The inspiration for this article came from an actual credit counseling
session recently with a consumer who had in excess of 50,000 dollars of credit card debt, about 3 months behind on payments looking to do something to lower
his payments, which had now become a problem due to a drop in income, and the same monthly expenses. He needed a drop in his monthly expenses of in excess of 1500 dollars per month to make things work with the new lower income.
Without giving you a headache, this consumer was very used to living his lifestyle. Car payments on each of three cars with monthly payments in excess of 500.00 dollars per month. No easy way out on the cars but possibilities, but the possibilities were neither easy or comfortable.
He was also paying his mothers mortgage. Of course he had grown accustomed to his lifestyle, so his first thought was that perhaps a debt settlement program or a bankruptcy could help him. He was thinking correctly. Debt settlement programs would have reduced his monthly payments dramatically, but not enough without other drastic changes. With his current lower 100,000 dollar per year salary and the equity in his house he was not a candidate for a bankruptcy and Ch 7 without other changes. I even sent him to an excellent mortgage broker for a refinance. The problem was that his monthly payments on the new mortgage would just about have doubled his payments.
Those last three words, without other changes, were the problem. The necessary changes would involve selling at least one of the cars, and driving something much less luxurious, and other significant cut backs. When I was personally faced with this same situation, about 20 years ago, except my debts were in the millions, some of the decisions were made for me. Two of the cars were simply repossessed. The natural inclination was to get them back, when my wife and I had a serendipitous moment. Get them back? Why? Now that they were gone, they were two less things to worry about paying each month. So why couldn’t we do this with other things? My wife and I finally realized they were just material possessions, and when the debt crises was over, we could always buy new ones if we were so inclined.
This was a truly enlightening moment for us. We actually felt relief as those cars were repossessed. While it wasn’t nearly enough of a change to solve our problems, the change in our thinking was the first step to becoming debt free. All the experts and attorneys we counseled with could not ever have accomplished what those repossessions did for us. After getting this consumer free telephone consultations with a bankruptcy lawyer, and providing three different debt settlement program quotes trying to get his payments lower, my counseling took a different direction. I told him my very personal story in some detail. Hoping that he would have his own serendipitous moment, as I hope you have yours while reading this.
The fact is that as effective as debt relief structured programs have become, they still will not and cannot resolve every debt situation.
Sometimes we just have to take it slowly, one day at a time and act on some very hard realizations. And yes, sometimes those realizations are forced on us. The key is to realize that the valley of any crises in life does not last forever. It also helps to know that there is a God in heaven.
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Yours Truly
Steven Ciantro
[email protected]
Consumer Advocate
American Debt Enders
Certified Credit Counselor
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Member National Association of Certified Credit Counselors
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Is there going to be a debt relief program for graduate students that cannot find a job? I am a student with two degrees (psychology and criminal justice), all I want to do is help people. Its clear that I am not in this profession to make money, considering the pay for a public servant. Soon, I will need to seek out debt help to start paying my loans.
Thank you for covering this topic. I hope the Debt Relief program will come soon rather than later.
Posted by: Giana Forzareli | September 13, 2012 at 11:08 AM