How do I cure Financial STDs (Substantially Tremendous Debt)???

"Ms. Jackson, my husband and I are in our late 40s and have significant debt or as you call it in your book, Financial Fornication, a severe case of Financial STDs (substantially tremdenous debt). Before the economy crashed my husband and I had great jobs and our household income was 6 figures. We saved a little but obviously not enough. About two years ago I lost my job and then my husband got sick and could not go back to his high salary paying job. To make ends meet we used our credit cards to pay our bills in hopes that one or both of us would find a good paying job to pay it later. I was recently contacted by a creditor about a debt we owe for over $30,000 (unsecured) that they are about to charge off.  We can not pay this and we are also past due on everything.  We are hoping to be approved for a mortgage modification. We do owe the debt and we want to pay it, but we owe over $100,000 in unsecured / revolving debt, plus our car and mortgage and we are only making around $50,000 a year combined.  What should we do? We don't want to ruin out credit any more. - Desperately Seeking Solutions, Marietta GA"


Dear "Desparately Seeking Solutions,"


I can definitely empathize with what you are going through. This economy is a "Bear"! I know you are concerned about your credit but Reality Check, your credit is already shot! Therefore, it's now time to think "preservation." There are a few things you may want to consider executing to assist you through this process.

1. Contact your creditors (not 3rd party collection agency...yet) by phone and in writing to explain your financial hardship situation and request a loan modification down to a payment you know you can afford. This may be through lowering the interest, extending the term, or forgiving some of the principle balance. Every financial institution is different in what they may allow and be able to do, but you won't know if you don't ask.
2. If a 3rd party Collection Agency is calling you about a debt that they bought from or are calling on the behalf of a creditor, make them validate the debt. Validation of Debt includes the agency providing you with the following: a) Proof that the collection company is legally entitled to collect the debt from you or has been assigned the debt, example: a direct contract between the collection agency and you; b) Some account statements from the original creditor that calculates exactly what is owed (excluding their collection fees); and c) Copy of the original signed loan agreement or credit card application. Some 3rd party Collection Agencies are junk debt buyers and may not be able to provide the requested information. So make them prove it. Send a letter requesting this information. If you want them to stop calling you, you will need to send this request in writing (make sure it is certified mail that requires a received receipt). 
3. Increase your income through another job, network marketing, or self employment.  Do your research and do what is best for you and your family.  You can try to find a second job, however, what most people would consider as a second job is other people's primary job because of the limited job market.  So, you will need to be innovative and creative to find alternative (legal) income streams.

Now, if you cannot increase your income significantly enough to help your financial situation and loan modifications are not possible or doesn't help, you may want to consider your legal options as a last resort. Although I am not an advocate of Bankruptcy, sometimes it may be financially necessary to protect your family's financial well-being and assets.

Bankruptcy Chapter 7 is what I call Financial Abortion because it is the termination of debt. If you have a home or car, it will be considered an Asset case where you will have to determine if you are going to allow the bankruptcy court to sell the property to pay on the debt that you can't pay are trying to terminate... OR you will "reaffirm" and exclude a creditor(s) from the bankruptcy and continue to the creditor(s) outside of the bankruptcy.

Bankruptcy Chapter 13 is what I call Financial Plastic Surgery because it is an alteration or modification of debt. Based on your budget, the court will determine how much of the overall debt you will be able and ordered to pay back, that could be 100% of the debt or less, over a certain amount of time.

With both Chapters 7 and 13, once the bankruptcy has been "discharged," creditors can not take collection or legal action against you for the unpaid balances.  Should the bankruptcy be "dismissed," because you did not meet the requirements or you changed your mind about filing, it will be as if you did not file for bankruptcy and the creditors may resume their collection or legal action against you.


If you must consider either one of  these options (as a last resort), please consult with a Financial or Legal Professional that specializes in this form of Financial Surgery first before you make any rash decisions and moves. There are many things you should take into consideration as it relates to the rights of Creditors in Bankruptcy that most people aren't aware of. (Hint Hint)

In my book, Financial Fornication, I explain the different possible cures of Financial Di-Eases, including Financial STDs, before you should consider bankruptcy.

All in all, I know that this is a difficult time for you and your husband and can be extremely emotional and stressful.  I recommend that you begin to look at your situation as if it were a business.  As the CEO, COO, or CFO of your family "business", you must make the right financial decision to keep your business operating.  Hey, K-Mart did it and Trump does it all of the time.  Just don't use Bankruptcy repeatedly as Financial Birth Control and try to abuse the system, like you know who.

Also, should you decide to exercise your legal options, make sure you establish a plan of action for after the Bankruptcy.

This is not the end of world and you can recover.  Although the decision and process may be painful and morally conflicting, a Preservation Plan will help you recover from your current Financial Dis-Ease.

Get my book, Financial Fornication, for more helpful hints or contact me for further assistance at http://www.tarrajackson.com/.

Tarra Jackson
Financial Relationship Specialist
Author of Financial Fornication: Avoid Financial & Credit Dis-Ease
http://www.financialfornication.com/
ProsperityNow.Bookings@gmail.com


* Do you have Financial Relationship questions? Submit your questions to Tarra Jackson for "Real Life Real Talk" answers to www.FinancialFornication.com/contact.html.