We haveover $40,000 in unsecured debt. Our gross income has been about $32,000?

Question

but will be improving to about $52,000 in a couple months. We have just divorced & are trying to figure out which end is up with the money. We contacted Debt Shield today. they offerd to help us with a 40-month plan, $625 / month.

Considering the obvious affect on our credit scores individually, the fear of legal action in the meantime, even that the IRS would want the forgiven portion reported as income......is this a good idea?

As it stands, our credit scores are decent, but with a few late medical bills and 1 late credit card payment, at least. however, we're paying the minimum, until i start getting a regular paycheck (the additional $20,000/yr at the beginning).

We already own a home, 2 in fact. the 2nd we rent out. and we already have a good vehicle, but will be needing a 2nd vehicle within the next couple years, as our 2nd vehicle is on it's last legs. We don't want to declare bankruptcy, we know the balances are a result of our bad decisions. we just don't know.

Answer 1

I wouldn't worry about your credit score right now, that is one of the last things I would worry about.

Be careful about Debt Shield, I'd recommend not going to one of these type of places.  If you are paying $625/month just pay the debt off yourself and save on fees that they charge.  

Take out one debt at a time while paying minimum on all the others, the smallest on first that way those payments can be added to another payment.  Talk to whoever you owe money to and get on some sort of payment plan.  Show initiative so that they know that you want to make right.

Put yourself on a budget and never eat out, don't buy coffee, don't go on vacation etc.  Pretty much you'll live with very minimal stuff, cheap food etc and put money into paying off your debt.

As for a vehicle, drive it until it dies.  If you get a car get used and cheap or find alternative means of transportation.  God gave you legs use them if needs be.

Answer 2

I have never used a debt settlement company but I have heard plenty of bad things about them.  You really don't need them.  You can do this yourself.  Here is a plan:

Send your payments to the original creditor. Send money orders if you have bounced checks in the past, otherwise just use your checking account. As far as your future, there are some things that you can do to get out of the quicksand.

Until you get your debts paid off (if you can with your current income in less than six months) or to pay them off faster, seriously consider getting a temporary part-time job and use ALL of that paycheck to pay off your debt faster. Have a garage sale or use Craig's List or EBay to sell that extra stuff that you have around the house and don't use/need. It is better to have one "no fun/no time" year and be free of the quicksand of debt than to have a "no fun" decade and slowly drown in the quicksand of debt. Stop using credit cards and pay CASH for everything!

1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don't even have to worry about it. You must cut you spending and live on less than you make.

2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only.

3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:

To start :

Debt #1 (highest interest): minimum payment+ extra payment

Debt #2 (middle interest): minimum payment

Debt #3(lowest interest): minimum payment

Debt #1: paid off

Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment

Debt #3: minimum payment

Debt #1: paid off

Debt #2: paid off

Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.

That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.

4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up.

5a. When you have your emergency fund in place, add a category for "fun" to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.

5b. When you have you emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. You employer probably matches at least part of your contribution so why give up free money. Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.

Answer 3

u make FAR more than i do, my gros is about 7,000 & i have about 11,000 debt. i did however get smart on a creditor & send back sum stuff so i cud start gittin ahead. i tried 2 return sum other stuff but de comp name changed & i hadda deal w/ a collections agency but they never cald me back & i'm assuming since i'm on ssi they never will call back.

Answer 4

All of a sudden? Contact each creditor and discuss a work out plan. You don't need an intermediary. You need a budget and a change in behavior. Emphasis is on the latter.

Answer 5

Not enough info.........what is your question?

Answer 6

what is your question?

Answer 7

Yes you can go for debt settlement. Debt settlement service is the fastest and cheapest way to achieve debt freedom, with a low monthly payment. Debt settlement, also known as debt negotiation, is a form of online debt consolidation whereby a certified debt arbitrator, on behalf of that individual will negotiate with the creditors to reach a reduced payoff balance on their debts and that will cut your total debt, sometimes over 50%, with lower monthly payments.

The benefit in going with a debt settlement program is that you can become debt free in a short period of time instead of paying the minimum payments to your creditors which with interest takes quite a long period of time to finish up. A debt settlement company can get you debt free in two year or less. It will hurt you credit until you pay the debts but once you pay it  is going to raise.

Here is the source of a debt consolidation company http://ezconsolidation.com for your reference.