The idea that you have a credit obligation may be difficult for you because most people do not want to fight the system. After all, you know your credit accounts are your responsibility and you certainly should not feel embarrassed about incurring a debt.
In just a few moments, we will help you to understand your rights in regards to your creditors. What I am about to share is almost counter-intuitive, but really, if you do not own up to your debt, you are not going to get anywhere. "But, know 'man that debt is mine!" We will save that for another day. Now, let's start off with some educating information. Many people have been led to believe that as long as they don't have their credit cards maxed out and at least making minimum payments, their credit is stellar. Believe it or not, that is not the case. The problem begins when you have debt that you can't pay. That can happen for a number of reasons. Olympia, Washington
They could be job loss, sickness, unexpected medical bills, college tuition, a failed business venture, or perhaps more. Now, it turns out that bankruptcy is one method for dealing with creditors who can't pay you. brains don't function that way, however, so that is not going to help you with your loans. There are two methods we will cover here to help you pay down your debts eventually:
Chapter 7 bankruptcy will liquidate your assets to repay your debt. Since you will not be able to afford many items in life, this may be your best option. We will cover this in detail in a future discussion. Chapter 13 bankruptcy goes much more in detail, but we will cover the basics here.
You will need to submit a repayment plan for the next five years to your creditors. You can attempt to have your wages garnished if you wish, but this is not a given and is solely under the discretion of the IRS. Ultimately (surprise, surprise) you are going to need an income to pay your debts. In the "school of thought", a minimum income would be about $35,000 a year. Keep in mind, this is not your actual income. This is your marginal whoopin Preventing Action. That's why it is referred to as the "piggy bank". You have to have an actual income to pay your debts. This is also why it is very difficult to file Chapter 7 for cheap! Now we get to homes; homes that you may have purchased or even refinanced in the past. Many people think they have great incomes in that even though they are being paid, the total amount they are paying is nowhere near the value of the home.
They think there are provisions for getting through their financial struggles on their own. You cannot! This is why we consider ourselves two-income families. This ties right into our previous topic of using Chapter 13 bankruptcy to help you. The reason many think they can is they think they are different from others. They think owning a home is the key to having "normal" lives. We are living in a different world and if it weren't for the mortgage, we wouldn't even consider living in the same way as we do now. Houses have become a form of security and we need that security. We can't function without that. The new rules are now beginning to kick in todrive this point home. You can no longer have the luxury of living the dream on credit. That doesn't give you security. In fact, it creates a state of unreality because now your living in what it would cost to homeown the home. You have to make mortgage payments so you can pay your creditors. We now call that living in a dream on your credit. That's a new one.
That is why creating an income today is so imperative. An income, an income, an income! That is what it is all about and now, that is the beginning of rebuilding your financial being. It's going to mean changing your life. If it's not "97k", it's definitely not something you want to do for a long time.
It won't last. Financial disarray will follow in like a sister visiting. As we cover your strategy for paying your bills, your child's day care, and maybe even finances for you and your spouse, is almost concluded. There are a lot of items we didn't discuss that are equally important and you will have to be absolutely focused on getting yourself out of debt. Yes, it will mean you might have to establish one new bank account that you just can't seem to use. Yes, it means you are going to have to go back to doing what worked before. But, it's much more important to pay off your debts.