Senior Citizen's Guide digital books
Senior Citizen's Guide to Indianapolis

Let's Get Out of Debt

The economy has been fueled by credit for decades now. We've been sold on the mentality that we should have whatever we want, when we want it, regardless of whether it's affordable. Fine, until someone loses their job, gets sick, or go through a divorced. When an emergency hits, it doesn't take long before things spiral out of control financially.

Once you rule out winning the lottery, rich uncle dying, etc., most people are going be left with the following choices for help with out-of-control bills:

  1. Credit Counseling or Debt Settlement
  2. Credit Repair
  3. Bankruptcy

If you (or someone you know) are facing garnishment, lawsuits, foreclosure, multiple creditor collections, reduced employment or unemployment, or not being able to afford even the necessary expenses to live, there are some things you need to know:

Credit Counseling and Debt Settlement

Unless you have a limited number of creditors, it is difficult for either to work effectively, particularly debt settlement. With debt settlement, you'll need to save up lump sums of money to actually make the settlements; meanwhile, the creditors who are in spots 4, 5, 6, etc. are going to sue. Why should they wait while you pay other creditors? Additionally, you can easily call your credit card company and talk to a Settlement Representative yourself. Save yourself the fees if you want to go the debt settlement route and at least try it on your own first.

With credit counseling, again, the fewer creditors you have, the more likely it will work. But, neither credit counseling or debt settlement can force creditors to go along with their programs, so one creditor refusing to can cause the entire process to fail.

Keep these things in mind when looking at debt settlement or credit counseling companies:

There is No Such Thing as "Magical" Credit Repair

You cannot repair your credit without paying some portion of the bills (except with Bankruptcy), or waiting long enough for bad stuff to drop off. "Credit Repair" companies are scams. You will be in a worse position after they "help" you.

The following are warning signs regarding Credit Repair scams:


Most bankruptcy filings are the result of major life upheavals (e.g. medical issues, job loss, divorce, etc.), not simply financial irresponsibility. Bankruptcy is the only credit fix that can force the creditors to accept it, and it is no more immoral than any of the other options. These are all financial tools to help people.

Bankruptcy isn't a perfect solution, but for people who have reached the point of not be able to afford necessary living expenses (mortgage/rent, utilities, food, clothing, etc.), it is often the best choice.

With bankruptcy,keep these things in mind:

  1. You can file a bankruptcy for yourself. It is usually a bad idea to do so.
  2. "Petition Preparers" are non-lawyers who fill out the bankruptcy paperwork and then you take it from there (so, any problem later, they will not be there to help). In my opinion, they should be avoided.
  3. Hiring an attorney will not stop a garnishment. Only filing the bankruptcy will do that.
  4. Particularly with a foreclosure, the longer you wait to get help, the more expensive it will be upfront (before filing).
  5. It's easier to get rid of incurable Meningitis than student loans.

No matter which path, I can't stress enough not to wait until things hit rock bottom. Garnishments typically take 25% of your bring home pay, and collections cause substantial stress. Once the original creditor isn't willing to do anything reasonable to help you get back on track, seek outside help. You should be able to find free consultations with each of the options.

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