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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308483  
Subject: Paying off old unsecured debt Date: 7/16/2003 1:44 PM
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Hey all. I finally got around to writing about this.

I've been really dumb about paying some old credit card debt. These are almost all CC's that I stopped paying about 2 1/2 years ago. ALl these accounts have since gone to collections/charge offs/transferred. They've reported to my CAs as such.

I also owe the IRS some money too. That's accrusing interest and penalties. I have a repayment plan with them and am paying it at that rate. At this rate, IRS will be paid off in 3 1/2 years.

The CC accounts are not still accrusing any interest, etc.

I want to buy a house. So, I've been contacting the CC companies by letter and making an offer to compromise. A lot of the amounts are overlimit fees and late fees - so much that the balances they report are about double what the amount should have been with original debt plus interest. I've sent my first draft to all of them, which was basically, taking the amount of the original debt without overlimit and late fees added, then I've offered to pay them 50 percent, over a 12 month period. My agreements state that after they are paid in full, they mark my credit bureous with "Paid in full, as agreed" and then delete any entries that show the account as late"

I've gotten about 1/3 of them to respond. Of the 1/3 that responded so far, one has accepted my agreement without modification, and a few more have indicated they want more money. If I pay them more, it will take money from the others - so that I won't pay them all off in 12 months. So, I feel like I should "bluff" bankruptcy, in which case, they won't get but maybe 10 cents on the dollar. I think I should continuue to press them to take 50 to 60 percent and no more.

They do not seem to have a problem with the reporting aspect, they just want more money; either all at once, or more per month and fewer payments. One asked for 100 percent, but in 6 months.

I have talked to a mortgage loan officer and they've basically told me that they won't loan me money for a house until all the charge-offs have been paid. And the IRS agreement is fine as long as it's kept up. It doesn't have to be paid in full first.

Should I just save the money until I can offer them all 50 percent in one lump sum? Or press on for monthly payments?

Any suggestions?
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Author: cstrohm Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164809 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 1:59 PM
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It would probably be better if I didn't reply, but .... only one thought comes to mind; This person is in a position to think about buying a house because s/he has defaulted on so many debts. And is looking to get out from under the defaulted debts only because there'll be no mortgage until s/he does. Geesh!

Here's my suggestion. You signed the paper, now pay the debt.

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Author: buckmizer Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164810 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 2:04 PM
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Did you know that charge-offs can be considered taxable income?

They do not seem to have a problem with the reporting aspect, they just want more money;

Really? Have they stated this in writing? If they screw you over, you have zero recourse and they have their money.

I have talked to a mortgage loan officer and they've basically told me that they won't loan me money for a house until all the charge-offs have been paid.

By being paid, I guess that they mean with "paid in full, as agreed". Just curious, what is the rate that they are offering you should you get this done?

Should I just save the money until I can offer them all 50 percent in one lump sum? Or press on for monthly payments?

I never knew that the latter might be a choice for such old accounts. Please keep us posted on your efforts.

Fred

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Author: mrsDJB Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164812 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 2:10 PM
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Does it make me a bad person to want to hear the sad tale of woe that got the OP IN to this predicament?

I second the other opinions - pay the debts because you borrowed the money. Simple as that.

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164816 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 2:30 PM
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<<Should I just save the money until I can offer them all 50 percent in one lump sum? Or press on for monthly payments?

Any suggestions?
>>


Rather than dealing with them all at once, I'd make you offers one at a time, so that you have the cash to dicker with. And rather than proposing a payment plan, I'd make them an offer of immediete payment of a lump sum in exchange for charging off the balance.



Seattle Pioneer

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Author: geekkitty One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164825 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 3:08 PM
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It would probably be better if I didn't reply, but .... only one thought comes to mind; This person is in a position to think about buying a house because s/he has defaulted on so many debts. And is looking to get out from under the defaulted debts only because there'll be no mortgage until s/he does. Geesh!

Here's my suggestion. You signed the paper, now pay the debt.


C'mon guys leave him alone. He's trying to pay off the debt. It's a hard thing to do. We've all been there.

At least he has the impetus of the house to kick start him into paying it off.

-GK

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Author: buckmizer Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164828 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 3:19 PM
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At least he has the impetus of the house to kick start him into paying it off.

Great! ANOTHER word that I need to look up today!

Fred
who's learning just how dumb he is on his 36th birthday.

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Author: vsqueen Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164830 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 3:22 PM
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Fred
who's learning just how dumb he is on his 36th birthday.


Happy Birthday Fred! Here's a birthday dance for you!

http://www.yuckles.com/birthday.htm

Wendy

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Author: Leviathan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164831 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 3:25 PM
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I also owe the IRS some money too. That's accrusing interest and penalties. I have a repayment plan with them and am paying it at that rate. At this rate, IRS will be paid off in 3 1/2 years.

The CC accounts are not still accrusing any interest, etc.

I want to buy a house. So, I've been contacting the CC companies by letter and making an offer to compromise. A lot of the amounts are overlimit fees and late fees - so much that the balances they report are about double what the amount should have been with original debt plus interest. I've sent my first draft to all of them, which was basically, taking the amount of the original debt without overlimit and late fees added, then I've offered to pay them 50 percent, over a 12 month period. My agreements state that after they are paid in full, they mark my credit bureous with "Paid in full, as agreed" and then delete any entries that show the account as late"

I've gotten about 1/3 of them to respond. Of the 1/3 that responded so far, one has accepted my agreement without modification, and a few more have indicated they want more money. If I pay them more, it will take money from the others - so that I won't pay them all off in 12 months. So, I feel like I should "bluff" bankruptcy, in which case, they won't get but maybe 10 cents on the dollar. I think I should continuue to press them to take 50 to 60 percent and no more.

They do not seem to have a problem with the reporting aspect, they just want more money; either all at once, or more per month and fewer payments. One asked for 100 percent, but in 6 months.

I have talked to a mortgage loan officer and they've basically told me that they won't loan me money for a house until all the charge-offs have been paid. And the IRS agreement is fine as long as it's kept up. It doesn't have to be paid in full first.

Should I just save the money until I can offer them all 50 percent in one lump sum? Or press on for monthly payments?

Any suggestions?


My first suggestion is that you ignore ALL the credit card companies for the purpose of getting the IRS paid off. I tend to put the IRS in a special category of debt because their penalties and interest are far more than any credit company can charge and because they can pursue criminal charges against you (they usually don't, but still...). I would put 100% of my focus into paying them off, even if it means borrowing from another lender to get the money (which you probably can't do with your debt load, but it's worth asking).

Once you do get them paid off, I would follow the plan you've been using but with a small modification. Take your smallest (balance) debt and save up half as quickly as you can. Call them and say something like "I owe you $5000. Right now I've got $2500 in the bank. Would you take that to settle the debt?" If they say yes, GET IT IN WRITING and send them the money. If not, save up some more (say $3000) and try again the next month. Keep going until you either settle or pay it.

Don't call them all at once because you're basically waking up 16 monsters to fight when you probably only need to worry about one. Start with the first and go from there. Should one of them begin actually pursuing a lawsuit or garnishment against you, bump them up the list. Just use common sense here and you should be fine.

Leviathan

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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164832 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 3:26 PM
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I* would simply set aside the ones who won't work, and kick butt on the ones who are cutting you a deal. Get everything in writing before you send a single penny. Pay them off as soon as possible, according to the new terms, then work again with the others.

Would it be possible to get a loan to cover the debt (or settlement amounts)? I'm just thinking if you have "cash in hand" and a current account in good standing, you'll be able to do two things: Have the money ready to make deals with the old accounts (instead of payments) and be building good credit.


frissy
*well, not me, personally, because I've never found myself in such a position, and hope I never do--here's to working 2 jobs!

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Author: UKJess Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164835 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 3:57 PM
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My first thought was "what kind of interest rate gets offered by a company which doesn't care whether or not you pay your debts in full.

I can't help thinking that there has not been condign raciocination somewhere along the line.

Jess

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164836 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:00 PM
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Thanks to all who replied.

I could pay the IRS off first, but then I'll be 2 1/2 years. I *have* to get a house first. I have 5 kids and a wife, and I'm renting a VERY small house now. I suppose I could rent a 5 bedroom, but I'd rather own a house even at a high interest rate.

So paying off the IRS first would be smartest in terms of money paid, but I'd be stuck in a house that's too small.

Yes to all those who say "I made the debt, so pay it" however, I made that debt in good faith thinking I could pay it. I then got in WAY over my head.

I've now made it so I'm living "below" my means. So, that's taken me 2 1/2 years.

So I would say that "to just pay them" is the absolute stupidest thing I could do. Why? Because they will take the money and leave the bad marks on my credit report. Having paid collection accounts on my credit report is almost as bad as having unpaid ones. (Accornding to lenders, etc.)

Other people are able to negotiate jail terms for crimes. Why can't I negotiate paying less on debts that I got into just like others. Some of the others are going the bankruptcy route in which unsecured creditors get virtually nothing. I also could go CCCS but that's a joke. I basically pay it all back, get a mark against my credit rating that's worse than not paying (according to Bud Hibbs). So .....

Hence my wanting to negotiate with as many of them as possible in order to get them to take some money, and in return, improve my credit rating. If others do it, I'm going to try.

I wanted to pay them in several payments for several reasons:

1) I can make my agreement so they have to show some improvements to my account as soon as I start to pay them. If they don't make small incremental improvement updates to my credit bureau reports as I pay them, then I know they won't do it if I just pay them in one lump sum.

2) Quicker overall improvement in my total credit reports. If I have all of the accounts start to show "paying as agreed" about 4 or 5 months into the payments, rather than some show good and others left in collections.

3) I feel that the longer I leave them in collections status, the more external collection agencies my original creditors might hire and thus place extra marks on my credit report. Opening up the channels of communications now with all of them should get the accounts all back to the original creditors.

As it stands, I think I'll have to deal with the ones that won't talk to me unless I have all the money upfront like this:

"If you won't settle for monthly payments, I'll have to just wait until I save these payments up for a one-time payment. You loose the partial money now."

If they play hardball and threaten legally, I'll have to take from others to pay the ones that play rough. They won't all play rough I don't think as long as I tell them up front and be truthful. I can always file bankruptcy (I won't, but they don't know that).

I cannot borrow money to pay these loans back. No one will give me unsecured credit now. No one, and if they did, it's going to be 25 percent interest or more. None of these closed accounts are accrusing interest any more.

So, yes. I owe and I will pay, but I got in over my head - and doing this will give my creditors more than if I file bankruptcy or go Credit Counseling.


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Author: MsPoppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164838 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:02 PM
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I want to buy a house

Probably not a good idea, since you already owe everyone else.

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Author: mlk58 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164840 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:03 PM
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My first suggestion is that you ignore ALL the credit card companies for the purpose of getting the IRS paid off. I tend to put the IRS in a special category of debt because their penalties and interest are far more than any credit company can charge and because they can pursue criminal charges against you (they usually don't, but still...). I would put 100% of my focus into paying them off, even if it means borrowing from another lender to get the money (which you probably can't do with your debt load, but it's worth asking).

I have to disagree with this. The poster says he has a payment plan, which means the penalties have stopped and they don't intend to pursue criminal action. My DH owed over $63,000 to the IRS, and as long as we made the payments on time, they didn't bother us a bit. The interest was 9%, which was a lot better than we were paying on some of our other debts when we started. They did keep our income tax refund every year and apply it to the debt, but that wasn't much of a problem because we're talking about small amounts. When we finally got them paid off, they were very cooperative about releasing the tax liens and helping us get our credit reports updated to reflect the "paid" status. (Also, the IRS doesn't report to credit reporting agencies -- tax liens show up as public records, but the payment plan never showed up.)

Overall, I would much rather deal with the IRS than First USA or Providian or some of the other scummy lenders out there.

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Author: MsPoppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164841 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:04 PM
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C'mon guys leave him alone. He's trying to pay off the debt. It's a hard thing to do. We've all been there.

At least he has the impetus of the house to kick start him into paying it off.


Why is advising someone to pay debts that they incurred (of their own free will) before they incur more debt a bad thing, exactly? Just curious.

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164842 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:07 PM
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My first thought was "what kind of interest rate gets offered by a company which doesn't care whether or not you pay your debts in full.

Well, I have such bad credit that the one company that said they would let me borrow money for a house quoted between 8.5 and 9.5 percent interest as long as I could put at least 5 percent down on the house, and after closing would still have over 3000 dollars left.

For the house I need, this translates into somewhere 600 to 800 more dollars per month for interest than if I got the loan for 5 percent interest.

They ->do<- care that I pay back money. My credit report shows that I pay back all secured debts with no late payments at all. All my cars and also quite a bit of my unsecured credit, and utilities in the past 7 years are on my credit report and show paid as agreed, never late, etc.

They would not loan me any of this money unless I somehow "satisifed" all my collections/charge off accounts first. They said I did not first have to pay the IRS because I have a repayment agreement with them, and am making timely payments to them. They did say I would of course have to show proof of making timely payments to them, because the IRS doesn't report payment plans to the CRA's.

They also want all my tax returns, etc. you know the rest.

So, I'm going to repay these debts first. And then go looking for a little better rate in a year or so.


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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164843 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:11 PM
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I could pay the IRS off first, but then I'll be 2 1/2 years. I *have* to get a house first. I have 5 kids and a wife, and I'm renting a VERY small house now. I suppose I could rent a 5 bedroom, but I'd rather own a house even at a high interest rate.

I'm not sure why you need to rent a 5 bedroom. A three bedroom should be big enough. Two kids in each room and the extra sleeps between you and your wife--cheap birth control! LOL!

3) I feel that the longer I leave them in collections status, the more external collection agencies my original creditors might hire and thus place extra marks on my credit report. Opening up the channels of communications now with all of them should get the accounts all back to the original creditors.

I think you are only supposed to have one notation per account, no matter how many times it changes hands. Someone will be along shortly to correct me if I'm wrong.

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164844 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:12 PM
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"I want to buy a house

Probably not a good idea, since you already owe everyone else"

I have to get into a larger house. It's not a matter of want, but of need. I am in a tiny house now, but have 4 kids and another one on the way in a few months.

Actually, my debt to income ratio is not bad. So I need to get the back creditors paid back quickly.

My only other alternative is to rent a larger house. That's a waste I believe.


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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164846 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:13 PM
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They did keep our income tax refund every year and apply it to the debt, but that wasn't much of a problem because we're talking about small amounts.

Oh, that's a good point. Make sure that you change your withholding so that you are only getting back the bare minimum. IIRC, you can have any earned income credit you are entitled to paid out throughout the year.

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Author: CatBarber Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164847 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:14 PM
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I have 5 kids and a wife, and I'm renting a VERY small house now. I suppose I could rent a 5 bedroom, but I'd rather own a house even at a high interest rate.

6 kids. 4 bedroom house. That's how I grew up. Each child had to share a room. It was easier to do that because we had 4 girls and 2 boys. I also remember having a very small room over the garage when we lived in NJ. From what I've been told my bedroom was really a walk-in closet. I do not remember it being too small. Do you need 5 bedrooms or can you live with fewer than that?

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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164848 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:16 PM
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6 kids. 4 bedroom house. That's how I grew up. Each child had to share a room.

Yeah, but look how you turned out! (giggle)

Don't you know that children today MUST have their own rooms? To make them share would injure their self esteem, and cause them to use drugs and become prostitutes!

frissy
also slept in a closet.

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164850 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:21 PM
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I'm not sure why you need to rent a 5 bedroom. A three bedroom should be big enough. Two kids in each room and the extra sleeps between you and your wife--cheap birth control! LOL

The current house we have has bedrooms so small that only one twin bed will fit. So, if we could get a large enough three bedroom, that might work. One for the boys, one for the girls, and one for my wife and I.

However, the fact remains that the house we rent now is too small. In fact, the master bedroom doesn't even have a closet in it. The previous tenants changed the master bedroom closet into an extra bathroom. So we use the closet from one of the kids rooms. Which makes it even harder.

One of the kids is a teenager, so where do I put them? With the baby when it arrives? Keep in mind, the baby will stay with us in the master (with no closet) until about a year from now.

Which is when I'll *need* a bigger house.

I also telecommute to oen of my jobs, so I need a room that has a computer in it. I need some room for it, plus it has to be quiet so it needs a door so I can close it to keep the kids from interrupting me while I work. I need this so I can make income to pay things off.

So... I still think I am justified in saying that I need a bigger house. Not just want one.


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Author: MsPoppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164851 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:21 PM
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My only other alternative is to rent a larger house. That's a waste I believe.

Maybe. Maybe not. If you're renting and you can't afford the rent, you have the option of moving to a smaller place temorarily. You are already highly leveraged and are about to become more so (with a house and with a new baby). As a renter, when something breaks, the landlord fixes it. As an owner, something breaks, you fix it.


But, it's your choice.

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164852 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:22 PM
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I think you are only supposed to have one notation per account, no matter how many times it changes hands. Someone will be along shortly to correct me if I'm wrong

I would be VERY interested if this is true. Some of my creditors have "sold" my accounts to others, who then also put the account on my credit report. In fact, I have one account that's listed on my report in 4 different forms. 3 from account collection agencies, and one from the original creditor.


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Author: Catleen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164854 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:24 PM
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And once you buy a house thing break and then you go out and buy more stuff and fill it with furniture that you canot afford. Don't ask me about things breaking just this year... I have spent a lot of money on my house in just that category.

Catleen

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Author: Catleen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164855 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:26 PM
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Sorry to contradict but because you have a payment plan with the IRS does not mean that the penalties stop. They continue putting on penalties after penalties until the whole thing is paid off.

Catleen

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164856 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:28 PM
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"Do you need 5 bedrooms or can you live with fewer than that? "

Well of course I could live with less than that. But when most people buy a house, they don't usually buy a house they they can just "live with"

Remember, I don't want just the bare minimum. I want to buy a house that will hopefully be the last house I need to buy before I retire.

I feel that paying off all the back-debts in a year and *then* buying this house is how I will go. So keep in mind, that in one year, if I pay back the debts at 60 percent, I will only have $12K I still owe the IRS, plus no debts at all, and two cars paid for.

I will have to scrape then for a down payment, but by then I should have an improved (somewhat) credit report.

So I don't believe that I should go looking for a "small" house then. a 5 bedroom will do nicely. Also, by then, my 17 y/o daughter will be moved out and her mom (my ex-wife) can help with college.

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Author: Catleen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164857 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:30 PM
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I also had a closet sized room.

I will say one thing about living in cramped quarters, it makes you seriously consider how much clutter you are willing to live with, at least it did with me.

Catleen

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Author: uwalum Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164858 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:37 PM
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"I have to get into a larger house. It's not a matter of want, but of need. I am in a tiny house now, but have 4 kids and another one on the way in a few months."


Oh, BALONEY! You don't need a bigger house, you want one. You can live in what you have but chose to have a larger family and want more room. I don't blame you, but buying a house now while you try and figure out a way to pay half of what you owe is not the way to go, IMO. You can easily live in a 3 bedroom home. Boy room, girl room, baby/parent room. Easy? No, probably not. That's part of being a grown-up. You take responsibility for making all the kids and getting in above your head.

The average house in the 1950's fit inside a 3 car garage.

Try this...work with your creditors. They may be willing to take off the late fees and other charges. Start to pay everyone while you live below your means.

You "got over your head" and I venture to say you are still there. You don't live below your means because you aren't paying all your bills.

You can't afford a house. Do you realize that you are considering paying an additional $600-$800 a month more on interest payments for this house when you can't pay off your old debt?

Give me a break.

L


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164859 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:40 PM
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Maybe. Maybe not. If you're renting and you can't afford the rent, you have the option of moving to a smaller place temorarily. You are already highly leveraged and are about to become more so (with a house and with a new baby). As a renter, when something breaks, the landlord fixes it. As an owner, something breaks, you fix it.

I can afford my current rent. It's 1100 a month. It hasn't gone up in 5 years we've been there.

There is really NO WAY I could move to a smaller house. In fact, the whole thing here I wrote about is that I must get a larger one.

Remember, I didn't tell anyone my income. I've probably got a much higher income than anyone here thinks. It's just that in the past, I've been very stupid with my income. You know.... .Buying cars (50K plus), etc. big screen plasma TV's, gadgets, eating out (with 4 kids) every night, babysitters every weekend (at 50 bucks a night), etc.

Now that we are living below my means, I realize, I *have* to pay back my creditors, grow up financially and buy a house the way responsible people do. I want to have a house with equity when I get close to 60 yrs old. I'm 42 now.

The only large ticket items I pay monthly now are:
1) Rent 1100
2) School for 2 kids 660
3) Car payment 201
4) Car insurance (2 cars) and renters insurance 260
5) IRS 750
6) Food and home maintenance 800 to 1000
7) Work related expenses 200
8) Other stuff: life ins. phones, electricity, water, utilities 400 to 500
9) Payback of personal loans 200
10) Medical expenses, prescriptions 300
11) Paying back medical expenses 200

The personal loans will be paid back in about 3 months. Medical expense payback in about a year.

I used to put out 800 a month for a Cobra, 600 for an Explorer, 400 for another car, plus many many more frivolities.


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Author: mlk58 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164860 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:40 PM
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Sorry to contradict but because you have a payment plan with the IRS does not mean that the penalties stop. They continue putting on penalties after penalties until the whole thing is paid off.

Hmm... that's odd. I know for a fact that when DH entered into his payment plan, they froze the principle amount (including penalties accrued to that point) and just charged interest during the payoff period -- no new penalties. Maybe it varies from person to person. We used an enrolled agent and feel like he did a good negotiating job for us.

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164861 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:42 PM
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"And once you buy a house thing break and then you go out and buy more stuff and fill it with furniture that you canot afford. Don't ask me about things breaking just this year... I have spent a lot of money on my house in just that category"

My current lease agreement requires that I pay for any repairs that are less than 100 dollars in parts. So I usually pay for the parts and then do the repairs myself.

The landlord pays all the rest.

I pay for all lawn maintenance, etc. So I usually do that myself too.


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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164863 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:44 PM
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The current house we have has bedrooms so small that only one twin bed will fit. So, if we could get a large enough three bedroom, that might work. One for the boys, one for the girls, and one for my wife and I.


Bunk beds? That's what my sister did for her kids. She, her husband, their three kids, and his daughter (on the weekends) all live in a 2 bedroom apartment with two cats. (The cats just "allow" the family to live in the apartment, LOL!) They do the bunk bed thing. Lisa, her husband and the cats sleep in a queen in the "Master" bedroom, and there are two sets of twin bunk beds in the kids' room.

One of the kids is a teenager, so where do I put them? With the baby when it arrives?

I know you are new, so you probably don't know that I was a "teenage mom" without the fun of getting knocked up. My mother had a fling with a guy when she split with my father, when I was 10, and by the time I moved from my father's back in with her, I was 12 and started raising that baby. When I was 17, she did it again, only this time, I began caring for the baby from day 2 (Day one she was in the hospital and nurses took care of her.) I was the cheif cook and bottle washer through the rest of HS--I was the one getting up at 2 am to feed her (and she woke up at 2 am EVERY night!) I'm still alive, and better for it, I think.

Sounds like you have three bedrooms now? Put the two littlest ones in one room and the two older ones in the other room. The baby will be with you, as you said. Bedrooms are for sleeping and changing clothes. Limiting the number of toys your kids have will prevent the whole "where do we put it all" problem.

You could set your office up in your bedroom. The baby can nap in the older kids room while you are working.

In fact, the master bedroom doesn't even have a closet in it. The previous tenants changed the master bedroom closet into an extra bathroom. So we use the closet from one of the kids rooms. Which makes it even harder.


What did the previous tenant use for a closet? Maybe you could get one of those rolling racks or an extra bureau? I have a drawer in my modular entertainment center that houses--no, not videos--underpants! (and socks, bras, pajamas) No one is nosy enough to go digging through the drawers in my apartment.

In either case, you have to make do for another year or so. Probably two. Look for solutions to your problem NOW, and you won't get yourself into trouble later when you actually start shopping. It would be horrible if you bought too much house and ended up in an even worse position.

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164864 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:44 PM
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Sorry to contradict but because you have a payment plan with the IRS does not mean that the penalties stop. They continue putting on penalties after penalties until the whole thing is paid off.

True, but my penalties are abated to a fixed level (They were 100 percent at one time - but now are at half of the interest rate) and don't acrrue any more and the interest is a fixed 12 percent. I feel that's cheap compared to the interest I would pay someone else with my credit rating.

Once I can get secured credit (my car perhaps) at a lower rate than 18 percent, I will try to pay the IRS off and then pay the loan.


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Author: CatBarber Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164865 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:46 PM
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Don't you know that children today MUST have their own rooms? To make them share would injure their self esteem, and cause them to use drugs and become prostitutes!

LOL! We lived in a 1 bedroom 1 bathroom condo until my daughter was 5. She never had her own bedroom until we moved into the house I live in now. How much room does a baby really need?

I would not have a brother and sister share a room, but I would definitely make sisters share, or brothers share. I actually liked sharing a room.

Another cramped-house story. My neighbors right next door. two whole FAMILIES sharing a 3 bedroom 2 bath house (their house is like mine). They did fine. Just a few months ago the lady across the street from me sold her place and one of the families in the house next door bought the lady's house. btw... both houses and lawns are immaculate, and the families are very quiet, and very nice.

You do not have to have a lot of room to raise a decent family.



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Author: SoftSimp Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164866 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:47 PM
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Great! ANOTHER word that I need to look up today!

Fred
who's learning just how dumb he is on his 36th birthday.


Happy Birthday, Fred! With age comes wisdom, right?

SS - who is a wizened old 37.

PS. Sorry if you have to look up wizened. <BEG>



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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164867 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:50 PM
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Oh, BALONEY! You don't need a bigger house, you want one. You can live in what you have but chose to have a larger family and want more room. I don't blame you, but buying a house now while you try and figure out a way to pay half of what you owe is not the way to go, IMO. You can easily live in a 3 bedroom home. Boy room, girl room, baby/parent room. Easy? No, probably not. That's part of being a grown-up.

Boy room okay, girl room, sure. Where does the teenage girl go? With us in our room? My house isn't big enough. Period.

I am most definately living below my means now. I guess you didn't read the part that all of these CC bills are older than 2 1/2 years old? That was back when I lived above my means.

You take responsibility for making all the kids and getting in above your head

The kids didn't get me above my head (although I will get "fixed" soon), but the cars and other things did. That was several years ago.

Try this...work with your creditors. They may be willing to take off the late fees and other charges. Start to pay everyone while you live below your means

Gee. I though that's what my original message said. That I was going to try to pay off my creditors now and for the next year and *THEN* try to get a house.

Did you misread? Or are you just assuming I want a new house *now* rather than in a year?


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Author: CatBarber Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164868 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:51 PM
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But when most people buy a house, they don't usually buy a house they they can just "live with"

And that is why there is out-of-control debt. Buy what you can AFFORD! If you cannot afford to buy something, RENT! And why would you care what *most* people do? <rhetorical question> - They also buy cars they cannot afford, as well as houses. But I do not want to throw away my hard earned money on something I cannot afford and have no hopes of keeping up with financially. And that is also NOT what I want to teach my child. It sounds to me like you *want* a house. That's fine. But don't rationalize it as a *need* or suppose that you *have* to purchase a house, when renting is a viable option.

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Author: CatBarber Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164869 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:54 PM
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Remember, I didn't tell anyone my income. I've probably got a much higher income than anyone here thinks

Believe it or not, income is pretty irrelevant when you are trying to settle collection accounts and buy a house that youcannot afford, to the tune of 9.5% interest. That just tells me that you are not living within your income, whatever it is, and that your credit isn't good enough to qualify for better than that.

btw.... my dad made a PILE of money in his job as a patent lawyer/electrical engineer. However, he did not spend it all trying to live a life he couldn't afford. Kids eat away money. Just ask my dad.

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Author: uwalum Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164870 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 4:59 PM
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"I am most definately living below my means now"


No you are not. You can't afford private school either because you ARE NOT PAYING ALL OF YOUR BILLS! In addition to the IRS, charge offs, "getting in over your head," having another baby, you also owe on medical expenses and personal loans.

And now you want to buy a home...large enough for your ever growing family.

"The kids didn't get me above my head"

By the way, kids cost money. You might have noticed that since you have now decided that as the kids grow you might need a bigger house. When I said a boy room and a girl room...that means that the teenage girl shares with her sister(s) and the teenage boy shares with his brother(s). That's how it will have to be until you can get control of your money problems.

LBYM means that you are paying all your bills and still have a dime to your name. You are not paying all your bills. What happened 2.5 years ago still counts. It's almost funny that you say that "I guess you didn't read the part that all of these CC bills are older than 2 1/2 years old? That was back when I lived above my means." Buddy, what you charged 2.5 years ago and didn't pay is still owed. It isn't paid. You are not LBYM. Do you get this part yet? You can't afford private school and a new house because you owe money all over the place that you are not paying.

L




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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164872 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 5:08 PM
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"Bunk beds? That's what my sister did for her kids."

Well, I'm trying to not buy anything else and only pay back bills now. The current beds we have shoved into the boys room will have to do for a year more. And that's fine.


"I know you are new, so you probably don't know that I was a "teenage mom" without the fun of getting knocked up. My mother had a fling with a guy when she split with my father, when I was 10, and .... "


Interesting. When I was 9 my mom had my only brother he's a half brother. My dad died when I was 6. She divorced my step dad then and she worked full time. When I got home from school, after delivering the morning newspaper, I cleaned and cooked. Had dinner ready by 6 after delivering the evening newspapers.

At least she got a babysitter for my brother during the day. Mom was able to keep us in a house and I got my own room and so did my brother.

So I know what it's like to live poor. We at good at the first of the month, but by the end of the month, it was macaroni and beans. I used my newspaper route to help buy food and put gas in moms car. And to buy my own bicycle, which I used to throw papers with.

Clothes were used, and I mowed lawns when I turned 12 for extra money. Then I could buy my own shoes that were not used.

Then my brother got cancer, and we had no medical insurance. I was lucky to get to live in the living room of the new house (if you could call it a house).

My brother survived and is now pronounced cured. That was in the early 70's.

So I know what it's like to live well within my means. I am doing so now.

But in many ways, my familiy now has less room than I did when my brother had cancer. The girls room has to double as a closet for us. There are clothes hanging on rods put up on one side of that room. The room is more the size of a closet.

My computer room *is* a closet. I need it for income so it's not an option to put it in the bedroom with a crying baby. I would have to simply quit that job.

My living room is a 20 year old love seat with stuffing coming out of it. I did keep the big screen TV I bought 3 years ago.

Our eating table now is a small table I got when my mom died. Before that, it was a table we dug out of the trash. The chairs have to be repaired. I will have to buy another small one soon from Sams.

We do eat well though. But we don't eat steak any more. And with the kids, I have about a 300 a month outlay for medical (deductibles, medicine deductibles, copayments, etc.) Some of my kids and myself do have a special diet that is medically necessary so that adds up.

I still have 2 kids in diapers and another one coming. Our 4 y/o is still in diapers (pull-ups) and can't seem to get him to be trained. We could go for counselors, but those aren't cheap on my insurance. Medical insurance just seems to get worse and worse every year and yet I pay more and more for it. I now pay over 300 a month for medical and dental insurance alone. That doesn't cover the costs, that's just the deductions from my paycheck.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164873 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 5:09 PM
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You could set your office up in your bedroom. The baby can nap in the older kids room while you are working.

No. Babies need to sleep in something with rails so they don't fall out. The crib is the only thing we have, and it's not easily moved from room to room unless you break it down and re-set it up.


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Author: SoftSimp Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164875 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 5:13 PM
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Two kids in each room and the extra sleeps between you and your wife--cheap birth control!

ROFL! And that'll prevent them from needing and even bigger house in the near future, too. Talk about a LBYM solution!

SS

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164877 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 5:17 PM
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It sounds to me like you *want* a house. That's fine. But don't rationalize it as a *need* or suppose that you *have* to purchase a house, when renting is a viable option.

But renting is not cheaper. I pay more for rent than I would if I bought my house. All the housing in this area of the country is like that. In fact, landlords around here look at renting as a profitable venture. They buy the house and rent it for more than their principle and interest payments, plus taxes and even insurance. Plus they mark up a good profit.

My landlord has made some good money on my in the last 5 years. Renting is an awful waste of money. Yes. I am counting repairs, etc.

No, I suppose from what many people here say, that a family of 13 could live in a one bedroom apartment just fine. all the girls on one room, all the boys in another and some more to share the parents room too.

If the limit of "WANT" vs. "NEED" is set to the standard of that, then sure, I *want* a house. In my opinion, I *need* a house in order to maintain my sanity and the sanctity of my marriage.

So I would still say in one year, I will "need" a bigger house.

As for renting vs. buying, as I said, I am not young. I will need some equity by the time I get to retirement age. So renting is not a good option in my opinion.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164878 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 5:23 PM
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Believe it or not, income is pretty irrelevant when you are trying to settle collection accounts

Yes. I know that.


...and buy a house that youcannot afford, to the tune of 9.5% interest.

I didn't say I was going to buy it at that interest rate, but keep in mind, back in the early 80's that was the going rate.

Also, I can afford the house I'm looking at. If I were to get that house at 5 percent interest, with taxes and insurance, I would still be at close to 20 percent gross income. Nowhere near the 28 to 33 percent some lenders will allow.

That just tells me that you are not living within your income,

How is that? If I bought a house at $135K at 9.5 percent interest and made $135K a year, would you say I was not living within my income?
Why or why not?

whatever it is, and that your credit isn't good enough to qualify for better than that.

That credit problem was created 2 1/2 years ago. I already stated that I was living far above my income then. But now I'm not. It's taken me 2 years to realize that. Now I'm in a position to pay it back.

Please give me constructive cristicism. I don't need rants and misinforation.


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Author: nikkiheaven Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164879 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 5:25 PM
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Why is everyone making a big deal about him wanting a house, it seems like he has a good plan to me. I've been in the same boat, I have a decent income for a single person (now that I'm back employed), but in the past before I became "foolish" I lived above my means, and then came the lay off. I'm in the process of catching up on late pays, and have resumed paying off some more deb

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164881 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 5:28 PM
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No you are not. You can't afford private school either because you ARE NOT PAYING ALL OF YOUR BILLS! In addition to the IRS, charge offs, "getting in over your head," having another baby, you also owe on medical expenses and personal loans.

Well isn't that funny? For the last year, I was paying back those loans, paying back the IRS, paid off my cars, paid back my 401K loans, paid my bills on time, got rid of a LOT of unecessary bills, paid back a legal bill, and now, I find that I can still make all those payments, eat, pay my medical bills, pay my private school (which was recommended as a medical necessity for one of my kids), and I see that I still have 1200 to 1500 a month left over to pay back the creditors I owe from 2 1/2 years ago. So.....

Please, tell me why you don't think I am living under my means?

I suppose you could say I could take that 660 a month for the private school and pay back crditors with that. But that's about all I see. I think the 1500 a month is fair- and not many people can pay back all their creditors inside of a years time.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164887 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 5:59 PM
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"Did you know that charge-offs can be considered taxable income?"


Yes. THat's why I am trying to get the late payment charges and over limit charges waived and rolled back as never having been a valid charge as well. I know that the difference between what I validly owe and what I pay is considered income by the IRS.

Of course, the invalid charges that some collections agencies tack on and then put on my credit bureau are illegal in some cases. I would fight the payment of taxes on those amounts.


"By being paid, I guess that they mean with "paid in full, as agreed". Just curious, what is the rate that they are offering you should you get this done?"


Once I get this "done" I won't go back to the same lender. I would presumable have a much better credit rating and could get a much better rate.


I never knew that the latter might be a choice for such old accounts. Please keep us posted on your efforts.


I know a lot of you have just advocated taking my lumps and just "paying up" all of the debts and letting the bad marks stay on my credit. Why? When others negotiate and get it removed for paying half? See: http://www.edebthelp.org/negotiation.htm

I got into this debt fully intending to pay and got in over my head. Many people do it. Why do many of you assume that I did this in some way intending to defraud them? I did not intend it.

Why do so many of you think that negotiating a reduced settlement is somehow bad? It's better than bankruptcy. I can tell you they would get much less that way. It's also better than credit counseling. They take your money, negotiate with only one or two - don't pay them and leave you with a more damaged credit rating.

I feel this plan is a fair and eqitable way to repay my debts while getting an improvement on my credit reports.


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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164888 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:03 PM
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No. Babies need to sleep in something with rails so they don't fall out. The crib is the only thing we have, and it's not easily moved from room to room unless you break it down and re-set it up.

For the first few months you could use a basinet. Our family has one that gets swapped around every time someone has a baby. It got destroyed by my sister, though.

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Author: hamsmyname Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164889 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:03 PM
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Sorry to contradict but because you have a payment plan with the IRS does not mean that the penalties stop. They continue putting on penalties after penalties until the whole thing is paid off.

Hmm... that's odd. I know for a fact that when DH entered into his payment plan, they froze the principle amount (including penalties accrued to that point) and just charged interest during the payoff period -- no new penalties. Maybe it varies from person to person. We used an enrolled agent and feel like he did a good negotiating job for us.


If you've paid your installment plan on time and regularly, the IRS can sometimes be talked into waiving the penalities. Just takes asking reaaaaaalllll nicely. :-)

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164890 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:06 PM
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"Does it make me a bad person to want to hear the sad tale of woe that got the OP IN to this predicament?

I second the other opinions - pay the debts because you borrowed the money. Simple as that. "


Well - yes and no.

I *am* going to repay it. But just to repay it all - even the amounts they added that are not fair or legal, and not to negotiate seems to me to be really stupid.

No one, myself included intends to get themself into a credit mess. And I feel I should get myself out of it the smartest way.

I'm taking most of my ideas from here: http://www.budhibbs.com/budhibbs/default.asp

But no, I'm not going to go into details about how I got into this predicament, because I don't feel it's really relevant. Who wants to hear about how someone lived beyond their means and didn't realize it? Haven't most of you heard enough of those stories?

I am in this situation. I am going to get out of it.

I can either

1) Pay it all to the creditors. I will get nothing good noted in my credit report.

2) Negotiate a settlement as a lot of people do. The creditors get back what they are willing to accept and I get some good marks on my credit report.

3) Go to credit counseling - in which case they do the same as I do in number 2 above, but they get to charge me a percentage for their negotiation services. I don't even know for sure that I got the best negotiation.

4) File bankruptcy. For me, that's stupid. FOr the creditors who might not get but 10 percent, it's even worse than any option above. The only one this is good for is the bankruptcy attorney.


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Author: RosemarysBaby Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164891 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:07 PM
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The current house we have has bedrooms so small that only one twin bed will fit. So, if we could get a large enough three bedroom, that might work. One for the boys, one for the girls, and one for my wife and I.

So you have a baby on the way, plus 4 kids, is that correct? The rooms are so small now that only 1 twin bed will fit, so where are they sleeping now? And they baby is going to share a room with you when it arrives, so what has really changed? A newborn doesn't need a lot of closet space.... What is really going to change significantly until the baby is a year or 2 old?

Personally, I say grin and bear it until the baby is a year old, then think about getting the house. You will be in much better shape financially and won't have to pay that extra $600 a month for the added interest because of your poor credit situation.

Heck, I lived with my mom and brother in a 2 bedroom condo for a year and a half when they moved in with me for a time. Was it comfortable? Not especially. Was it an optimal situation? Not especially. My mom and I shared a bedroom with twin beds, and my brother slept on the futon in the spare bedroom/den. Did we manage? Yep. Would I do it again? If I had to.

Do you have a dining room? Convert that to a bedroom. Can you screen off part of the living room or den?

I think about pioneer families and how they managed, 6-7 kids plus parents in a single room house sometimes--with NO INDOOR PLUMBING! At least you have 2 bathrooms! They didn't have closets back then, either. Shoot, worst comes to worst, you could buy an outside storage building and erect it in the backyard, run out some electricity, and voila, the teenager has a private room, or you have office space, plus closet space. (I saw the cutest building at Home Depot--it had a footprint of about 15 x 15 feet, and it had a stairway and a second story. A little finishing, and I'd use it as a cabin in the woods! It was very cute).

Seriously, though, that's probably a bit extreme, but there are ways around it.

Also, did you give your financial situation any consideration before you conceived this most recent child? I mean, it's not like all this just came up. Of course, nothing you can do about it now except deal.

RMB


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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164894 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:09 PM
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You do not have to have a lot of room to raise a decent family.

I think that we are just spoiled. I was gonna spare our newbi, but here goes:

A preacher* came to our congregation last month and gave an update on the fledging congregation he's been working with in Slovakia for the past two years. He told about one family who has 6 children, and they all live in one room, about 200-300 sf. They have all their beds raised up, like bunk beds without a bottom bunk, to make room to walk around. One of the kids sleeps on the fire escape during the summer. They don't have A/C. They are happy.

I am shaking my head trying to figure out how 8 people live in an apartment that is 1/2 the size of mine!

frissy
*he's got 4 kids and a wife himself, and they are in a very small place as well, but I don't recall if he said they were staying with another family or renting a small apartment....

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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164895 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:09 PM
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ROFL! And that'll prevent them from needing and even bigger house in the near future, too. Talk about a LBYM solution!

although, my sister got pregnant with her youngest with her two other babies sharing a bedroom with her and her husband....

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Author: RosemarysBaby Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164896 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:10 PM
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"Bunk beds? That's what my sister did for her kids."

Well, I'm trying to not buy anything else and only pay back bills now. The current beds we have shoved into the boys room will have to do for a year more. And that's fine.


Bunk beds = maybe $1000
New 5 bedroom house = maybe $150,000-$250,000

Invest in the beds.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164897 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:16 PM
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Another thing I haven't told many of you is that many of these creditors employed tactics for collection that are illegal under the FCRA, and FCCPA. Some have added monies that are not compliant with their agreement that I signed.

Many added charges that are also compliant with agreements they made after the fact.

For instance, one credit card began charging a higher overlimit and late payment fee. When I got the notice, the notice said that if I use the card after a certain date, it would be considered agreement to those terms.

I called them, cancelled the card, received a letter confirming closing of the account, and did not use the card after that date.

Yet the account was still treated as though I had agreed. This is in violation of their own agreements.

This is but one instance of how these companies legally steal money from you.

There are more instances where they have viloated law by calling me at work when asked not to, calling me on my cell phone while I'm in meetings at work, not hanging up when I asked them to. Threatenging to garnish wages (which is illegal), etc.

I don't feel totally obliged to pay them all the money they say I owe. Yet many of you simply feel that I am somehow obliged to pay every penny. They did not own up to their end of the bargain. Some even put charges on my card that I didn't authorize and then refuse to remove it because I was late or over 30 days behind.

One company even added an insurance "policy" and stated I had to puruchase it because my account was in arrears.

These companies are snakes and slimeballs. I am trying to repay a large portion of the debts and not call them on things I could. For instance, some laws say that I can have a creditor levied 1000 dollars if they violate some of the laws they have violated. I haven't said I was going to do that. I am simply going to negotiate a settlement. It happens all the time. How about Enron, Worldcom, etc. Or is it okay for those companies but not okay for me?

I think I will dig up and document everything I can, and file against some of these slimeballs in small claims court. I think it will speed up the negotiations a lot in my favor. Maybe I need to get nasty too.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164898 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:18 PM
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"Why is advising someone to pay debts that they incurred (of their own free will) before they incur more debt a bad thing, exactly? Just curious. "


Because you obviously didn't read my entire plan. I said I was planning on paying these debts before I actually bought the house.


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Author: MsPoppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164899 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:19 PM
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I used to put out 800 a month for a Cobra, 600 for an Explorer, 400 for another car, plus many many more frivolities.

See, here's a question I have then. And it's a frequently unpopular question.

If you blew money that you didn't have on "frivolities", how are you comfortable with not paying the full amount for them? Meaning, what rationale tells you that paying part of what you owe is okay? That it's better than bankruptcy?


As to your income, I made no assumptions about it. My information (from your posts) is that you owe a bunch of money and are only willing to pay back some of it (i.e. settling old debt). Which leads me to believe that either A) You can't afford to pay back all of it, or B) You're comfortable with skipping out on your debts.

Either way, a new big debt load is not the first thing I would send your way.

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Author: MsPoppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164900 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:21 PM
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Because you obviously didn't read my entire plan. I said I was planning on paying these debts before I actually bought the house.

I read your post.

So, I've been contacting the CC companies by letter and making an offer to compromise. A lot of the amounts are overlimit fees and late fees - so much that the balances they report are about double what the amount should have been with original debt plus interest. I've sent my first draft to all of them, which was basically, taking the amount of the original debt without overlimit and late fees added, then I've offered to pay them 50 percent, over a 12 month period.

You're not planning to pay the debts. You're planning to pay half.

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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164903 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:27 PM
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Well of course I could live with less than that. But when most people buy a house, they don't usually buy a house they they can just "live with"

Remember what living like "most people" did? Buying stuff you couldn't afford on "payments", saying "Charge it!" at the grocery store, underwithholding on your taxes?

How did that work for you?

It made you broke and in debt!!!

WHY would you want to live like "most people" again?!

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164904 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:27 PM
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... It's almost funny that you say that "I guess you didn't read the part that all of these CC bills are older than 2 1/2 years old? That was back when I lived above my means." Buddy, what you charged 2.5 years ago and didn't pay is still owed. It isn't paid. You are not LBYM. Do you get this part yet?...


Hehe - I understand that. I meant that I can pay these back now. It sounds as if you think that LBYM means that I cannot have ANY debt at all. Is that what you mean?

I treat these back credit amounts as a debt that's owed. I can pay them back at 50 percent (because that's about what I feel I truly owe in principal and interest. The rest are overlimit fees and late payment fees). I can pay these back in 12 months, along with all my current obligations and still have some left.

I can't pay them back at 100 percent RIGHT NOW. If that's what you mean, then I guess I'm not living within my means. However, if that's your defintion of LBYM than ANYONE with debt that they cannot pay back RIGHT NOW is not lving within their means. I don't accept that defintion.

It's just a matter of semantics. I can pay it back in 12 months at what I think is a righful amount. And I already said that I was WAITING to buy my house until I do that.

SO WHAT'S THE BIG DEAL?


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Author: PeesPorridge Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164905 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:30 PM
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But renting is not cheaper. I pay more for rent than I would if I bought my house. All the housing in this area of the country is like that. In fact, landlords around here look at renting as a profitable venture. They buy the house and rent it for more than their principle and interest payments, plus taxes and even insurance. Plus they mark up a good profit.

Obviously you don't live in Silicon Valley where the median price of a house is closing in on half a megabuck.

With 20% down (100,000) and a $400,000 loan at 5% for 30 years, your payment would be $2147.29 just for interest and principal repayment. Taxes and insurance would be extra.

That and the fact you'd have to scare up $100k for the down payment.

PeesPorridge


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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164906 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:30 PM
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In my opinion, I *need* a house in order to maintain my sanity and the sanctity of my marriage.

You maintain the sanctity of your marriage by honoring your wife and your vows to her.

NOT by buying a house.

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Author: MsPoppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164907 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:30 PM
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Gee. I though that's what my original message said. That I was going to try to pay off my creditors now and for the next year and *THEN* try to get a house.

Did you misread? Or are you just assuming I want a new house *now* rather than in a year?


You're new, so I'll explain something to you. A lot of people around here (though not all) are very opposed to people taking on new debt when they have a lot of existing debt. I'm among those people. We are particularly opposed to frivolous spending being discharged without being paid in full in order to incur more debt. There are a number of us who believe that paying less than originally agreed is just plain wrong. Since that's what you intend to do, you will have people who disagree with you immediately. It's a topic of much debate.


That, on top of your desire (and make no mistake, it's a want, not a need) to get a house and you've earned some more disagreement. Need is shelter to protect from the elements. Need is not seperate rooms for all children. You want it, and it's okay to want it, but you also wanted more cars than you could afford and other "frivolities".

I'm telling you this so that A) You're not surprised and B) So you'll watch the sarcasm and defensiveness. No one's saying you're a bad person - we're saying it's a bad idea in our opinion. Ultimately, it's your choice, but when you post on a message board, you get opinions that don't match your own. Get used to it.

Regards,
Poppy



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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164908 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:31 PM
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and not many people can pay back all their creditors inside of a years time.

Including you. You are only able to do so if you have them charge off 50%

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Author: 96hokies Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164909 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:33 PM
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I've never been in your position (no collections and no kids)so take my 2 cents with that in mind.

If you've paid off other debts recently have ~1500 a month to put to these remaining CCs then I would argue that you are presently living within your means... and that is a very good start.
Others will undoubtedly disagree.

However, I'm echoing a lot of other suggestions:

Negotiate to get the FEES off your existing balances... IMO, reducing it by anything more than the fees and you're asking the creditor to pay for a portion of that big screen. How fair is that really?

I would also suggest tackling them one at a time in lump sums and try to avoid getting into more monthly payment obligations. With your comments on medical issues I would think keeping your required monthly payments down is crucial.

Might be a radical idea but maybe the teenager can get a job and help pay for some of her own "needs." That might open up even more of your cash to the creditors. Or at the least will help her learn the value of a $$ now so she doesn't repeat your mistakes.

As to the house/sleeping situation... if spending a couple hundred on bunk beds makes your living situation more tolerable for another year or more, then I'd say that's a worthwhile expense. And even when kids get their own rooms, bunks are great for when even MORE kids stay over! Check for floor models or discontinued items on big sales.

Good luck, you're on the right track.
96hokies

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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164910 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:33 PM
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I *am* going to repay it. But just to repay it all - even the amounts they added that are not fair or legal, and not to negotiate seems to me to be really stupid.


How is it not fair and legal if it was in the contract that you signed?

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164911 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:36 PM
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"Personally, I say grin and bear it until the baby is a year old, then think about getting the house. You will be in much better shape financially and won't have to pay that extra $600 a month for the added interest because of your poor credit situation."


GRRRR! Please forgive me for ranting on you - but it seems that most of the people here have a problem with reading or else I've really been grossly inable to get my point across...

Here is a quote from my initial post on the subject:
"then I've offered to pay them 50 percent, over a 12 month period. "

Does anyone really think that I intended to get a house now, paying down payments, closing costs, moving expenses and all, PLUS pay for 12 months?

My plan has all along been to negotiate and pay these debts for the next 12 months, THEN get a down payment and THEN buy a house.

Please, tell me, where I said I was going to buy the house FIRST?


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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164912 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:36 PM
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Well, I'm trying to not buy anything else and only pay back bills now. The current beds we have shoved into the boys room will have to do for a year more. And that's fine.

My BIL, moron that he is, built the ones for his kids. All it takes is some (untreated) 6x6's, 2x4's, 1x1's, nails, screws, sandpaper, paint, and a few tools..

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164913 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:38 PM
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Also, did you give your financial situation any consideration before you conceived this most recent child? I mean, it's not like all this just came up. Of course, nothing you can do about it now except deal.


Nope. I had not intended to have any more children. I did not, however, plan on being celebate the rest of my life.

So... to answer your question, this one was a surprise.


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Author: MsPoppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164914 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:39 PM
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They did not own up to their end of the bargain. Some even put charges on my card that I didn't authorize and then refuse to remove it because I was late or over 30 days behind.

They're called "late fees" and they're poart of the agreement that you sign when you get a credit card. By having the credit card and using it, you've authorized them to charge you for paying late. Your end of the bargain was to pay them on time.


It happens all the time. How about Enron, Worldcom, etc. Or is it okay for those companies but not okay for me?

It's not okay for those companies. Do you really want to model your behavior on them?


These companies are snakes and slimeballs

No one forced you to borrow their money, did they?

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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164916 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:39 PM
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Yet the account was still treated as though I had agreed. This is in violation of their own agreements.

No, it's not. Once you close the account, you are pretty much at their mercy and under a whole new set of rules, typically "punative rates" until you pay off the card.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164917 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:40 PM
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Bunk beds = maybe $1000
New 5 bedroom house = maybe $150,000-$250,000

Invest in the beds.


hehe - they have two beds in there now. No room for anything else. But I didn't say that was not good enogh for now. It's fine for now. And for the boys, it could stay that way. At least for the next year.

At that time, if I have better credit and still have my current or better income, I will want to buy the house.


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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164918 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:42 PM
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well, he's right in that you can't rent exactly what you can buy for less. But you can rent for less than you can buy.

For example, you can't typically rent a 2000 sf 4/2 home for less than you can rent it for, but you CAN rent a 3/2 apartment for much, much less--at least in Phoenix.

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Author: MsPoppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164919 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:43 PM
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Hehe - I understand that. I meant that I can pay these back now. It sounds as if you think that LBYM means that I cannot have ANY debt at all. Is that what you mean?

Yes. That's what LBYM means.

Living below your means means spending less then you earn. Which means no debt. Most people can't afford to buy a house with cash, so mortgages are fine, but caryying consumer debt means that you are buying things that you can't afford.

Being able to service debt (i.e. monthly payments) doesn't mean being able to afford something. Likely the primary reason you got in trouble is because you don't quite get that yet.

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164921 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:49 PM
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If you blew money that you didn't have on "frivolities", how are you comfortable with not paying the full amount for them? Meaning, what rationale tells you that paying part of what you owe is okay? That it's better than bankruptcy?


Because the creditors violated their agreements in some cases and charged much more than they were allowed. I explained earlier. Also, they violated the law on many occastions when in collections.

I really have no problem with paying principal and interest. I can't believe in paying 29 per month in late payment fees and 35 per month in overlimit fees.

Some of them, once I was late by 30 days, lowered my credit limit, and then started to change overlimit fees every month. I was busy trying to pay off secured debt and couldn't make my minimum monthly payment and so they charged late fees even when I paid a little, but it was less than my monthly minimum.

In the past, this was illegal. They were limited by law to what interest they could charge. These fees are OUTLANDISH. In fact, it took some of my accounts which were 1000 dollars owing, up to 3000 dollars. I am sorry I don't feel I am obligated to pay that.

I got in over my head. And they raped me for 200 percent of my original amount just because I couldn't pay it all on time. They charge 70 dollars a month if you pay 1 cent less than your minimum payment if you are late on that one cent by one day.

Sure, I signed up for it. But it's just too exhorbitant of a penalty when you get in over your head. It's worse than the IRS.

I feel completely free to negotiate a settlement.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164922 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:52 PM
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"You're not planning to pay the debts. You're planning to pay half. "

No. Some of these charges were added, even though I didn't agree and tore up the cards and closed the accounts.

If you think the 60 bucks a monnth is fair in ADDITION to interest and principal payments, then I have to disagree.

These companies change the rules on you in the middle of the ball game.

If that's the way you see the world, in total black-and-white, then yes, I am planning to repay half. That's life. I am going to negotiate. If big companies can do it, I will too.


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Author: MsPoppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164923 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:57 PM
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I got in over my head. And they raped me for 200 percent of my original amount just because I couldn't pay it all on time. They charge 70 dollars a month if you pay 1 cent less than your minimum payment if you are late on that one cent by one day.

Sure, I signed up for it. But it's just too exhorbitant of a penalty when you get in over your head. It's worse than the IRS.

I feel completely free to negotiate a settlement.


Let's say, for argument's sake, that the fees that they charged you were unfair. They're written very clearly in the credit card agreement, but since I like fairness, let's assume that the terms of credit are actually irrelevent.

So you get them to get rid of the fees. I'll even overlook the fact that you want to pay half of the debt (after the penalties and fees have been removed).


Do you know what happens when you pay your mortgage late? Or your property taxes? The fact that you are so angry at the credit card companies means that you blame them for your financial situation. Which means you haven't taken full responsibility. Which means that you haven't learned what you need to learn. Which means you would be in danger of repeating that behavior. The house "needs" new floors. Or a new chimney. Or new windows. And maybe you'd get a HELOC and do the work. And the someone gets sick, or loses a job.

Your family winds up homeless.

I've seen it happen. You need to pay your debts, build up an emergency fund of six months, make sure you have enough insirance to take care of your wife and five children and then maybe, maybe you can THINK about getting a house.

In short, you're not even close to ready for that.

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Author: MsPoppy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164924 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 6:59 PM
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If you think the 60 bucks a monnth is fair in ADDITION to interest and principal payments, then I have to disagree.

These companies change the rules on you in the middle of the ball game.


Nope. It's right there. In black and white. In your credit agreement.

If that's the way you see the world, in total black-and-white, then yes, I am planning to repay half. That's life. I am going to negotiate. If big companies can do it, I will too


Bully for you, Sport. It's not my money, so it's no skin of my nose. Good luck.

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164925 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:00 PM
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Remember what living like "most people" did? Buying stuff you couldn't afford on "payments", saying "Charge it!" at the grocery store, underwithholding on your taxes?


My tax troubles are not caused by underwithholding. They were caused by an IRS gone crazy. I do not feel I owe those taxes. The IRS does. I can't fight it. I won't go into specific details, but you somehow assume that everyone's trouble with the IRS are legitimate. I don't. I simply feel that it's easier to pay them than to fight them and loose.

As for the house, why does everyone assume that if I buy a house in a year after I get out of debt, that I will be living beyond my means? That's ridiculous! I'm living beyond my means if I pay someone rent even more. If I do that, I'm not building equity. I thought people here on this board were smarter than that.

So far, everyone thinks I should pay whatever ANY credit or taxing authority want me to whether or not it's justified. That I couldn't possibly have a need for a larger house no matter how big my family is, that I should not buy a house until I am totally debt free even if the debt is well within a good debt-to-income ratio, that I somehow was evil by allowing myself to get into a situation that I couldn't repay some credit cards, etc. etc.

Jeez - I sure am glad the rest of the world isn't like some of the people I see here. Man, even criminals get to negotiate their jail time. But many people here think I'm sorry, low-life scum that will never ever learn just because I want to buy a house once I pay off or settle my old debts.

I somehow should figure out how to put a bed into my bathtubs, should shower in my toilet and eat beans and rice until I have paid back every dime I ever borrowed plus 3000 percent interest and maybe I should also ask my creditors if I can wax and polish their shoes and cars for a year or two as penance.

Come on.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164926 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:02 PM
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"Obviously you don't live in Silicon Valley where the median price of a house is closing in on half a megabuck."

No. I don't. And I'm very glad I don't. If I did, I woould have to live in a cardboard box under a freeway.

And you know what? Some of the people here would still think I was living beyond my means and should get a smaller house.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164927 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:04 PM
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You maintain the sanctity of your marriage by honoring your wife and your vows to her.

NOT by buying a house


I make many agreements with my wife over the course of my marriage. One of the commitments is to have a house that is ours. I intend to do that at some time in the not too distant future. Of course, with some of the replies I've seen here, even after I repay my debt, I shouldn't buy ANY house, no matter what the cost. I should just rent forever.


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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164929 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:08 PM
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mrbol,

You wrote, Any suggestions?

Hello. It's good to see an old friend at TMF.

Focus on your debts and credit report for now. The house will come in time. Maybe in a year as you hope; but maybe not.

Try not to take any of the harsh criticisms too personally. You'll work through this. Probably not quite as you plan; but I know you're a bright capable guy that just needs to apply himself to this problem, though at 42 you're starting pretty late.

In any case, the cumulative knowledge here is pretty hard to beat. A lot of people at TMF have experienced financially difficult times and weathered through them. Many have posted their strategies for dealing with creditors and I'm sure a number are still regulars here and would be happy to share with you.

I think you will get much better responses if you post questions that include lots of facts and figures. For instance, if you post a budget here, people will come out of the woodwork to critique it and make suggestions. Same with a debt payment schedules. Many of the suggestions probably won't be relavant to you; but you'll find many gems in them as well. If you're paying down debt, Fools tend to recommend the snowball method -- which has been discussed at great length in recent days. Finally, you'll find that most Fools will insist on honesty and personal and fiscal responsiblity -- and when they suspect a poster isn't meeting their expectations some can be a bit harsh.

As my last paragraph alluded to, you might want to post a budget. I know you put up a quick summary; but I think it might help if you got into more detail. One problem with this is that a real budget includes your income. To produce a realistic budget, you need to be using something like Quicken or MS Money to track your expenses, if you aren't already. Just listing the last couple of month's expenses is a good place to start.

Another suggestion would be to post your correspondance to your creditors here when you're negotiating. Sometimes we say or do things that we really shouldn't when we're writing to our creditors; or we assume things we shouldn't. Suggestions here might help you negotiate more effectively.

Finally, if there are concerns or questions about your credit report, post those as well. There's probably someone here that's dealt with every possible problem you can have with a CRA or creditor.

As always, I hope you enjoy your stay at TMF and I'm sure you'll learn a lot that will help you in your daily struggle with your finances.

- Joel
Who know mrbol from way back.

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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164930 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:10 PM
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... A lot of people around here (though not all) are very opposed to people taking on new debt when they have a lot of existing debt.


I would disagree that it's a lot of debt. It's just that it's marking my credit report.


We are particularly opposed to frivolous spending being discharged without being paid in full in order to incur more debt. There are a number of us who believe that paying less than originally agreed is just plain wrong. Since that's what you intend to do, you will have people who disagree with you immediately. It's a topic of much debate


No. I don't agree that it's all owed. Credit card companies ARE prone to violating their agreement once you get in over your head. In fact, they are designed that way. It just seems that no one here can see that. It seems to me they assume that the credit card companies and collection companies can do no wrong and that all the amounts they say I owe are owed. That is not the case here and I intend to negotiate that. In fact, after seeing the responses here, I am going to sue some of them to get statutory damages awarded to me, and if I prevail, I will use that money to repay the portions that I do owe. So if that's evil, too bad.

Now, How in the world, would buying a house be considered frivolous once I've discharged these debts? Please, can someone explain that to me?


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164931 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:13 PM
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... Need is not seperate rooms for all children. You want it, and it's okay to want it, but you also wanted more cars than you could afford and other "frivolities".


I never said each kid would get their own room. Nor did I say I was going to buy a house that was over my means.

Lot's of people here just JUMPED to that conclusion really fast. Two of the bedrooms are used to make income. My wife paints and does sculptures for sale so she would have one for that. I also use a computer to make a living and one would be for that.

I don't see that as frivoulous, but obviously some do. That's okay - I don't take issue with that. I DO take issue that some people have ASSUMED I want a seperate bedroom for each kid. I did not say that.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164933 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:23 PM
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"and not many people can pay back all their creditors inside of a years time."

Including you. You are only able to do so if you have them charge off 50%


Yes. I suppose. I do not consider all of the charges valid. Maybe you do automatically.

I, however, will negotiate with them and pay what they are willing to take. Once it's paid, I will buy a house.

If you think that's somehow bad, or evil, then I'm sorry. But it happens all the time in this world. People and corporations get in over their head all the time though no fault of their own. Somehow, lot of people here automatically think people are evil if they do that. So be it. I'm the devil reincarnated then.

Once I settle these debts, I will feel a lot better about myself and will buy a house if I can.

If it takes me over a year, then it does. I won't buy the house until then.

Now, I fail to see what is so bad about that, especially when the charges were not all legal. Hell, in fact, a portion of the debt was for services my mother incurred before she died. Yes. I know I'm not supposed to be responsible for them, but I co-signed, so I am. But at least some of the debt was not for spending beyond my means, in fact, the unforseen was probably what pushed it over the top.

But anyway, it doesn't matter. Once the companies and I have come to an agreement, I will sleep just fine once they are paid.

Sorry about that, but I will.


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Author: uwalum Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164936 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:34 PM
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"My tax troubles are not caused by underwithholding. They were caused by an IRS gone crazy. I do not feel I owe those taxes."

"Jeez - I sure am glad the rest of the world isn't like some of the people I see here. Man, even criminals get to negotiate their jail time. But many people here think I'm sorry, low-life scum that will never ever learn just because I want to buy a house once I pay off or settle my old debts."


You have mentioned that the cc companies are evil because they charge you per their agreements. Now the IRS is evil because they also want their money.

You let the cc bills go unpaid and are now complaining and trying to figure out a way to pay less than what you actually charged on the cards. You are defensive when people point out that you really aren't LBYM even though you have deluded yourself into believing that you actually do spend less than you make.

Your response has been, "Yeah, but..." or "evil everyone else." Sorry, but I don't buy it. I think that it is easy to be defensive under the circumstances, and I would hope that you would sit back and think about what has been said here. Many people have come out of worse situations than yours. Bottom line is that those people took responsibility for their action. IMO, it would be better for a 42 year old male to accept responsibility rather than point the blame to everyone else.

Good luck. I think that the first step in your financial recovery will be your attitude about why you are in this situation. You might first want to look in the mirror.

L



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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164937 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:35 PM
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Negotiate to get the FEES off your existing balances... IMO, reducing it by anything more than the fees and you're asking the creditor to pay for a portion of that big screen. How fair is that really?


Ah! Someone with a heart.

about 30 to 40 percent of the balances are fees. I am offering 50 percent - but I'm sure some of them will want more. If I pay 60 to 70 percent, then I will. And then they won't be paying part of my big-screen. It might take me more than a year to pay it and if so, then thats okay. It was just a plan.

would also suggest tackling them one at a time in lump sums and try to avoid getting into more monthly payment obligations. With your comments on medical issues I would think keeping your required monthly payments down is crucial.


We have no super-bad medical problems. It's just that with many kids, and a pregnant wife (have to pay for delivery) that I have budgeted a large amount per month for medical bills. In actuallity I pay about half that amount so I use it to pay some medical bills past.

Incidentally, I got the past two medical bills that I "owe" on by two things

1) An insurance mixup. When I started my new job, dental insurance had a 30 day waiting period before they would pay a claim. This was in the contract, but I didn't read it. When the dentist called the insurance company for a pre-authorization, they got the authorization. After the fact, the insurance company didn't pay citing the 30 day period. So I got a 600 dollar surprise. Had they told them then, I could have waited - but then of course, it would have been a pre-existing condition.

2) When my son broke his arm, the original doctor didn't set it properly. So about 2 weeks later, we had to get it re-broken and re-set which required surgery, etc. So the doctor that did the surgery was in our network at the time of the break, but dropped out by the time the follow up visit and the claim was paid, taking it from being paid at 90 percent to 60 percent paid. I don't agree with this, but fighting it might be a loosing battle.

So I really don't forsee many more medical problems, unless somoething else "happens."

Yes. I need an e-fund before I buy a house... I know.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164939 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:42 PM
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I *am* going to repay it. But just to repay it all - even the amounts they added that are not fair or legal, and not to negotiate seems to me to be really stupid.


How is it not fair and legal if it was in the contract that you signed?


It "wasn't" in the original contract I signed. They used to charge 3 to 5 dollars for overlimit and late fees were not charged.

They "changed" the agreements by sending out a notice. Such notices require no signature. They simply say that by continuing to use your credit card you agree to the new terms and conditions.

What happens if you didn't even GET those new terms and conditions? In my case, if I got a new terms and conditions sheet that was that bad, I closed the account.

That doesn't matter to them, they just charged these fees anyway. By simply keeping a balance and not paying off the entire amount right away, you allow them to change the agreement at will.

Also, many cards simply lower their limit once they see you've been late once or twice and then start charging you a overlimit fee if you are not able to immediatly repay under that limit. That's not right.

I'll make a bet - I'll bet many of you right now are unaware of some of the terms and conditions you have given to these companies because they send you these things and you cannot agree to the new terms because to do so would require you to close the accounts.

These "fees" are NOT legal and are maybe aboout to become EXPLICTLY illegal under this: http://west.thomson.com/aboutus/newsletters/bankruptcy/bkcy070903.asp?cookie%5Ftest=1

I hope so.



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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164942 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:49 PM
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They're called "late fees" and they're poart of the agreement that you sign when you get a credit card. By having the credit card and using it, you've authorized them to charge you for paying late. Your end of the bargain was to pay them on time.


No. I didn't sign up for them. I signed up for 3 to 5 dollar late fees. They changed the agreement after the fact.

Using your arguement, lets assume you have a credit card with 5000 dollar balance.

The CC company sends you a notice in the mail (Not registered mail either) that says this:
"1)You agree to give me your first born plus 50 percent of the equity of your house and car and 35 dollar fee if you fail to pay us on time once.
2) We change the due date to 10 days after we send the statements.
3) We lower your credit limit to 2000 dollars"

Then, this notice gets lost in the mail. Being the good credit card consumer you are, you know you failed to get your last statement in the mail so you send in your payment.

Next month, you get late fees and overlimit fees.

Oh, but "you" signed this agreement.

So----

In answer to your question, No, I did not agree to those 29 dollar amounts.

And before you say I did by default, I say that not many courts would allow a contract by way of NOT receiving it. Most reqire that you be given written notice by certified mail of a contract change.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164943 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:51 PM
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No, it's not. Once you close the account, you are pretty much at their mercy and under a whole new set of rules, typically "punative rates" until you pay off the car


Precisely why I won't loose sleep if I pay them a settlement, rather than the whole outrageous amount they want.


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Author: mrbol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 164944 of 308483
Subject: Re: Paying off old unsecured debt Date: 7/16/2003 7:55 PM
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