DEBT: I owe $8879 how should I pay it off???

Question

Student Loan: $2625, Best Buy Card: $2029, Old Mastercard: $2871, Old car loan: $1090(it was reposed and this is what they want from me b/c it didn't get full value at auction), Hospital Bill: $264 (didn't have any insurance at the time).

How should I pay all of these off? I'm not opposed to Bankruptcy and already work a FT Job but don't make alot. I want to pay under $200/MO for 4 years to kill the debt.

What steps should I take here? Counseling? Consolidation? Any info would be VERY helpful I really want to get this behind me.

The job i'm at now takes alot of my time so a 2nd job is out of the question at this point.

PLEASE Help! : )

Answer 1

Counseling? Hehe what for?

I think Consolidation is your best bet here. Once you've qualified, they can clear off all of those bills so that you only have one loan to pay. The monthly payments will depend on the interest rate, and also how long you have to repay the loan. If the interest rate is 10%, for example, and it's calculate up front (as opposed to interest calculated on the reducing balance), then you'd be expected to repay $9766.90. Split that over 4 years and you have monthly payments of $203.48.

Not bad...

Answer 2

I will try to help...what are your interest rates on the cards?
Are you currently delinquent in any of these payments?
Are you wanting to take this $200 a month (only that much) and dedicate it for this debt? Do you have any more that you could dedicate? What about things that you can sell that you don't need?
I will help once I know a little more about the rates!


Well.....You must not be on here to answer this and I need to head off to la la land....but.....consolidation sounds like a great thing for you so I would look at that. In the mean time try snow balling.
Pay on all your bills but put a CHUNK on the hospital bill and get it gone within a few months and then take the money that you were paying to the hospital and send it to take care of that car loan and so forth working your way up. Each time that the money that you were paying on the loans from the lower levels and use it to pay off the next tier.
The only exception I can think of here would be considering your interest rates. If that MC bill has a LARGE rate then you would want to get it gone faster than say a student loan with a lower/fixed rate.
Good luck!

Answer 3

Normobri is absolutely correct. I must add that you taking the initiative now is of the upmost importance. Creditors want to see that you are taking responsibility and are not a deadbeat.
Realize that there are a few things more important than your debt. Be sure first that you and your loved ones are not going without food, clothing, shelter or transportation. Then use the debt snowball as Normobri illustrated. I thoroughly agree with her recommendation of dave ramsey (www.daveramsey.com) He has a daily national radio call-in show, a 13 week course called Financial Peace University and a wonderful book "The Total Money Makeover" which you can get from the library (either directly
or on interlibrary loan). I am hoping that in 5 years you will
not only be free on all consumer debt but will have the following accomplishments in your life.
1. An Emergency fund funded with necessary funds to
cover 3-6 months of expenses
2. Elimination of all consumer debt
3. No Credit cards
4. 15 %of gross income being put away for retirement
5. Money saved for children's college fund in you have kids.
6. Paying off mortgage if you have one with gazelle intensity
saving yourself thousands of dollars.
7. committment to living below your means so that you can
save and invest for the future.
Personal testimony. 5 years ago I was $60,000 in debt
due to my wife's desire for a divorce. Before that we were completely debt free with tens of thousands in the bank.
Having tasted of the joy of being debt free (no house payment, no car payment, no credit card payment, no debt of any sort) I ressolved to quickly pay off this first mortgage
by taking on a second job and severely cutting expenses.
I quickly made progress. Soon the balance was down to
$29,000 then $16,000 then $9,000 then $3,000 and finally
it was paid off. I continued for a short time working 2 jobs
to fund more retirement and investment programs. I began
to learn about mutual funds, diversification. Now I have 7 portifolios. Last year alone I made from 15% to 37% to 73%
on my investments. It was worth the sacrifice. I am now
a very good steward of money. I did not learn it in a day or a week or even a year. But by gathering little by little I know have the understanding of how to live. I can always live on less. I am able to give generously to important causes.
The point is there is information available that is truth and if those principles are followed you will arrive at your destination. The obstacle is two fold. First you must
learn to discern truth. If you listen to the news or advertisers
you will be like everybody else and you will get ripped off
like everybody else. Second know that knowledge is 10%
and diligence is 90%. Learn to put yourself in an environment where you can be encouraged and motivated
to continuing to practice what you know is true. I am no superstar. I am just a regular guy who recognized the truth
when it was presented and acted on it. The principles are
true and repeatable for millions. Will you chose to follow
these principles and join the ranks of the debt-free crowd?
I hope so. Best wishes.

Answer 4

Your credit score is probably already low due to the repossesion of your car so what you should do is attack the ones that are charging you interest and late fees. That would be the credit cards first. Call them yourself and negotiate a lower interest rate. Tell them your situation and that you are going to pay it off if they will work with you. Whichever card will allow you to lower the rate, then do a balance transfer so you have one card. This will avoid anymore late charges to accumulate. Pay the $200/month and within a couple of years you should have the cards paid off, assuming you stop using them--which you should.

The student loan should already have a very low payment that you should make. They usually have long repayment terms with low monthly notes. If you would keep any debt this is the best debt to have. But, try to keep up you low monthly payments during this time that you are repaying your credit card even if you have to lower the $200/month a bit.

Call the hospital and tell them your situation, they could write off the amount if you are classified as low income. There is some paperwork that you will have to fill out but it would be worth it to erase this from your credit report.

You really should try to avoid bankruptcy because your debt is not that high and you can only use your "get out of jail free card" once for at least 7 years.

From here you should set down and develop yourself a strict budget that you stick to no matter what. Remember it is only temporary that you might struggle to dig yourself out of this hole, but once you are finished you can then begin to save the $200/month and actually get yourself a nest egg in savings.

Good luck

Answer 5

You are so far away from bankrupt, you can't even see it from where you are. The student loan is not bankruptable (if that's a word), so you'd be looking at filing for $6254. I'd give you less than two years to pay it ALL off if your making anywhere above minimum wage.


The first thing you need to do is get on a written budget. List all of your known expenses, along with your average income. The difference between the two is what you have left to pay on your debt. Include a payment to yourself for an emergency fund of $1,000. You must keep that much in the bank to avoid using a credit card every time a tire blows out or you need a new water pump, etc.

Next, list your debts from smallest to largest, regardless of interest rate. In your case, it would look like this:
Hospital - 264
car loan- 1090
best buy - 2029
student loan- 2625
MC - 2871

Pay every extra penny you have on the hospital bill and pay minimums on the rest. If any of them are in default and aren't calling you, then don't pay them anything (let sleeping dogs lie). When the hospital is paid off, use that payment, plus the min. on the car and get it paid off. Keep doing this until the last one is paid off and never borrow money again.

If you need a new car, save up for a $1,000 car and pay cash for it. Make payments to yourself (350/mo) and save up to get a better car in 10 months. Keep doing that, and you could be driving a brand new, paid for car in four years, whereas most people are just trading in their old car and taking out new payments after four years.

It's called living like no one else, so that later, you can live like no one else. The Average American is over $9,000 in debt. Average is broke and living paychek to paycheck. I don't want to live like everyone else. The borrower is slave to the lender (the Bible).

Answer 6

Pay the lesser ones off in whole. Like you might be able to handle paying the old car loan and maybe half of the best buy card or mastercard. It will take a hospital bill a while to catch up with you b/c its harder for them to get you into a real collections agency. Then put the student loan into forbearence. Just call them and tell them you want to do it for a year and it should be no problem or if you want.. try to consolidate that student loan.

Answer 7

If possible, it would be best to get a low interest bank consolidation loan. Watch out for interest. With some companies it can cost you $12,000 to borrow $9,000 in the long run. You might take advantage of some of the low interest offers you get from some credit card companies to consolidate. But be careful. If you're late on a payment or something, they can raise the interest rates and charge enormous late fees. And pay more than the minimum, or else you'll never get it paid back. You also have to resist charging anything on the card EVER.

Answer 8

Normobrian is correct, except he has the creditors in the wrong order (most people do get this wrong).

Credit card companies need to be paid off first(due to interest rates)...pay as much extra as you can each month, next make minimum payments on school and car and contact hospital and let them know you can only afford to pay $10-15 a month in payments. They will take whatever they can get!!

Once one is paid off then take the amount you were paying toward that and use it to pay off the next.

Good luck, and have patience there are those out there that wish they only had $8900 in debt! :D

Answer 9

It should take more than 4 years at $200/month - the interest charges will be more than $800.

You might consider putting the student loan in forebearance while you pay off the high interest credit cards first.

Don't declare bankruptcy. It's not that bad. I was in debt way more and paid it off.

Answer 10

Consumer Credit Counseling would be a good start. You can call them and see if they have a program that is good for you. I know alot of people who have used this and it has worked well for them and saved their credit rating. It puts a blemish on your credit rating, but doesn't destroy it like bankruptcy does. Good luck.