Photo (cc) by rggoldie
Here’s a recent viewer question:
Hello Stacy, I have a question!! My question is that I went from making 51,100.00 a year to 1639.00 per month from Social Security Disability. My bills are now adding up and I’m not making my payments on time. The one payment is now 600.00 from Citibank with APR 29.99 % and Direct also 600.00 APR 29.99%. My other credit cards are being paid by insurance for 18 more months, my total debt is 74.035.00 and my yearly salary is now 19,668.00. What should I do. Here’s my debt: Revolving debt (bank and retail cards) $56,167 Installment debt (fixed payment loans) $17,868
Here’s your answer Richard: Run, don’t walk, to the nearest reputable non-profit Credit Counseling Agency: here’s a story I did on how to find the right one.
While I want you to call them, I suspect the type of help they offer won’t be enough for you. What a credit counseling agency can do is get your interest rates and payments reduced. But in your case, it’s still highly unlikely you’ll be able to stay afloat: you’re now paying $1,200 month on just two bills and your income is $1,600/mo. Even with reduced payments and rates, your payments will still be too high to maintain. And what happens when the insurance stops paying your other bills?
In all likelihood, you’ll soon be filing bankruptcy. If so, the credit counseling agency should be able to hook you up with a good bankruptcy attorney.
That’s why it’s so important to get help NOW. Because if you do ultimately have your debts discharged in bankruptcy, the precious money you’re now using trying to make these impossible payments will have been wasted: not to mention the stress you’re undoubtedly now enduring. See this story I recently did about someone in similar circumstances.
And when you consider bankruptcy, don’t feel guilty. The people who should be losing sleep are the ones who reacted to the disability of one of their customers by raising his interest rate to 30%. Shame on them, not you.
Seriously, bankers: what the hell are you thinking? And to the rest of you out there: this type of stupid, arrogant behavior won’t end because of the new credit card reforms taking effect next month. Thanks to massive lobbying by the banking industry, there will still be no cap on penalty rates. And that same powerful lobby is also doing its best to water down regulatory reform in other areas: here’s a story I recently did on that.
If you care about people like Richard, you should weigh in on these issues. And if you don’t care, you should. What’s happening to him could happen to you.