Thursday, February 22, 2007

Debt Blogs

I was on vacation last week when this interesting story ran in the NYT about debt bloggers -- people crawling their way out of bad credit & debt situations and posting about it online to connect with a community. Almost all of them are members of Generation Debt. I have read some of these blogs and I think it's great that the Times will let more people know about them.


Andrewx1966 said...
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Anonymous said...

Are there no rulesthat Sallie Mae has to be responsible for. When collecting on "Student Loans" all bets are off in regards to how they collect...FDCPA does not have to be followed and Insider Trading thats OK too.....Do they still think that they are being protected by us...Taxpayers of America...AKA us Government!!! Watch yourselves you are starting to sound like you can do anything and it is perfectly ok!!! WRONG just ask Martha Stewart!!!

Hannes van Tonder said...
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Hannes van Tonder said...

The first thing that you can do when your debt burden becomes too difficult is:

Choice no:1 - Talk to your creditors

Creditors are extremely high strung people. If you do not talk to them, they assume you are hiding or running away from them. You will be surprised at how many of these guys are prepared to listen to you. Try to explain your situation to them and come to a new agreement that you will pay them x amount every month in stead of your full installment. Get it on paper so that they can not deny this fact should you be facing a summons from them at a later stage. If you have tried your utmost to talk to them and no agreement can be reached, then try for:

Choice no:2 - Borrow money and consolidate your debt.

This choice can help you in the short term if you can manage to secure a loan to do this. When you do this you can actually reduce your total expenses by quite a margin, but I must warn you, this is a very expensive alternative in the long run and you could be making matters much worse than what they are right now. Obviously when creditors are threatening to take judgment against you, you sometimes have to resort to steps that you know for yourself are not the ideal steps to take.

As I have said, this can help you out in the short term, but be very careful, money is expensive. Now most people, when they get to this stage where they need to borrow more money to pay old debt, they are usually in a position where they have already been blacklisted by their creditors, and find that no one else wants to loan them any more money. So, you sit with a slight problem. You now have to choose either to face the music head on, or sell some of your assets to get them off your back.

If you start selling off items that has cost you dearly, for a fraction of what you have paid for them, you must know that something is very wrong. You are now grasping for straws and my advice to you is, don't sell your goods. You have worked hard for them, rather face the music. You will see in a while why I suggest you don't sell your goods. Now we have a situation that brings us at:

Choice no:3 - Simply sit tight and do nothing.

This is a dangerous choice to make. This is when creditors start taking judgment against you and when the Sheriff of the court starts knocking on your door. When this happens they attach your movable assets to be sold at an auction. Once an auction has taken place, they will still hold you liable for the difference between what you owed, and the price they got for your goods at the auction. The sad fact of the matter is that months and years from now, they can again attach your new acquired assets to be sold at an auction again.

Your creditor can now also apply for a garnishee order to be attached to your salary. This means that before you even see your money, they have already subtracted an amount from your salary to pay to your creditor.

Choice no:4 - Put yourself under administration

When you exercise this option it will mean that you apply for an appropriate court order where you pay in a certain amount of money to a lawyer, who in turn will then divide it amongst your creditors.To go under administration your total debts may not exceed a certain amount. This limit may be revised by the law from time to time.

The problem with administration is the fact that the interest that accumulates on your debt may give rise to the fact that your debt does not really come down much and that you could be paying off this debt for a very long time. When you put yourself under administration it will relieve you from the burden of creditors pestering you for money week after week.

I suggest you look at the next option which is the BEST choice you can make. Believe me, if you have no other choice but to go this route, you are one of the few lucky ones who gets an opportunity to make a fresh start in life within 30 days (depending on your country laws) In South Africa it takes only 30 days.

You may download a free copy of my book called "Out of Debt in 30 days" on the following link.

P.S. Webmasters: Please feel free to offer this e-book free of charge from your website or to subscribers.

Anonymous said...

Interesting blog, my wife had a 10k student loan but we were able to pay it off in a year and a half. Alot of people we know are still struggling with their loans from college.