recovering from debt

[Hoshino]

hey guyz
my first topic on these forums...
ok im gonna get straight to the point. a fellow buddy of mine and his family are sinking in debt. lemme tell you the reason why. an idea struck to his dad to start a basement renovation out here in toronto. now the problem is he wasnt able to find a good partner. and the insurance company rep he was getting all the contracts from bailed out on him and ate some of his money. he used his credit cards to finish off the remaining projects. but by the time he was done. he was abt $70,000 in debt. he's a really close friend of mine and i was wondering if you guyz can suggest any solutions to recover from the debt. although i know its not going to be an overnight job unless he wins a lottery. my buddy, and both his parents work. but they're unable to make ends meet and clear this debt. they're having a hard time tryin to pay the mortgage and all the utility bills.
any suggestions for this?
every penny of advice will most likely help.
thx alot guyz

[Greg]

Usually there are debt consumer agencies around that can help deal with people you are in debt to - they can even arrange for easy payments at lower interest rates or advise on bankruptcy options (if they believe that is the best option).

Try looking around for a local debt help group (non profit one) - sure there are lots in T-dot.

[Hoshino]

my friend's dad already did that...but apparently for some reason...the agency took the money from him for abt 6 months and gave up on them...they said that we cant "work" with you anymore. i mean when he started that he was a bit relieved that he would be able to get rid of it. but apparently its given him another reason to become more tensed

[Dani]

file for bankruptcy?

Will kill his credit rating, but I think it's already shot.

[Antiventurecapital]

Originally Posted by Greg

Usually there are debt consumer agencies around that can help deal with people you are in debt to - they can even arrange for easy payments at lower interest rates or advise on bankruptcy options (if they believe that is the best option).

Try looking around for a local debt help group (non profit one) - sure there are lots in T-dot.

Just talking to a consumer debt counseling agency kills your credit score. NPR did a story on them a year ago.

[Hoshino]

isnt there anything else he can do to get rid of the calls of those collection agencies asking for the money? or filing for bankruptcy?

[Antiventurecapital]

There's apparently a forum like this one out there somewhere where people can get answers to questions about their credit fiascoes. Sorry, I don't know its name or url.

[dor]

Originally Posted by Antiventurecapital

Just talking to a consumer debt counseling agency kills your credit score. NPR did a story on them a year ago.

Not to mention they are funded by the credit card companies. In britian, i think it was the barclay's ceo that admitted (by accident) he wouldn't want his kids using CC, and that they try to trap people into cycles of debt.

Because of their predatory behavior, their lobbying the US congress so its now more difficult for consumers to file bankrupcty (but not businesses! ) i say, do whatever, legally, you can to stick it to them, then , get your self out of debt.

but avoid places and people claiming to fix your credit rating for a charge - they are usually expensive scams.

[dor]

Originally Posted by Hoshino

isnt there anything else he can do to get rid of the calls of those collection agencies asking for the money? or filing for bankruptcy?

google
Cease and desist letter.

[Johnny]

But experts say there are ways to recover from having too much debt. For some, using a debt counseling agency is the best way to appease creditors and develop a repayment plan. Others may choose to get a loan and consolidate their debts into one regular payment. Still others may simply turn to family members for help or rely on creating their own budget and repayment schedule.

Fueled by a weakened economy, consumer debt in America has reached an all-time high. The Federal Reserve estimates that consumer debt totaled $2 trillion in November 2003, up from $1.4 trillion five years earlier. Faced with lower reimbursements and often loaded down with school debts, physicians have been part of this trend.

[maken]

Originally Posted by Dani

file for bankruptcy?

Will kill his credit rating, but I think it's already shot.

not only that, he'll be unable to get a mortgage, loans or any form of borrowing for several years. also some jobs do not take on bankrupt employees.. its an option but one that should be thought about carefully.

[carenkh]

Originally Posted by maken

not only that, he'll be unable to get a mortgage, loans or any form of borrowing for several years.

Not true - the interest rates will be higher, though. I have a couple of friends who filed bankruptcy - in both cases, they were flooded with offers for loans, etc. immediately afterward. Bankruptcy doesn't have *all* of the negative stigma it used to.

There are consumer agencies that are non-profit - we have the Consumer Credit Counseling Agency here, through the United Way, and they'll help you get lower payments, lower interest rates, etc. and... can't remember the word... put all your debt together, you just make one payment to them, and they disburse it. It keeps people from calling you. There are also some that legally may be nonprofit, but they still make a ton of money by asking people they're helping for "donations". Something shifty about that.

[Millbyff]

It sounds like your freind has mostly credit card debt but if he has suppliers and subcontractors that he owes he could go to them and explain his story and plea for some debt reduction(especialy if they are small business owners like himself). If he lets them know he is considering going bankrupt and straight out can't pay, then they may be willing to cut 20% to 50% depending on the profit they had built in. Otherwise if they handed the debt to collections they would only get pennies on the dollar. How good of a negotiator is he? If it worked out, I would be sure to pay immediately with credit card if there is any credit left and then consolidate. Its been done, he can do it too.

[brooke]

I think that if a person is truly in over their head with financial problems, bankruptcy is not a bad way to go. It is abused and gets a bad rap, but really is a merciful alternative for those who truly need it. Yes, there are consequences of filing for bankruptcy, but I don't think they are worse than being in constant financial crisis. And credit is never a stagnant thing. Over time you can always rebuild it and get to a better place.

[tomjen]

Have your friend spend a day reading everything there is on The Simple Dollar, starting from the very begining. There are a lot of advice on that site. Just a word of warning - stop in time and start focusing on building more income once the debt is gone and your friend have some savings.