Financial dilema?

Question

I have several overdue bills, credit card debt, medical bills and now my checking account is overdrawn and will be closed if I do not pay it within 10 days. I have enough money coming in next week to catch my bills up, and offer the credit card some money (they're threatening me with collections), or I can bring my checking account current, but not both.

If my bank account is closed and sent to collections, I know I'll be able to pay it off within the next month, but I also know I won't be able to open another account anytime soon. A friend suggesting I consider bankruptcy, that I could discharge my medical bills, credit card debt, and the bank debt under it.

I am not trying to get out of my debts, I have been struggling for some time to pay everything, but even working full-time I make less than $17000 a year. I am trying to work things out so I can get a part-time job, but my current employer doesn't like us having second jobs.

Any advice? What would you do?

Thank you for the answers so far, but I think I should clarify. The overdue bills are things like my utilities and my telephone - I'm not spending like crazy, I scrape together change just to have gas to get to work. That's why I'm wondering whether to let the checking go. I'm not charging anything on the card, I closed it when I started a debt counseling program last year. Unfortunately, even those reduced payments became too much.

Answer 1

I have a friend who was having problems and went with an "attorney run debt reduction" program. Has debt a bit higher than you and will be debt free in 30 months. He said the Consumer Credit counseling companies are in cahoots with the credit card companies (and take 7-8 years to pay), which I heard long ago, and he didn't want bankruptcy, and said once you're paid off, you can rebuilt your credit quickly after. I tried to give advice to someone on this, thru email, and it wouldn't go thru. If you want, just search under the above and find a company or so and talk to them...then check out your options.

Answer 2

fix the checking account and/or move it to a credit union. then keep it current -- the overdraft fees are killing you.

move the medical bills to the last of the list. they're used to it anyway. if you had no insurance, try to bargain with the providers -- in most states, their bills are hugely inflated over what they would actually be paid by an insurer.

oh -- and stop charging on the charge card. since you owe, you're being assessed interest on everything you charge [ugh!]. this isn't as expensive as the bank charges and try to make the minimum payments so you don't get hit with more fees.

it sounds like you need to lower your spending as well. Lord knows how you'll be able to do that, and it sounds like it has to be done.

try credit counseling through a non-profit outfit before bankruptcy. your bank can steer you to one.


GL

Answer 3

Get your checking account up to date. Call any other creditors and set up a payment plan--as long as you are paying them something they can not turn it over to collections--so even $5 a month. Also, even if they do turn it over to collections they just try to get the money, it is a black mark on your credit history, but that seems to be the least of your problems. For the most part creditors do not try to get legal judgements against individuals b/c it is not worth their time and money to do so--so they sell your debt to a collection agencey.

In any event, as long as there is no legal judgment against you, all collection actions just go on your credit report. Also, collections agents can be very agressive but remind then that it is illegal to call you at work once you tell them not to and also that they can not "harass" you...but best bet is to try to set up a feasible payment plan.

So get your checking account current and contact any and all creditors and explain the situation. Be sure to keep a log of when you called and who you spoke to. Tell them that you want to pay, but can only afford $X a month.

One other option is a credit consolidation service--there are ads on TV all the time. They also show up as a black mark on your credit but it is not near as bad as bankruptcy.

Finally, the bankruptcy laws just changed last year and the new laws are quite different as far as what is ans is not written off.