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Let me just start by saying that I know we have been financial idiots, and this past year has taught us a lot and we are really working hard to never get in this situation again. We were really dumb with our finances, and now here we are

My husband lost his very well paying job in February of last year. He was unemployed for a few months before finding his new job, which is currently paying a fraction of his old job. He's in sales with mostly commission/bonus, and a small salary. We've been pretty financially destitute since last March when we went through our small savings. His job has amazing oppurtunities and he will soon become a city manager,and he is going to be staying with a friend in the city we used to live in, 2 hours away, five days a week, so that he has a lot more oppurtunity to sell, since we had to move back to my hometown and stay with my parents for four months after he lost his job and he's run out of places to sell here. Anyways, the point is, his closing ratio is so high, we can realistically expect him to be able to double or triple our income after next month.

I've been a stay at home mom since our 2 year old was born, and he lost his job when I was pregnant with our now 7 month old baby. I am going to school fulltime online to get my B.S. in Accounting, but without my degree, I can't find a job that would pay more than daycare, so for now, we are stuck with one income. I have at least 3 more years of school to go.

My husband bought a stupidly expensive vehicle about 3 days before he lost his job and we had to call the bank to have them voluntarily repossess it.
We now owe $20,000 to the collections agency who bought the debt, and I need to pull up our credit reports, but I would estimate we have at least $6000 in other debt in collections. (credit cards we couldn't pay on, and medical debt).

I'm not concerned about the $6000. I know we could work with a credit counseling agency and get that debt consolidated, but obviously the huge issue is the $20,000 for the car. Currently they have excepted 3 months of $100 a month and acccepted a payment plan for another 6 months of $100 a month. We've been paying this to avoid them from suing us and forcing us into bankruptcy because we can't afford a garnishment. But that's not even paying the interest. I know that when you consolidate your debt, they want the plan to be no longer than 5 years. $26,000 in debt over five years would be a payment of $433 a month, not including interest. Since the collections agency for the car has already excepted another 6 months of $100 a month, we have another 6 months to see if my husband's income improves enough to be able to pay that amount. In the meantime, I've finally stopped dodging collections calls and am setting up payment plans with them, as we are expecting a decent tax return plus my student loan money next month, and quite probably an increase in my husband's income.

What complicates matters is that my husband has an employee stock option plan, and will be offered an employee stock purchase plan in a couple of months, and we would hate to lose any proceeds that eventually come from this. Also, we would have to wait a year anyways to file bankruptcy, because we owe my parents $4000 from the time we were living with them, and from them helping to pay our lawyer for a lawsuit that we have been working on for our ex slumlord since last year (it's a long story). And we have promised to pay them $2000 from our tax refund and they really need the money.

So I guess I may have answered my own question while typing this all out. If we have to wait a year anyways to file, because of having to pay my parents, there's a good chance that in that year, we can pay off most of the $6000 or so of the other debt, and just keep making small payments to the $20,000 for the car in order to keep them from suing us and garnishing my husband's wages, and at that point we could probably afford a debt consolidation program. Does any of that sound like a better idea than bankruptcy?
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Ummmm....


My guis that one of the costs to people and society by the decline in Church membership is that fewer people these days hear about the biblical parable about the seven fat years and the seven lean years....


Seattle Pioneer
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Bailing

To clarify - you've run through savings? The student loan is federal?
On the employee stock option plan or stock purchase plan, is that something he and enroll in once per year?

Do you have other debt other than the $26000 that is in collection? How much do you presently have on student loans? Do you have any type of retirement accounts?

Can you get your current interest rate info and share with us here?

First off, let me state that I think avoiding bankruptcy is a noble pursuit. There is a decent chance it may financially be your best option.

Second, if its federal student loans you are talking about, how you spend that particular money should be done in a way that furthers your education and/or keeps the lights/you and the kiddos fed on while you are doing that.

Have you applied for food stamps or any of the programs that might provide you with assistance?

Do you have a budget?

One thing I would suggest is that when the tax return comes if you can dedicate a little of it to trying to get debt paid off or forgiven. this is something that would take an agreement, in writing, with the collection agencies - basically, say if you have $500 you can put toward the debt after the monthly bills are payed - call up one of the agencies, let them know you think you can pay Y$ on X balance, but they need to be willing to charge off the remainder of the balance. Let them know this is a one time offer, and if they can't do a deal, you'll go to one of your other creditors. Anything you agree to needs to be in writing, just in case they try to not charge something off or otherwise reneg. The goal on this is 2 fold - one stop interest from accurring, and 2, improve your cash flow in future months. My gut is this is more likely be be doable on the medical debt, particularly if the provider already received payment from insurance.

Good luck. Lots of folks smarter than me here.
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Well, you've pretty much come to the conclusion that BK isn't really an option, so you need to focus on repayment. In order to do that, you have to figure out your income and your outgo, and see if you have enough income to meet the required outgo. And, you need to use the actual income your husband can count on NOW, not the income you HOPE he will have in a few months.

Do you know what your monthly expenses are? Have you examined them for what can be cut? What are your minimum payments for ALL of your debt? When you add the monthly expenses to the minimum debt payments, how does that compare to the monthly income that you currently get? (Note - the income should not be the income that you HOPE will occur in a few months, but what you can actually count on now.) If there is too much outgo, and not enough income, then you need to figure out what outgo you can cut.

As far as the employee stock purchase plan, while you are in debt, your husband should only be purchasing stock in an ESOP with the intention of selling it immediately to take advantage of the discount offered. If the ESOP does not have a discount, then he should not be participating until you are out of debt.

If you want to provide more details of debts, expenses and income, you can get lots of advice - much of which you will probably seem harsh and/or you will want to reject immediately. But in your situation, you probably need to take a harsh look at what you are spending vs. what your income is.

AJ
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I wish you the best of luck. AJ is right, if you give details on income/expenses people will be happy to pick it apart for you but I don't know what kind of expenses you would have living with your parents right now. I guess kids stuff, food and gas mostly?

I think you're right to try to pay it off without bankruptcy, but without details can't give you more than encouragement.

My husband bought a stupidly expensive vehicle about 3 days before he lost his job and we had to call the bank to have them voluntarily repossess it.

We now owe $20,000 to the collections agency who bought the debt, and I need to pull up our credit reports, but I would estimate we have at least $6000 in other debt in collections. (credit cards we couldn't pay on, and medical debt).


What a mess! I know you can't do anything about this now and I don't know how repossession generally works but it seems a shame that that would add up to 20k. Is that more than payments would have been? (you don't have to answer, just thinking it through)... I'm wondering how much of that is fees and if there is any possibility of arguing away some of them. Of course, you would probably have to have some cash to wave at them for that to work well, so you may be best off paying what they've asked for for a period of time. Unless they are taking on more fees and interest the whole time you pay the 100 bucks. You might want to look at the details of that offer, if you haven't already.
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bailingtheboat14,

You wrote, We now owe $20,000 to the collections agency who bought the debt...

Your husband's stupidly expensive car lost $20K in value that fast? Wow. I assume that includes some $$$ for expenses from the lender. Did you ever get any kind of accounting for the balance owed from the lender?

It might have been better if he had tried to sell the car instead. Of course that might have meant bringing cash to the deal - something I assume you didn't have. But I'm a little surprised that you'd owe $20K. Even if you sold a new $60K luxury car right after purchasing it, I wouldn't expect to lose more than maybe $10K on the transaction. At $20K, something doesn't smell right - or this must have been a really stupidly expensive car.

Also, Currently they have excepted 3 months of $100 a month and acccepted a payment plan for another 6 months of $100 a month. We've been paying this to avoid them from suing us and forcing us into bankruptcy because we can't afford a garnishment. But that's not even paying the interest.

Ah. I was wondering if you realized they might be able to garnish your husband's wages. In some states, that can be up to 25% of pay. But many have a lower cap or other restrictions on wage garnishment and a few forbid it altogether for consumer debts. Also the duration of wage garnishment orders is usually limited to a few years. In some states for some situations letting the debt go to judgment and even dealing with a wage garnishment might be better than going through a bankruptcy. For one thing judgments in most states stop interest from accruing or at least fixes the rate, often at something less punitive ... at least compared to things like credit card rates. You probably need to dig a little deeper and understand the details of what is law and what is customary in your state before deciding that wage garnishment is something to fear over bankruptcy.

Finally, What complicates matters is that my husband has an employee stock option plan, and will be offered an employee stock purchase plan in a couple of months, and we would hate to lose any proceeds that eventually come from this.

From my experience, you don't have to do anything with an employee stock option program until your right to exercise the option is about to expire. That means you should have some years to try to fix your finances before you have to worry about that.

You will need to understand the tax implications for both the stock option plan (if it is a qualified or non-qualified option plan) and how the company manages the option exercise. Also stock option plans for public and private companies tend to differ a bit since private companies can't issue shares to your broker. And if the company is private, you will need to decide if tying up your money in an illiquid stock is even a good idea.

Of a more immediate concern is the ESPP. That usually requires an employee to let his employer set aside a certain amount of their income - usually up to between 10 and 15% of their gross for between 3 months to a year at a time. You need to examine the plan and have enough saved to cover lost income for your first contract period. Once your husband gets his first block of stock you should be able to sell (assuming its a public company) the stock immediately to refill your savings.

And as aj485 said, you probably won't want to participate in the ESPP unless there is a purchase discount. Without the purchase discount, you could have just bought the stock on the open market at a time of your choosing.

- Joel
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Sorry, I missed some of this when I first read your post......

In the meantime, I've finally stopped dodging collections calls and am setting up payment plans with them, as we are expecting a decent tax return plus my student loan money next month, and quite probably an increase in my husband's income.
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we owe my parents $4000 from the time we were living with them, and from them helping to pay our lawyer for a lawsuit that we have been working on for our ex slumlord since last year (it's a long story). And we have promised to pay them $2000 from our tax refund and they really need the money.


Okay, let me get this straight - you are okay with making payment plans because you are planning on using money from your tax refund (a big chunk of which you have already committed to use for paying your parents, not for payment plans), borrowed money (in the form of your student loan) and a hypothetical increase in your husband's income to make payments on those plans? And you are still paying a lawyer to sue your former landlord, but haven't collected any money yet?

Your actions are just digging the hole deeper. If you really want to get out of the hole, you need to STOP DIGGING! You really need to sit down and look at what you are bringing in, and what you are spending. If what you are spending is more than what you are bringing in, you need to stop spending on anything that is not necessary for survival - rice, beans, a roof over your heads, heat (but not A/C) and make do with everything else you already have. In fact, you probably need to sell a good part of what you 'have', since you can't afford it. And you need to make some type of contingency arrangement or some other type of payment arrangement with the attorney you are using to sue the landlord, because you can't afford to pay the attorney, either.

Then, you need to figure out ways to increase the income you are bringing in. You need to get a job. You claim that you can't find a job that will bring in any more than child care, but you are apparently somehow managing to have the children cared for when you go to school. If you can manage to have the children cared for while you are in school, you should be able to figure out a way to get a job, too. And you need to stop assuming that your husband's income will increase, and start spending less than he actually brings in.

AJ
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AJ

OP indicated she was taking course work online. I concur that the student loan, in particular, should not be used to satisfy the other lenders - thats probably a clear violation of student loan regulations, as well as generally a bad idea.

Regarding a job, a few things that might be open for the stay at home mom include providing phone/chat support from home, or potentially contacting some of the accounting firms in her area looking for data entry that could be done in the off hours. Not sure really how to get her on either of those tracks, but its possible. Also, could potentially work weekends when dear husband is home. There are some other, more entrepreneurial things open to her - Etsy, E-bay, but I don't think they warrant consideration until we get more info on the budget.

At current federal minimum wage ($7.25/hr) is $290 per week before SSI and taxes. I fully expect that it would be very difficult to find child care that could allow you to work a 40 hour week and actually make economic sense at minimum wage.
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At current federal minimum wage ($7.25/hr) is $290 per week before SSI and taxes. I fully expect that it would be very difficult to find child care that could allow you to work a 40 hour week and actually make economic sense at minimum wage.

The classic solution to this problem is to *be* the child care provider, taking care of your own kids for free and being paid to take care of someone else's kids at the same time. It's really setting up a small business, and requires a bit of record keeping; but it's something the OP should at least look at for feasibility in her situation.

Patzer
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The classic solution to this problem is to *be* the child care provider, taking care of your own kids for free and being paid to take care of someone else's kids at the same time. It's really setting up a small business, and requires a bit of record keeping; but it's something the OP should at least look at for feasibility in her situation.

Patzer may be on to something here. When our youngest was born, I stayed home with him for two years by getting myself registered for in-home daycare. I then undercut the costs of the commercial day care centers and still brought home enough money to seriously contribute to the household. Plus, there was the added bonus of having time with my son, not having to invest in a professional wardrobe, and having my son have built in playmates every day. It was a great option for us.

LWW
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OP indicated she was taking course work online.

Most accredited full time 'online' degree programs (as the OP indicated she was pursuing) that I am aware of are not completely 'online' - they have some type of meetings/touchpoints with other students and/or mentors that need to be done at least over the phone - so I would expect that there is still some type of child care needed. Note - I assume that the degree program the OP is pursuing is accredited, or she would not be able to get a student loan.

At current federal minimum wage ($7.25/hr) is $290 per week before SSI and taxes. I fully expect that it would be very difficult to find child care that could allow you to work a 40 hour week and actually make economic sense at minimum wage.

In addition to Patzer's excellent suggestion, there are options other than minimum wage jobs available. For instance, at my company, entry-level Customer Service Reps (no degree required) typically earn at least $10/hour. In addition, my company offers a benefits that include additional child care reimbursement for employees whose income is less than $50k/year, as well as tuition reimbursement, which could help decrease the need for student loans. Even a net of $50/week after taxes and expenses would bring in $2600/year, which would help to pay off the $26k in debt the OP has mentioned, in addition to helping stop the bleeding by decreasing the student loans that the OP is taking out.

Maybe all of these possibilities have already been investigated by the OP, in which case she can say so. But dismissing the possibility of employment with a blanket statement of without my degree, I can't find a job that would pay more than daycare sounds to me like not all of the possibilities have been considered.

the student loan, in particular, should not be used to satisfy the other lenders - thats probably a clear violation of student loan regulations, as well as generally a bad idea.

We are in complete agreement here. Here is information on what student loan proceeds can be used for from the Direct Student Loan website http://www2.ed.gov/offices/OSFAP/DirectLoan/inschool.html:

Using the loan for education expenses: You may use the loan money you receive only to pay for your education expenses at the school that is giving you the loan. Education expenses include school charges such as tuition, room and board, fees and indirect expenses such as books, supplies, equipment, dependent child care expenses, transportation and rental or purchase of a personal computer.

AJ
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Using the loan for education expenses: You may use the loan money you receive only to pay for your education expenses at the school that is giving you the loan. Education expenses include school charges such as tuition, room and board, fees and indirect expenses such as books, supplies, equipment, dependent child care expenses, transportation and rental or purchase of a personal computer.

Wasn't that what Calidreaming did? Every time she and her husband got really low on money, and the credit cards were maxed out, she would go to school and take out the maximum in student loans, then continue to spend, spend, spend.

It was one of those scenarios where you had to wonder how they thought it would work out.

Nancy
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Wasn't that what Calidreaming did? Every time she and her husband got really low on money, and the credit cards were maxed out, she would go to school and take out the maximum in student loans, then continue to spend, spend, spend.

Yeah, apparently, most years, they were making $100k/year, but using the student loan money and credit card debt to live like they were making more.

It was one of those scenarios where you had to wonder how they thought it would work out.

Not so well, as it turned out - they divorced, she got evicted from the apartment that she insisted she couldn't break the lease on because it would be 'too expensive' (I guess she found a cheaper way to break the lease by not paying) and she declared BK, at least on her consumer debt ($70k+). Even though her student loan debt was included in the BK, she didn't expect it to be discharged. So she was still stuck with probably at least $160k in student loan debt, while making $10/hour as a CSR.

AJ
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Not so well, as it turned out

The only person I felt sorry for was the daughter, who was hit at the last minute with, "we can't afford college, sorry."

And we now return you to your regularly scheduled program.

Nancy
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The only person I felt sorry for was the daughter, who was hit at the last minute with, "we can't afford college, sorry."

She still went to college - but a less expensive in-state school, rather than the expensive out-of-state school. Hopefully, she took it as a life lesson on LBYM. If so, I think she's the big winner out of the whole deal.

AJ
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Made me look up Calidreaming.
I remember that thread. Amazing that it was 4 years ago.
plus a short follow up a year later.

Wonder how things have turned out.
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