without my attorney in on the call. They refuse to allow him in on the negotiations which pretty much leads me to believe I need him in on the negotiations.Needless to say, I was not feeling real happy with their tactics that day. I felt that if they were going to mow me down, I need to protect myself.Do those aggresive phone tactics really work? It would seem to me that they backfire and drive the debtors into the arms of the BK court. It almost did it to me.I've gotten other similar phone calls. Lately they have been waving small concessions in front of me. I haven't been able to take any of them yet because they all demand full payment of the debt within 3 days. I can't move that fast.
$65K is the first job. The second job last year netted about $8K, but I had a lot of start up expenses. I expect to do better this year.
CableRegardless of the situation, you do not have to put up with "30 minutes of obsenities and threats". It sounds as though you are in touch with a collection agent. You need to talk to the companies themselves. Someone please tell Cable his rights regarding these calls and where to go to enforce them.It isn't hopeless .... see, you already feel better don't you.Stan
Cable,Where in CA do you live? I'm just curious because I am also in debt (about 1/3 of your total - but without the retirement fund). I lived in the Bay Area for 3 years and moved last November. I can understand the high cost of living since my rent for a 1br/1ba apartment outside of San Francisco was $1036/month for me. One of the main reasons my wife and I left the area (and our steady jobs) was because it is extemely tough to catch up on outstanding CC debt when paying out that much just for a roof over your head. What I am asking is - is relocation a possibility? Our rent went from $1036 to $535 for a similar apartment when we moved to another state. That extra $500/month helped out a lot towards paying down our debt. And, you mentioned that you are 200 miles from LA, are you living in towards the desert or up the coast towards Silicon Valley? I had a neighbor who was an independent contractor/consultant and he was able to support a non-working wife and 2 kids and still buy a home worth over $300k which is below average in the city I lived.Rich
I live in my home town (and my wife's) of Santa Barbara, Calif. It is 100 miles west of LA.
>>Regardless of the situation, you do not have to put up with "30 minutes of obsenities and threats". It sounds as though you are in touch with a collection agent. You need to talk to the companies themselves. <<Actually they refuse to tell me who they work for. They say they are collectors working for bank so-and-so. I guess that they figure they can push the limits of the law. After all, it will be my word against theirs, and I'm a scumbag deadbeat.They actually don't let me speak. When I try to explain that I've written letters explaining my situation, they cut me off, claim they didn't get my letters (they do them "Oh... that letter"), and that I must agree to pay them "x" amount by Friday before they will hang up. I don't want to lie, so I tell them I can't pay "x" amount on Friday. I also mention that I must have my attorney present for any questioning, which is when they launch into their screaming tyraids. At this point, I just hang up on them. I feel like I'm trying to negotiate with a 4 year old kid.I anticipate some dirty tricks on their part, such as issuing garnisments, leans, etc. without due process. That is why I have an attorney.
Cable s.s.s ---Go immediately to the following site:http://www.nolo.com/chunkdc/collectors.htmlGood advise on how to handle collectors and creditors. A friend of mine was having severe difficulty with getting calls from collection agencies (his student loan was in default, didn't have a job and deferral ran out). The info at this site really helped him - oh, and by the way, he now is paying his student loan.
>>Go immediately to the following site: http://www.nolo.com/chunkdc/collectors.html Good advise on how to handle collectors and creditors. <<I don't think I need to do this this. Talk is cheap and they are just doing their job. I would welcome a call from a calm, reasonable person who will calmly discuss my options. The guys that do call act like meth junkies looking for a fix. I can't talk to them like that.I don't want to avoid them. I'm not trying to hide anything. I just wish they would put an adult on the phone to have a substantial discussion with me.I'm holding out hope that they will do this, after they have gone though all of the chest beating and threat rituals.Please be patient with me. I'm not going to rush out and tap my 401K, file chapter 7, or any other rash actions until I have a comprehensive plan to get my life back in order in place. Moving too fast could cause more harm than good at this point.
Cable,If your really being abused in this manner I would suggest taping your conversations with them and make sure upfront you tell them this conversations is being taped. Also make sure you send all letters certified mail now, if you havnt been. I agree with a few others.. cut the middle men out and talk to the CC Companies...BTW.. tell them your taping the convo even if your not.. Its a good bluff either way and see what happens. But do it Initially there are laws about taping a convo where the other party doesnt know about it. As we have all learned recently. (each state may differe a little)Robbottles
CableRecomended reading matieral."How to get out of debt, stay out of debt, and live prosperously" -- Jerold Mundis.Included in his book is how to set up a payment schedule you can live with. When you are talking directly to the creditors you tell them what you can pay each month. There may be lots of sword rattling, but they will probably agree. Keep a rcord/journal of your conversations, keep a journal of your payments. Should they get nasty and take you to court the judge will also look at your journal to decide if you are dealing with your creditors in good faith.I also liked "The Richest Man In Babylon"Included in this book is a repayment plan I can live with.10% is yours to keep. savings, 401k, etc20% is to pay your creditors.70% to live on.in any repayment plan all current expenses must come out of current income (NO NEW DEBT).In no case do you have to put up with 30 minutes of obsenities.~~paul
cableThese guys you want to avoid. They are hired, on commission, to collect from people. You are not talking to the companies that you owe and these guys are not empowered to negotiate. Call the card companies direct and shuffle these guys to Buffalo or wherever.Stan
<<There is no way I can pay them back on their terms as currently written (22% APR plus lots of pentalties). I have to do something else. What I want is for them to stop and reverse pentalies, and lower the interest rate so I can pay all of them off over a long period of time.......I was stretched so thin meeting CC payments that I was serously risking missing a rent payment and loosing my home. I was also behind on many other bills and had zero emergency savings. I made the decision to postpone CC payments for 6 months so I can get my other bills caught up and put $2K in the savings account for any emergancies. By late 1997, my family could either be homeless, or late on the CC bills.>>This is ALL ALL wrong. Are these joint accounts which you're not paying? In other words, are you ruining your wife's credit along with your own? Have you explained to your wife that you could pay off all these bills in a matter of weeks (however long it takes to get the paperwork organized to borrow/take from your 401K), and still have more in your retirement account than 95% of Americans, and 99.9% of 34-year-olds? What does she think about this? What does she think about you risking the roof over your family's head, the food on your family's plate, your family's financial creditworthiness, AND your family's mental state (I'll bet you and your wife have just been a JOY around each other with the calls from collectors firing in without end and the constant legal negotiations. And I'm SURE that your kid sees and picks up on NONE of this, right??), all to protect this damn precious 401K which you've still got DECADES to further fund?<<Third Point: I didn't fund my 401K with my credit cards. It just ended up looking like that because of the bull market, profit sharing, and some great company stock. Over my lifetime I have contributed only $32K before taxes to my 401K. >>This is incorrect. Just b/c $32000 is less than $60000 does not mean that the CC's money didn't fund your 401K. How much of your CC debt load is cumulative interest? At 22.9% on $60000, you've got to be adding $1200 a MONTH to your CC bill. If you had made timely payments to your CC company for the last 11 years in the same fashion which you made your 401K payments, then you likely wouldn't have any debt at all. You're just caught now on the wrong side of a concept that Fools know very well (sometimes, like you, by learning the hard way): compound interest.Bottom line: Pay the debt, and get on with life. There's no reason for you, your wife, or your kids to go through ANY further pain or suffering. There's too many other "grey" decisions in life to gnaw and agonize over. This one's spelled out in big fat black-and-white letters. I hope you realize that sooner rather than later.Shealy
Shealy, cool it, you are much too angry and involved in name calling, grow upFoolcub
<<I say desperation because I perceived contract work as "risky". Well, it isn't - at least not in the Dallas/Ft. Worth area. Now that I've made the leap, I realize my job is just as safe as the "captives." >>I switched over to contracting about 3 years ago, and my entire family (with the exception of my wife, who sticks by me no matter what, thankfully ;^) thought I was nuts. Yet not one of them would blink if I said that I was a full-commission salesman. I think that those guys carry far and away more risk than I do. Having an income stream where one month you make $20000, and the next month may very well be $0.......OUCH!!For me, contracting makes sense only because I'm in a hot field where my talents are in high demand. I'd recommend contracting to anyone who:1) has skills in an "in-demand" computer field, and2) lives in a city with a well-developed contractor marketfor at least the next five or ten years (demand is predicted to significantly outstrip supply over that time frame). But if the consulting market softens significantly after that, then I'll promise you that I'll be one of the first people diving into a full-time salaried position.....Cheers,Shealy
Shealy,Thank you for the feedback. To answer your questions:<<Are these joint accounts which you're not paying?>>Yes. One is, two are not. I'm married so in the eyes of Calif law, they are both our debts anyways. My wife and I aren't getting divorced over this.<<Have you explained to your wife that you could pay off all these bills in a matter of weeks>>Yes. She feels that same way I do.<<I'll bet you and your wife have just been a JOY around each other with the calls from collectors firing in without end and the constant legal negotiations>>My mental state since I descended into delinquncy has never been better. I was a real mess before this happened while I stressed over how to pay the rent and stay current on the credit cards. Since I made the decision that I can't, I've felt much better. I was a real stress case late last year.<<What does she think about you risking the roof over your family's head, the food on your family's plate, your family's financial creditworthiness>>She is aware of the risks, options, and stratigies. I keep her informed of all developments, and we discuss this in detail.<<And I'm SURE that your kid sees and picks up on NONE of this, right??>>We don't have any children. What I have is my wife's 28 year old brother with severe mental and substance abuse problems. He lives with us because he would otherwise be on the street. The subject of my bum brother-in-law would open up enourmous discussions more appropriate for an AA forum than MF. Bottom line, he is family.<<Just b/c $32000 is less than $60000 does not mean that the CC's money didn't fund your 401K.>>I did not intend to do this. This illustrates the insidous nature of CC debt. I was just bumping merrilly along, make 401K contrubutions like I was suppossed to, and using my credit cards just like most Americans do. Except I my case, the CC debts crept up and up until one more emergancy pushed me over the brink. I find myself in this situation today and I need to make INFORMED decisions.I think any American with a retirement account and CC debt is subsidising (sp?) their debt habit. The key is to strike a balance. In my case, I failed. I spent more than I should have. I know that given the way things were going, giving up 401K contributions would have only postponed the inevitable crash with reality for another year.<<There's no reason for you, your wife, or your kids to go through ANY further pain or suffering.>>That's why I'm here, bud.
<<Shealy, cool it, you are much too angry and involved in name calling, grow up>>That's nothing! You should listen to a collection agent screaming at me! ;-).
<<Shealy, cool it, you are much too angry and involved in name calling, grow up>>Foolcub,Cable666 is a big boy. He (rightly) took some mutual fund managers to the woodshed on another board a few months back when they "lost" $1.5 million of some of their investors money. He's got broad shoulders, I'm sure. (He better, with collection agents calling..... ;^)If I sound thoroughly peeved, though, it's probably b/c I've come across two people in the last week who are completely in control of their lives, but just don't recognize it. Cable666 is one of them. The other one is much closer to my home.Two years ago, a long-time friend of my wife started this quaint little homemaker-run medical transcription service. It was a great opportunity for my wife (she joined up about a year ago, when she got pregnant), and a number of other moms in the neighborhood. They got to stay home with their kids, earn a few bucks by transcribing 2-3 hours per day, and have something to do other than "24-hour kid-duty". It was a really fun "club" of people around the neighborhood.But over the last six months, the friend (who then became her "boss") has realized that the medical transcription business is awfully good in Atlanta (15000 doctors, I think I heard on the radio the other day....), and she's decided that she wants a bigger piece of the pie.Mind you, I have no problem with that. She's President of the company, and if she wants it to be a growth company instead of a neighborhood club, then that's entirely her decision.But she's doing it by taking on far more clients than the current moms can (or want to) support. So instead of hiring on new transcriptionists (especially the full-time kind, who will be interested in "doing what it takes to make the company a success"), she's hitting up her current homemakers to work 8-10 hours a day. This isn't the deal that these moms signed up for, and they're not playing this game. They signed up for a few hours work a day, and the opportunity to stay home with their kids. If they were going to do the 8-5 bit, they would have stayed at their old jobs.So now my wife's boss is in this death spiral of rage, drinking, firing employees who won't work 8-10 hours, losing friends (most of the transcriptionists were originally good personal friends), mistreating her kids, running up big credit card bills, rage, drinking, firing employees, losing friends, etc., etc. She fired my wife, as both an employee and a friend, last Tuesday. (My wife had the audacity to tell her that she couldn't devote 8-10 hours a day while supporting a 16-week-old kid.)It's depressing as hell to watch, because she is in complete control over her own destiny. If she wants a growth company, she needs to hire the right people. "Growth" people. Not rip apart the very friendships and relationships that helped you get where you are today. And certainly not destroy your finances, your household, and your sanity in the process.A week later, and my wife still can't get the events off her mind. She was friends with her boss long before this business ever started, and now she's wishing that she had never signed up. It wasn't worth losing a friendship to her. We both see this whole episode as unnecessary.Cable 666: I just hate to see you put yourself, your wife, and anyone else around you through a lot of needless pain and suffering. It's just not worth it. I'm watching it plenty of it "Live" a few houses down the street. Pay the debt, and move on to bigger, better, and more Foolish things......Cheers,Shealy
Cable, My apologies for the length of the post, but it is worth saying, (IMHO) The Fair Debt Collection Practices Act was passed by Congress. It sets specific guidelines for third party collection agencies as to what they can and cannot do. Collection agencies who have been found to violate the Fair Debt Collection Practices Act can be fined large amounts, up to $10,000 a day, for each violation. The FTC iis responsible for overseeing its enforcement, and many state laws also parallel federal law. When filing a complaint with the FTC, a similar one can be filed with the attorney general of the state. Under the Fir Debt Collection Act, Collection Agencies Cannot:1. Write to anyone other than yourself, or your attorney/representative.2. Use abusive/profane language or behaviour -"to harrass, oppress, or abuse any person" - to threatan violence or harm to property or reputation. They cannot use the phone to continually annoy; either by calling and not identifying themselves, or repeated calls3. Call the consumers home during inconvenient hours. They may only call during the hours of 8 a.m. and 9 p.m., unless the consumer specifiically agrees otherwise. Also, they may not call the consumer more than twice a week.4. They cannot make you incur any expense for the communication with them, i.e. making a collect call.5. Contact you at your place of employment.6. Use a fictitious name, i.e. a law firm, credit bureau, or government agency.7. Ask the consumer for a post dated check. If they do, report them for conspiracy......post dated checks are written against an account that has insufficient funds...a crime!8. Threaten to take legal action, if they don't intend on fulfilling the threat.9. Continue contacting the consumer after the consumer has specifically notified them to stop. The collection agency may only notify you one more time, for the express purpose of notifying you of their intent to either take legal action, or dropping of the matter. Cable....collection agencies play a psychological game. They try and push as far as they can, in hopes of scaring you into taking whatever measures you have to to get them off your back. If you have a dispute, or feel the collection agencies are breaking federal mandated guidelines, You have some recourse. First, get a cheap tape recorder, with a phone pickup. The kind at Radio Shack, that you stick to the back of the phone. Start the tape before EVERY call, so you can get their initial response. Inform him of the fact that to protect yourself, the call is being recorded. Ask his name, his company, and his supervisor. Nine times out of ten, he hangs up, or realizes he must be civil. Above all, do not return his abuse in kind. Wont accomplish anything, other than making his day, knowing he made you miserable. I had a collection agency go over the line once, and they would not identify themselves. After I hung up, I called the operator, and asked for the number of the party that had just called me, as they had threatened me (some phone companys offer this service right from your phone....something like *321 or something). She promptly gave it to me, and I called the agency back, and got the name of the company, the supervisor, and then informed the manager of the office of who I was, and of my intent to file a grievance with the FTC, and my state attorney general, and HIS state attorney general for the violation of my rights under the Fair Debt Collection Practices Act. (Be advised...you throw the technical jargon back at them, and they freak. They are used to consumers who have no idea what their rights are). I then hung up. 3 minutes later, the manager called me back, and apologized for his employees earlier behavior, and we discussed calmly my situation, and came to an amicable agreement, that was advantageous to us both. I have followed this thread religiously, and am pleased of your recent postings of your intent to try and do what you feel is right. But others must do right by you too.....it is the law.v/rMichael
<<The Fair Debt Collection Practices Act was passed by Congress. It sets specific guidelines for third party collection agencies as to what they can and cannot do. Collection agencies who have been found to violate the Fair Debt Collection Practices Act can be fined large amounts, up to $10,000 a day, for each violation.>>This act only applies to collection agencies. It does not apply the creditor. They can call you as often and whenever they feel like. Please correct me if I am wrong.Since I don't know if they are collectors (they won't say), I just let them call and leave message. The letters are much more cival and productive.I'm insisting that all correspondense be in writing. They scream about, but then they do eventually write. I can then take the letter to my attorney and discuss my response.I don't feel that they have done anything unethical or illegal yet, just really rude.
<<If I sound thoroughly peeved, though, it's probably b/c I've come across two people in the last week who are completely in control of their lives, but just don't recognize it. Cable666 is one of them. The other one is much closer to my home.>>Shealy,I don't get it. I don't think I'm anything like the woman you descibe. I don't drink, do drugs, gamble, or do anything else "questionable". I work hard at my jobs, and my friends think the world of me. My financial problems have not affected any of my relationships. I haven't complained or asked any friends or relatives for help.My only crime is being up to my eyeballs in CC debt and considering BK to get my life back on track.Please explain the similarities.
I am a bill collector and a good one. I'd be remiss if I didn' point out where you are mistating the FDCPA. here a good summary http://www.rdkcollects.com/fdcpa.htmSpecifically It is not illegal to ask for a post-dated check. It is illegal to cash it before the date on the check. It is also illegal to cash a check post-dated by more then 5 days without notifying the person 3-10 before cashing it.we can contact up to once per day not 2X a week as you suggest.We can also call at work unless you infor the collector that your employer prohibits it. As far as alias names. They are allowed as long as they are used consistently. I can use a fake name as long my company has the name on file. That said, state laws vary. Some of the things you have erroniously added to the FDCPA may be added by state law.
There is NOTHING noble in declaring BK over $60k in debt when you have $250,000 sitting in an account; nor can you consider BK in this situation as "avoiding a second major financial mistake." As a lawyer, I would advise you of your legal options; as a human being with some integrity, I would suggest that you pay the debts, take your lumps, and get on with life.We all despise credit card companies that charge 22% interest. On the other hand, if you made a conscious decision to NOT pay your bills for six months with $250k available to pay them off entirely, why do you blame them for "playing hardball"? Of course, THEY WANT THEIR MONEY, and you have it to pay them.
This is worth exactly what you paid for it:From an ethical perspective, you shouldn't havegotten in such an unsecured debt in the first place.Having done that, from an ethical perspective again,the primary consideration should be whether youractions against your creditors are justified (asa result of declaring bankruptcy). If you feelthey are and you can live with that decision, that'sall that matters---nothing that anyone says here does (unless you want it to).If you're the sort of a person who believes "legalis ethical", then you can (perhaps should) of coursedeclare bankruptcy. You've accepted the laws, good orbad, and this is one time when the law works out inyour favour. When you file a bankruptcy, you will beliving with the consequences and I'm sure youunderstand that. Finally, if your primary concern is money and notethics or legalties (i.e., assuming you can withstandthe consequences), then financially bankruptcy mightbe the best "investment" you can make at this point.While I do think you're very fortunate comparedto many many people who declare bankrupts (financiallyat least---I'm not sure about your situation), andI can't honestly take "your side", I can't takethe credit card company's side either. They clearlyhave calculated people like you into the equation,and perhaps it's their karma. My point is that this decision is about YOU,and YOU alone---the system is structured so thatyou CAN do it and you'll just be a blip on theirprofit screen. So it all boils down to whatyou can live with and what will make you happythe rest of your life (including whether you'llbe able to use the retirement money without a guiltyconscience). I'm sure you've thought about it, butif you've not, well, do so, and then make the rightdecision (for you).Good luck!--Ram
Cable-I will be the first to tell you I haven't a clue as to how a 401K plan works. But let me introduce a concept here that I think is being over-looked.This problem has been **severely** over complicated.I re-read your calculations for retirement, and your concerns for not wanting to touch the 401K money. It appears that you spent a considerable amount of time and energy to come up with all of those numbers, assumptions, projections, etc. You yourself already admitted that you are well ahead of the game. Considering your obvious intellegence, I do not understand why you cannot figure out a way to make up for a loan/withdraw from the 401K. Just stop thinking about all of your worries, and consider how much money you will free up to invest after you get the CC companies off your back (understanding that you have already cleaned up the monthly bills, etc.). Forgive me, but I really do not understand this entire debate. I can understand the pressure you are under and your reluctance to touch the savings. But dude, you are so far in the black, I'm sure all of the people on this board (includng myself) are envious. I think you should step away from this board, spend a week convincing yourself (using all the financial know-how you used to create those projections) that not only will you survive after the large hit on that 401K, you are already ahead of the game.I believe a quote from my favorite show, The Simpsons, is in order: "Simplify, man!"Good luck,MD2BE
Cable666,<<I don't get it. I don't think I'm anything like the woman you descibe.>>Au contraire! The parallel is that both of you are in the middle of an easily solvable problem, and both of you are making it much too complicated.My wife's boss needs more people to help out. That's it. No more complicated than that. She's hired people before, and she needs to hire more now. Not too hard to understand. More business = more workers. Instead, she thinks she's in some kind of inescapable hell, and she's making her life the pits.You need to pay your bills. You have the money to do so. Not too hard to understand here, either. $250,000 is significantly greater than $60,000 (although this might not be the case for much longer. I figure at 22.9% interest, you're about another $400 in the hole since you first started the "Crazy Machine" thread. Didn't mean to depress you with that.....just the facts ma'am.). Instead, you're living in a complicated world of screaming debt collectors and self-serving bankruptcy lawyers. <<Seriousness Off>>But thankfully there's places of refuge like the Motley Fool, where you can meet nice people like me, right?? <very big grin><<Seriousness On>> As I brought up a couple of posts ago, I'm sure that you and your wife don't consider your current situation "fun", and so your personal life is suffering for it.Therefore, both my wife's boss and you are becoming financially and personally worse off for not promptly solving a promptly solvable problem. Amazingly enough, the "Prompt Solution" happens to be the _right_ solution in both of your cases. (That rarely seems to happen in life. Usually the quick and easy way out ends up giving you the shaft. In your case, the long and painful route involves lawyers, which should raise up big red flags about which choice will likely include a shaft <g>.) To steal from a previous post: "Simplify". Pay the bills you owe and get on with living. You're 34, and if you pay the bills now, then when you're 41 you'll look back on this over a beer with your wife, and think "Boy, I'm glad we got through that". File BK, and you'll be scraping your credit back together with your wife seven years from now. Simplify.Signing off on this thread. I wish you luck, Cable666.Cheers,Shealy
If relocation is a possibility, you could probably do quite well in another location. I live slightly north of Detroit, MI and am in the IS market myself (I'm a Systems Administrator with a major company (threee letter acronym)). I moved here about a little under 2 years ago (my wife was from here) and thought I'd hate it. (I'm originally from Chicago). I love it. I'm making slightly better money ($50K) here than in Chicago, and the prices are a LOT less. (BTW, I'm basically the only bread-winner in my household. My wife sells real-estate (which is not a steady income) and is honest about it, which puts her at a disadvantage in the field. When I first got here, I rented a two bedroom condo (only 900 sq. ft.) for $625/mo. (I don't even want to tell you what that would cost in Chi-town.) Plus, the job-market is booming. Current estimate are that by Y2K there will be 12K+ jobs in IS that can not be filled due to not enough people in the field. (Can anyone say "CHA-CHING!"?)Cable, you're not in a bad situation. You have $250K, VERY salable skills, and the support of a group of people who want to see you succeed (that would be us). You CAN beat this without BK. If you missed it, check some numbers I posted in message 2158(I think) and 2159.Good luck.Rogue31
Cable -Try this site:http://www.consumercredit.comThey worked with me and my creditors very honestly and professionally, and helped me get back in control. I've been with them for a year now, and my credit rating isn't as bad as I thought it was (actually considering buying a condo). I was 19k in debt, have paid down to about 13k in a year. It's gradual, but it's working, and I'm not facing the ire of creditors, the money-grubbing lawyers, or the stigma of bankruptcy.It sounds as if you're a responsible person with long term financial goals, but just got a bit too deep. It sneaks up on you, but once you've got control, you can fight it, and you feel so much better about yourself.What the heck. Give the site a shot and see if it's feasible for you at this point.Best of luck and keep us posted.Your Fool in Arms.BELBryan
No way should you have to take that kind of abuse, Cable. Hang up on them. If you have Caller ID, keep track of the numbers they are calling from and just don't answer, or if you have an answering machine/voice mail, screen your calls. If you have an answering machine, record the calls as well. You may have some legal recourse against the collection agency, although I honestly don't know enough about them to say so for certain. (Perhaps someone else here does.) Above all, deal only with the CC companies themselves. GOOD LUCK!KaitiJedi in orbit
THANK YOU for that post, F00LnrMoney! :-)Cable, I've only had a chance to skim a little of this site, but check this out:<<Are you in debt--and avoiding ringing phones, ignoring your mail and only hesitatingly opening the door--all to steer clear of the dreaded bill collector? No one likes dealing with these people. But the good news is that the law forbids repeated harassment by bill collectors--and gives you the right to sue for violations. If you complain loudly enough--and you've got proof backing you up--you have a chance to get the whole debt canceled.>>At the very least, you can get those naties off your back. For anyone who missed it, the URL is:http://www.nolo.com/chunkdc/collectors.htmlGood Luck!KaitiJedi in orbit
<<I had a collection agency go over the line once, and they would not identify themselves. After I hung up, I called the operator, and asked for the number of the party that had just called me, as they had threatened me (some phone companys offer this service right from your phone....something like *321 or something). She promptly gave it to me... >>You can't always do this. However, you can have the caller's name, phone number, etc. reported to the authorities **if you actually intend to take legal action** by dialing *57 or something similar. Contact your local phone company for more information on what can be done.L8RZKaitiJedi in orbit
Rougue31 wrote: "(I'm a Systems Administrator with a major company (threee letter acronym))I'm making slightly better money ($50K)"50K is good money. I know people who are getting a lot more for their computer expertise. This is how I've seen it done. You contact a bunch of headhunters. They make an offer. If they offer you $50/hr, they are usually getting $100/hr. So $50 for you and $50 for them. I saw this happening and so in our consulting business we tried negotiating for a higher price. We put $100/hr on the resume and sent it all over. Funny we got so many responses. I think they see this and say "Wow, this guy is worth a lot."So, currently we have a company pay $125/hr for our consulting services. It's not me making this money, I just run the buseiness, but that's damn' good.I've heard people getting up to $300/hr for computer work. I don't know them personally though.funkychair
I'm getting my MCSE and CNE concurrently. (Current company is helping to foot the bill.) When both are done, the shingle comes out. By that time, I should be CC debt free with my six months' emergency funds in the bank. (Then again, I currently have a friend who just jumped to $75K with another company and he told me they need more. Just sent my resume for that.) If that works out, I'll take it for a year or two and build up a better cushion (in addition to a healthier portfolio), then strike out. Got a niche market already figured out.Wish me luck!Rogue31
All the luck in the world to your venture - there is truly nothing as exhilarating/frightening/rewarding as beginning your own business.Just had two attorney friends quit corporate life for freelancing out of a home office in Seattle - and I can name half a dozen other friends who have a plan (and the guts) to try it on their own.Let us know how it all turns out!Corvette Barb
I've come in on this quite a bit late. Please forgive me if I've left anything out. I couldn't read all the posts.As one who is often on the collection side of the matter, hopefully I can be of some assistance here. If you are dealing with collection agencies, don't wait for collectors to contact you. Take initiative to contact (by phone) the banks yourself. I think you might even do better making a deal yourself than getting an attornee involved. I think this may have started the refusal to make a deal with you. I know that none of my collectors want to deal with an attornee. They are every bit as intimidated by law as anyopne else. If an attornee becomes involved, we usually just go to a legal battle and get what we can.Also, collectors are not compensated to collect money six months from now. They are paid on or judged by how much money they can bring in right away. You need to deal with a manager, not a collection agency, and not a peon collector.If these people have any idea of your finacial position, they are not going to cut you any slack. If you owe me money, and I know you have the ability to pay it, I don't care if you have to take it out of your 401K (I'm speaking from their perspective, not my own). Of course, I'm always in a secured position. Maybe it's different when you aren't secured.Your best bet, I think, is to pay off all the debt, if you can.If you can't, make some type of arangements to make some sort of payments to them right away. They may want you to pay the full amount, but make payments as if you were paying according to the deal you want with them. Get rid of your attornee; you don't need him to do this.Here are some possible senarios: 1. The CC cos will probably get tired of dealing with you and sell your account to someone else. The new owner of your account will probably negotiate with you. 2. The CC cos will get tired of the situation and will cave in to negotiate with you. 3. The CC cos will charge off your account to losses, in which case all interest and penalties will cease, and you can continue to pay as you wish (this will reflect in your credit file). In personal experience, it is looked upon admireably when some one pays on a charge off account. 4. The CC cos will continue to try to collect the full amount for all eternity (not likely).
Thanks for all the feedback. I've been giving this a a lot of thought lately. Some people have said the solution is simple... liquidate $100K of my 401K and pay off the CC's, or borrow $50K and pay most of them off. Unfortunately, it really isn't that simple.I already have a $30K loan against the 401K that I'm paying $600 a month on. If I could refinance this loan for $50K, that gives me $20K to apply towards the CC's. Plus, I don't know if I can afford the higher 401K loan payments, plus any other payments I need to pay off the rest of the balance.Also, I don't think it is a good idea for me to take on more debt. The best solution is to liquidate assets and pay down/off my debts.FYI: This 401K loan is my only other debt, and it is a secured loan.Which opens up the problem. How does one go about liquidating part of their nest egg to pay off credit cards? I'm going to start a new thread to discuss this subject.If I can't liquidate part of my nest egg, I need to negotiate a payment shedule with the CC's. There are two paths I can take here.(1) Forgivness of part of the debt. The problem with this is that I would have to pay about 35 cents in taces for every dollar waived. The get the debt down to a level where I can afford to pay *some* debt plus the taxes on the waived debt will be much lower than the CC's will tolorate.(2) Freeze interest and fees, and make small payments at first, larger payments later as income becomes available until the balance is paid off, no matter how many years this takes.I'll float the ideas to the CC's.
Concerning the collection agents calling me up.Thanks for all information on how to deal with them. It is not a problem. The debt is mine, I'm not trying to avoid resonsibily for them. So far I've been able to handle them by being truthful, and deliberate in my instistance for them to put their thoughs in writting. I will, and do answer them back.Someone mentioned that I'm blaming the CC's for their agressive tactics. Far from it. I never said that. What I 'm saying is that their techniques are counterproduction in my case. I don't blame them at all. I owe them money, they want it back. Screaming at me and hurling insults will not change anything or make progress towards a resultion.I suspect they are just testing me to see what they are dealing with. I would do the same thing.
I've missed a huge part of this thread, so forgive me if this question has already been addressed... but is it possible for a court to grant a bankruptcy when the filer's assets so clearly outbalance the total debt?$60,000 is surely a lot of money to owe, but when you have a quarter of a million dollars in other assets, what judge is going to allow you to erase the obligation?Lawyers? Accountants? Is such a thing possible?Cheeze
One last note to perhaps close this thread...Front page story in USAToday "House OKs Bankruptcy Reform".The bill passed the House on a vote of 306-118 (unanimous Republican support and 84 Dem votes). It is back by (guess who?)... CC companies!Basically, the bill states "those whose earnings exceed the median family income (about $51,500 a year for a family of four) and who can repay at least 20% of their unsecured debts over five years would be pushed into a repayment plan under Chapter 13 and would be barred from using Chapter 7... The bill would also target repeat filers... and borrowers who run up bills in the 90 days before they file for bankruptcy."Good for them. I hope it passes.Rogue31BTW, this is NOT directed to Cable, just happened to see it this morning and thought it interesting due to the recent posts on the subject.
>> is it possible for a court to grant a bankruptcy when the filer's assets so clearly outbalance the total debt?--------------At the moment it appears to be. The House version of the bankruptcy reform bill, just passed, would essentially prohibit chapter 7 bankruptcy for anyone with more than the median income (currently $51,000) who would be able to pay as little as 20% of the total debt over five years, and would require chapter 13 (reorganization) instead.
<< Cable, you're making $11.90/hour. You could make more money delivering pizzas. Something is very, very wrong here. I think you've really sold yourself short somewhere. Perhaps you could raise your rate on your second job to something more competitive? >>Even pizza delivery people make more than 11.90/hr. I deliver pizza and I make approx 16-17/hr working 40 hours. Hopefully I'll be able to make that much when I graduate from university.
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