Financial Problems... I need help....?

Question

Ok i am 19 years old and because of illness i was unable to complete cosmetology school which was going to be paid for by student loans. since i had no choice but to quit, my federal student loans were dropped and now i have about $5000 to pay off. it has gone to a collection agency because i was without a job for seven months and i was unable to pay. i am now employed and make about a $900/month. i have an apartment, credit card bills, student loans from college, electricity bills, and food to pay for. i have tried many times to work with the collection agency and the smallest that they can make the monthly installments is $200! i cannot afford that! i can't afford a financial advisor either. whats worse is that since i can't pay they monthly installments, i am now having legal action against me and they have also attacked my credit score! i need to know if there is a way to avoid bankrupcy and somehow pay them off... please help!

it isnt a student loan anymore, the student loans were dropped when i had to leave school so now it is a debt. i eat generic foods and i dont have a car...

Answer 1

Just start making payments...this way you're still getting the amount down. Call the collection agency and make sure and write down names and notate EVERYTHING said and done. Go over your finances with the agency to prove you can't pay more then "X" a month. You may still have to go to court, but you will have names, notes and cancelled checks to show the judge that you have not been avoiding the debt. Tell the judge you began paying what you could afford because the issue had been going on so long that you were afraid to be more in debt due to interest and charges being added to the current amount. This will also show the judge that you're diligent in paying the debt. It will also not allow the collection agency to make you look like a bad person who is just trying to get out of your debts. Also, when you go to court, get a copy of your credit report to show the judge that, other than this collection, all your other debts have been paid on time and amounts to the best of your ability. Get a copy of your lease agreement and see if it will or will not allow you to sublet your room or apartment...if it does not, then it shows the judge that, financially, you're bound to the lease and can't get out of it. Get a letter from your landlord stating that you can't sublet your apartment for the remainder of the lease and also that you have been responsible in paying your rent in full and on time. You're doing this to reinforce to the judge that you ARE a responsible person stuck in a bad spot. Also, get all your cellphone/phone bills showing that you have been in constant contact with the agency in an attempt to work this issue out and you haven't been avoiding them hoping they go away.

The judge can't make you go against the lease just to pay the agency. Doing that would force you to break a legally binding agreement to pay another agreement.

The judge will probably force you to make scheduled payments, but showing the judge proof of current payment, leases, letters, notes of correspondance, etc. etc. will probably help you in that he will order a lower payment. You can gather all this information and notify the agency that you have been paying what you could and that you have this mound of paperwork to give to the judge if it goes that far...they can work with you on this or they can take their chances with the judge. If all of your information gathered all points that you're a responsible, upstanding person jsut in a bad situation, they are chancing the judge will reject their $200/month demands and possibly lower it to an amount below what you're currently paying them now.

They may be willing to work with you if they see they are on the losing side of the battle.

Answer 2

Talk to a debt consolidator. You can get your credit card bills and your student loan in one loan payment that can be stretched for a long period of time, thus lowering the payment. However, the interest rate will probably be pretty high. Next CUT YOUR CARDS!!! The last thing you need is more debt. If you can't afford it don't buy it. By that I mean, if you can't pay in cash, you can't buy it. Period. Try cutting your costs as well. Buy generic food, don't leave your lights on, turn down your furnace and wear a sweater, etc. If you have a car, but live in a place that has public transportation, stop driving your car and ride the bus. After a few months, if you find you no longer need your car because the bus is convenient, sell the car, and pay down the loan. To them, $200 is not much, considering what you've gotten yourself into, and the fact that it is going to take you YEARS to pay it off with the interest. Consider that. Hope this helps.

Answer 3

Federal student loans can be put on hardship deferral which if you are only making $900 / month, you could qualify for. But that is a ridiculously low salary. So here's a plan:

1. You MUST increase income. You can deliver pizza at night and typically make $1500 / month or more. There are only 2 sides to the equation: Income and Expenses. You have to increase income with a second job (e.g. house cleaning, pizza delivery, something) and then you need to lower expenses. Sell anything you have that you don't need.
2. Cut expenses. It sounds like you don't have much room to cut here, but if you're paying for satellite TV or cable, get rid of it now. That could save you $60-80 / month. Make one trip to the store each week instead of several (save on gas). No extras, no eating out until you clean up the mess. Even cut your Internet connection and use the one at the local library right now.
3. Don't pay credit card bills at all right now. That will ruin your credit score, but you've already trashed that. They will call and be nasty to you but won't do anything about suing you, etc. for at least 18 mos. to 2 years. Tell them you only have $900 / month and you will talk to them only once every 2 weeks. If they threaten or act childish or sound nasty, treat them to a dial tone. Meanwhile, the federal loan is a big monkey with teeth that can confiscate your salary. Find out how to get a hardship deferral. If you get it, then you can start paying off your credit cards (smallest card first). If you can't get it, put every extra dollar on the student loan until it is current and then try to start paying as many minimum payments on the credit cards as you can and put all the extra on the smallest one.

Having said that, here are 2 prerequisites you need to do before you do anything else:

1. Cut up all the credit cards. They will only make your life worse.
2. Get $500 and put it in an emergency fund that you ONLY use for genuine emergencies. An emergency is not a credit card collector. It is a medical expense or a car breaking down. If you don't have an emergency fund, then you'll go into debt every time an emergency happens. $500 is sufficient for a single 19 year old.
3. Visit www.daveramsey.com and listen whenever you can to the Dave Ramsey show (on the Internet or radio in your area). You'll learn more for free about how to quit screwing up with money and start on a plan for success from listening to that show than anywhere else.
4. You can find out on Dave Ramsey's web site how to contact a Financial Peace Counselor and they can help you get the hardship deferral on your student loan.

Keep your chin up! The fact that you've messed up with money means that you're over 12 years old. Meanwhile, get that second job and work until your exhausted. You'll sleep better at nights and you need to get that mess cleaned up. Bankruptcy is a horrible option. Better to clean up a little trashed credit now with an extra job than to have a bankruptcy stay on your record for YEARS. (By the way, some job applications and most credit applications ask "Have you EVER filed a bankruptcy?" To lie on those applications is illegal. So avoid bankruptcy at all costs.)

Answer 4

There are specific companies that can consolidate your student loans, get the collectors off of your back and hopefully get your payments down to around 50 a month. Go to the following website and click the consolidate student loans link. At least the information you will get is free. Hope it helps.

Answer 5

Put every thing in storage then move into a hostel, then you can pay 600 to 700 hundred a month and in less than a year all your bills are paid off.

Answer 6

you cannot discharge student or federal loans in a bankruptcy unless in extreme circumstances (which is pretty much never). You have to pay them - theyll get you tax returns until they are paid off - just call them and work it out or go to a consumer credit service and have them work it out for you.

Answer 7

fake. it is going to remedy all financial issues yet there are some anybody isn't that able to take care of their financial desires. they are able to very own the money yet no longer understand what to do with the money while they have it. Peace & Love :)

Answer 8

tell them what you can afford to pay every month. if they don't agree, just start sending them the money anyway. once you start paying and do it faithfully, there is no judge that will condemn you as you are trying to pay it off.

Answer 9

I suggest you to sell everything.