|
 Dear
Debt Adviser,
My wife and I have been married for one year. We both
were still attending college when we got married, but now student loans, credit
cards, an ATV and a few other small bills have become way overdue. It would take
$12,000 to rescue us.
Two of our creditors are going to sue soon. I hate
to ruin our credit over such a small debt, but we have nothing to put up for collateral,
no parents with good credit and no other options. Is it true as long as we are
paying something that they can't sue us? Any advice would be a blessing.
-- Rodney  Dear
Rodney,
I'll bet you didn't think married life was going to be like
this! The dreams and hopes that lead a couple to marry are fragile things. Everyone
I know roots for the newlyweds in hopes they will get it right faster than those
who came before them. Your finances, and maybe your marriage, have a ding or two,
but I think I can help. Take a deep breath.
Let's begin
by using some simple common sense and the research skills you acquired in college
to debunk myths. Do some research and you will find that you most certainly can
be sued if you don't pay exactly what you promised and on the date due. The old
maxim that says "if it sounds too good to be true ... " really is true!
Next, I want you to research what makes up good credit.
You will find yours is tarnished already. So, your worries about ruining your
credit when you believe you are about to be sued is like closing the barn door
after the horse has left the stable. If you are "way overdue" on payments,
the damage to your credit has already begun. It could, of course, get worse, but
real damage has already been done.
Finally, $12,000 won't rescue you.
It will only delay the inevitable. The key for
you going forward is to learn how to manage your
finances. Do that and you won't need the 12-large!
So, let's begin. You mention an ATV in your letter.
I believe at this point it would be best to sell
the ATV. It's really not an essential and you
may either eliminate a payment or free up some
cash to apply to other bills.
Next, I want you to contact the
lenders who are about to sue you and work out
a repayment plan you can afford to keep up. Also,
be sure to research the possibility of consolidating
your student loans and see if it would lower
your monthly obligation. Otherwise, you must make
room in your budget to pay them.
You may have to make some significant
lifestyle changes, at least for a little while,
to get back in control of your student loans,
credit cards and other obligations. Consider the
following items that may help you free up enough
cash to make a difference.
 |
Free up some cash | |
|
| • | Consider
a move to less expensive housing. If you are renting, downsize to less bedrooms
or an efficiency size. | | • | Cut
back on food expenses. Don't eat out. Clip coupons, buy store brands and never
shop when you are hungry. | | • | Ask
for overtime at work and search for a higher paying or part-time job. |
|
This may be the most important of
all -- you must stop using credit cards. If you
are using them to extend your income, you are
digging a deeper hole every day and you need to
throw away the shovel now. Finally, I think you
need to listen to your bride a bit more. I'll
bet she didn't force you to buy the ATV, and since
she got you to write to me, I know she must have
a lot of good sense.
If you are overwhelmed and can't
make the first move to correct your situation,
consider visiting with a qualified credit counselor.
A counselor can help you understand your past
mistakes and create a plan toward a healthy financial
future. You can find a good one at www.aiccca.org.
Good luck! | 
