Crushing Debt due to 2 layoffs and massive paycut
Date: Sat, 07/21/2012 - 00:19
I was laid off twice between 2007 and 2009. The first time was prior to the 08 collapse from a Pharmaceutical sales company. My wife and I had 0 debt! 1 car paid for and the other a company car. I got a job immediately for the next co. in Jan. of 08. By Jan of 09 that company was in jeopardy of folding.
first they hit me with a $40K paycut than 3 months later a layoff. During the beginning of employment there I made more than ever before and bought my wife a new car and I still had a company car. After this layoff I simply could not find a job. This was in the brunt of the downturn Out of work 9 months and burned through our savings of the first ten years of my working life. I also burned through my 401K and maxed out all ccards to the tune of about $50K. Mind you 2 years prior I had $0 ccard debt and no car payment. This was all in an effort to keep our home, feed my family and pay living expenses. I am sick thinking how we got here. I am working and so is my wife for the first time since we have been married with kids. Even with dual incomes we have the added expense of childcare and I make $40K less than I used to and the ccards that need paid and 2 car payments. Again, Jan. 2007 NO DEBT! Now $50K on ccards alone and can't get ahead. These banks got bailed out, but nothing to help folks like me!
1. Should I walk away from the debt and take a hit and for how long will it sit there on my report/score? 7 years like BK?
2. Should I go through some consolidation program that will affect my score and settle my the amounts? How long does that hurt me on my report/score VS. walking away?
first they hit me with a $40K paycut than 3 months later a layoff. During the beginning of employment there I made more than ever before and bought my wife a new car and I still had a company car. After this layoff I simply could not find a job. This was in the brunt of the downturn Out of work 9 months and burned through our savings of the first ten years of my working life. I also burned through my 401K and maxed out all ccards to the tune of about $50K. Mind you 2 years prior I had $0 ccard debt and no car payment. This was all in an effort to keep our home, feed my family and pay living expenses. I am sick thinking how we got here. I am working and so is my wife for the first time since we have been married with kids. Even with dual incomes we have the added expense of childcare and I make $40K less than I used to and the ccards that need paid and 2 car payments. Again, Jan. 2007 NO DEBT! Now $50K on ccards alone and can't get ahead. These banks got bailed out, but nothing to help folks like me!
1. Should I walk away from the debt and take a hit and for how long will it sit there on my report/score? 7 years like BK?
2. Should I go through some consolidation program that will affect my score and settle my the amounts? How long does that hurt me on my report/score VS. walking away?
Quote:1. Should I walk away from the debt and take a hit and for
Quote:
1. Should I walk away from the debt and take a hit and for how long will it sit there on my report/score? 7 years like BK? |
You won't be able to "walk" away from the debt. You are a home owner...creditors will see that and end up suing you if you attempt this.
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2. Should I go through some consolidation program that will affect my score and settle my the amounts? How long does that hurt me on my report/score VS. walking away? |
There is a huge difference between consolidation program and settlement. A consolidation program "consolidates" your bills into one monthly payment , lowering your interest rate. The plan could take 3-5 years. You do run the risk of being sued while in the program,.
Debt settlement...I do not recommend paying anyone for this. You can settle your debts yourself just by doing a little research and being disciplined. Stop paying your cards and bank the money. Start by settling your smallest cards first and go up the list from there. Who do you owe?? Some creditors are easier to settle with than others and some are more likely to sue.
Your other option is bankrutpcy. Whatever you choose, your score is going to tank....big time. You are going to have to learn to live on a budget, paying cash for everything. I have been there...
1. Learn to use coupons. I save up to 30% each month by using coupons. Sometimes as high as 50% Subscribe to Coupondiva, the Coupon Clippers...tons of sites out there to help you save money,
2. Cut/cut down the cable. Go basic tier. Get netflicks.
3. Pack lunches for work...take your own beverages (pop/soda) Give up take out coffee/coffee drinks. (I treat myself to ONE per month)
5. This is a big one....stop carrying cash. Use a debit card....that way you can see exactly were your money is going. Make yourself accountable to yourself.
6. Shop thrift stores for clothing. You said you have kids. You can save a ton of money by buying used. I buy almost nothing new and both my daughter and I wear name brand/upscale clothing...everything is used. I just picked her up 2 Ralph Lauren polo shirts for $2.99 each. Old Navy jeans $3.00. (She prefers her jeans used...they are broken in) Holister Hoodie....$4.99 Spent less than $50 for back to school clothes for her....retail value would have been over $500.
7. Look for free cheap events in your cities for family outings. Lots of stuff going on at public libraries, community centers.
