Debt settlement is sometimes the only way to turn.

This article is from personal experience of hitting a financial wall and coming to a sudden stop. I was 40 years old and my whole life stopped. I was financially devastated and did not know where to turn. I had been making a good income and my wife at the time was working full time and making very good money. But then I walked into work one day and my job had come to an end. I had no clue that this was going to happen. We had been living high on the hog and had not been putting away any funds for times like this, we had no nest egg or financial cushion to fall back onto. I was devastated, I felt like my world was crashing in around me and I had no clue of where to turn or what to do. 

My credit cards were close to being maxed out and I had other bills that were closing in on me. I had reached out to credit counseling agencies to try and help me get my bills in order. They worked except they took every red cent I had and put it all towards my debt, which is fine but it leaves you with nothing which hurts when you have unexpected car repairs or home repairs or a medical emergency. You cannot just pick up the phone and call your credit counselor  and say I am skipping this months payment to fix my car, the credit counseling agents do not want to hear this from you and they will not help when you have these situation's. So unfortunately I had to take out other credit cards to help when these issues came about.

I had also looked into a consolidation loans to wrap all my debt into one account and one payment with a much lower interest rate and a payment that I could afford. This would have been great but with no job and only my wife's income I could not qualify for loan, I was what is called “upside down”, my debt to income ratio was backwards or upside down, I owed more monthly than what I had coming in as income. A consolidation loan was out of the question, it would have been great but there was no bank or loan company out there that would give me the time of day.

Unfortunately a lot of these types of programs do not work for people and they did not work for me either. One thing that I did do that worked for me was to go and find a professional debt settlement representative that could talk to the collection agencies, credit card companies, and other people I was in debt to and come up with a debt settlement that we all agreed too. A lot of people frown on debt settlement because it does hurt your credit report and credit score, but when you are in a position like I was my credit score sucked anyways. I opted to take a hit on my credit and pay off my debt at an agreed upon settlement instead of filing bankruptcy. The process can take two to three years of work but I was able to get my bills paid off and in the process I had found a new job and I took that income and applied it to my overall debt.

The whole situation was a wake up call for me. I knew from this that I needed to start storing away some funds on a weekly basis to cover me for three to six months just in case one of us loses our job again or we get sick and cannot go to work and we have to live on one income again. Everybody needs to make sure that they have at least six months of income stored away in case of emergencies.

How do you feel about debt?

How do you feel about debt?

All of us have heard many times over and over again, debt is bad! Even the bible talks about debt, “Proverbs 22:7 The rich rules over the poor, and the borrower is a servant to the lender.” The one misconception that many Christians talk about is, going into debt is a sin. Nowhere in the bible does it say that debt is a sin or that you have broken one of God's commandments if you find yourself in debt. The bible does talk about being in debt is dangerous and the bible also talks about not repaying your debt “Psalm 37:21 The wicked borrow and do not repay”.

One of the issues we see today that our own leaders in government is borrowing money like mad and going deeper and deeper into debt, which is teaching us to do the same. Our own government is setting a bad example for us to follow. Back in 2008 the government was saying that the people of the nation are not

borrowing enough money to purchase items and the Federal Reserve had to step in to help bail out companies that were hurting because we were not buying things to help companies pay their debt. The government has been in debt since the last great depression, but over the past several years the debt that the government owes has skyrocketed out of the roof. Most of the country’s debt is either mortgage debt or student loan debt. We have seen both of these categories explode over the years. Back just a few years ago when the housing market balloon busted we saw many homeowners leave their homes and dumped this debt back onto the government through bankruptcies. The government was handing out money to homeowners like handing out candy to children. I was working at the time doing loan closings for individuals and people were taking out two and three loans against their home equity just to purchase toys and etc. I knew something bad was going to happen, there was just too much money being handed out all around the country and I was correct. Banks and financial institutions began to fold and the market value on homeowners homes began to drop like a rock. Soon homes that had two and three mortgages on them were upside down, that is when you owe more on the home than what it is worth. When people realized this they just packed up their personal belongings and left their home and gave it back to the lenders (the government in most cases).

Let’s look at some reasons people go into debt or have to go into debt.

Income has been cut. For many, their income has taken a hit or they had to change jobs and their monthly income is less now. Many people fall into this category and they have not tried to cut their expenses. They want to continue to live like they were before their income was cut so they take out loans or charge credit cards to fill in the gap between their income and their expenses.

No savings. It is too easy to spend money that you have left over at the end of the week or month. A person or family should take any left over money and stick it away for a rainy day. Many families have no money or savings set aside for unexpected bills or job layoff or illness. A family should try and set aside three to six months of salary just for times like this, if they don’t they have to use credit cards and other types of loans to make ends meet.

Spending money before you get it. You are banking on a big bonus, or inheritance and it does not come in, but you have already spent this money and now you cannot payoff that credit card bill. I have learnt this one the hard way myself. I was informed of a big bonus and went out and bought some new fishing gear and then the company told me that they made a mistake in calculating my bonus and it was more than half less than it was supposed to be. The moral to this example is, never spend the money until the check clears the bank.

Lack of communication in the family. I find that a lot of family’s have terrible communication skills when it comes to talking about finances. When it comes to money people are afraid to talk to their significant other about buying habits, or the bank statement, or savings and etc. I know families where the husband runs the finances and the wife has no clue what is in the bank and she is afraid to ask anything to her husband about the bank account. I know other families where each spouse has their own bank accounts and they have no clue what the other does with his or her money. Each person has his and hers charge cards and there is no communication between the two of how far in debt they are. This is a terrible way to live as a union. This tells me that there is no trust in the household.

Medical Bills. Medical bills are just getting out of hand. Even with medical insurance you still have large deductibles, copay's, and the insurance is denying many types of surgeries that a person may need to have done. My nephew for an example has hepatitis C from a blood transfusion from when he was a child and he has to take a medication that cost a thousand dollars a day. His insurance will only pay for fifty percent of the cost, there is no generic medication and if he does not take the medication it will kill him. Unfortunately he cannot pay for the medication without going into debt. Another example is my wife, she had to have major surgery, the hospital required a twenty thousand dollar copay, and she has great medical coverage. The hospital required for her to take out a credit card with them in order for her to have the surgery. The hospital is not in the credit card business, they have a third party company that issues the credit, but the hospital has seen too many times when they have not gotten paid after the surgery, and the hospital is just trying to protect themselves from financial failure.

Divorce. Most of us have been through a divorce once or twice in your life. I can count on one hand the number of friends that have not gone through a divorce. As most of us know, a divorce is extremely expensive, even a simple divorce will cost about $3,000.00, then if you have children and assets it will drive the cost of the divorce through the roof. I have one family member that has to fly from Florida to Alaska every time his wife takes him back to court for one thing or another, can you imagine what his divorce is costing him. I know two others that have been separated for over three years and still legally married because they cannot afford to go through the divorce. Many people opt to go into deeper debt just to get the divorce over with.

These here are just a few reasons why people fall into debt. We would love to hear from you some other reasons why maybe you have gone into this dark deep hole called debt.

Check your credit report and credit score regularly.

If you are like most people you probably have never checked or have not checked recently your credit report or at least your credit score. It is highly recommended that you check your credit report on an annual basis. There are many reasons why you should check your credit at lease once a year. Here are a few of the reasons that you should take this opportunity to check your report.

It is Free. Today there are not many things that are truly free with some sort of strings attached. But a yearly credit report from all three credit reporting agencies TransUnion, Equifax and Experian is free. Your credit report plays a large role in your day to day life. AnnualCreditReport.com offers your credit report free of charge.

To Detect Identity Theft. Identity theft is a major problem for all of us today. If you have opened up a bank account or bought a car or house, filled out a application online then your identity has been corrupted one way or another. A lot of people think that they are free from identity theft because they pay for everything in cash or don't own a computer, that is a huge mistake. Identity theft is happening every day, you need to run your credit report annually just to check if your credit has been compromised without you knowing it. Scan over your report and check to see if any accounts that you have no clue what they are has been open in your name. You may be surprised of what you find, I myself have caught a couple huge accounts show up on my credit report, luckily enough I caught them early and was able to fix the issue with the credit reporting agencies before things got out of hand. But if you do not check your report regularly credit fraud can really put a damper on your credit report.

You Were Denied Insurance or a Job. If you have been denied any credit or insurance or even a job you can request a free copy of your credit report, this must be done within sixty days of being denied. The credit report will give you some insight to why you were denied. There could be something on your report that you have no idea what it is, this is a good sign of fraud. Or the report may open your eyes to some foolish spending habits that you may need to change. What ever the issue, if you have been denied then you need to take this opportunity to receive your free report and work on fixing what ever the issue is that caused you to be denied.

Public Records That Are Not Yours. One thing you need to look at closely on your credit report is judgement's, liens, bankruptcies, tax liens, and other civil judgments that do not belong to you. If you have hired any work done in the past for your home you may have a contractor lien on your credit report. The company that I work for, if we have a contract with a customer and they fail to pay us in ninety days we file a lien against their credit. These items you do not want to show up when someone like an employer pulls your credit.

These here are just a few reasons of why you need to pull your credit report annually, we will be looking at other reasons in the near future in order to help you get your finances in order.