A little while back I lost my job, like a lot of other people at the moment. It was not long until Christmas, I had a couple of montsh pay owed to me and a small amount of savings, but once that was gone I knew I was going to be in trouble.
I believe the biggest mistake you can make is trying to avoid the people you owe money to. Some people think that if they don’t respond then the problem will go away and be forgotten about. This cannot be further from the truth, the reality is that it escalates in the background. Credit companies have a process they follow to recover money owed to them, you are in the sausage machine and there is no escape!
You can however negotiate with your creditors. The challenge is doing it. It can be humiliating and some of the creditors can be difficult. Also, in most cases they won’t talk to you unless you’ve missed payments. That means your credit is going in the toilet. In my case that is particularly worrying as I have for the past couple of years kept debt repayment costs down by using promotional 0% interest rates on credit cards, moving debt from one 0% card to another. Now I am faced with a situation where some of these cards will start charging high interest as the promotional rate has expired, and I will struggle to get approved for new 0% cards in the future, I am unemployed and a liability!
I had seen this coming and took out new cards with 22 months interest free before I lost my job. Although I knew I was at risk of redundency I was still technically employed and was able to make more transfers before the final curtain fell, which gives me a little more time… as long as I keep up repayments!
The caveat with these cards is that if you default, you have to pay the full rate of interest thereafter.
It really is the case that the worse your debt problems the MORE you have to pay, pretty perverse really, though I guess in the credit industry its all about risk, the more of a risk you are the more you have to pay.
So, I decided I should start finding out what my options were, I started notifying my creditors and how it turned out.
As soon as I lost my job I knew I wasn’t going to have much time before I started missing payments. Of course I dealt with the most critical debts first, like home and auto. I also made my first calls to the credit card companies.
I called all the credit companies and asked them to work with me. Not a single one was willing to negotiate until I missed payments. This really made life miserable. I was looking for work at the same time. I let them know I was looking for a job and that as soon as I was back on my feet I could start paying the payments you were previously paying. I just wanted a few months without penalties until I got a job.
I asked the ones I am still paying interest to if they will stop the interest from accruing for a few months, but no one would give. So I basically had to accept the fact that I was going to have to stop making payments to get these people to listen.
My other problem was my phone company. I absolutely had to keep my mobile phone service. I didn’t even have a landline anymore and all my communications where done with a mobile phone. I was able to switch to a cheaper plan, so that helped out there.
Even though I didn’t make any headway with the creditors, I at least knew where I stood. It really is a depressing chore and not everyone will do this. The next step was to start missing payments. I dreaded the calls coming in from debt collectors. I had heard horror stories and just wanted to get on with life.
There is no worse feeling than being afraid to answer your phone when it rings or your door when someone knocks or lying awake at night wondering if a tow truck will take your car away because you haven’t been able to make the payments on it.
So not havng been able to make headway with my “direct” negotiations I decided to try a couple of debt agencies. Now these are not exactly the “good guys” either, because they charge for their serivices which have to be paid for somewhere along the line, however, I figured if they could succeed in taking some of the pressure off (where I had failed) it was worth a shot.
As it turned out this was a very good decision. Up to this point I had only been trying to stop things escalating. I had not really looked into “debt solutions” as it were. I was trying to get interest frozen, trying to keep my 0% rates from going up to 20% and juggling various payments with depleting funds. After checking a debt advice site I found out about the possibility of getting a debt relief order which allow you get debt written off, provided you meet all the requirements.
Fortunately I qualify as most of the debt I am struggling with is unsecured, mostly credit cards as previously mentioned, and my car. I am resigned to the fact the car will go back, but at least it will be on my terms in a manner of speaking. Not a bump in the night, I will be able to arrange a time to return it, and will not lose out on the price differential between what I owe and what the car is now worth.
I ended up calling the people from that website and went through it all with them, and they were very helpful. I am not sure I would recommend them over any other such company, I think they are all sharks to be honest, but they were professional and did help me.
So, with luck I will be able to wipe off a good portion of this debt after 12 months. In the mean time I am going to be left pretty much penniless, they dont allow you much to live on in the mean time. The creditors naturally want as much of the owed money back as possible, I have to evidence my income (read benefits) and expendature on utilities, food etc. My phone remains an open point but worst case I can get a pay as you go phone for incoming calls and use the phones at the employment centre for outgoing calls for job enquiries.
Its been a pretty bad time all in all, I am still in a fix and my problems are by no means over, but at least I now know there is a way out and that in time I will be able to put all this behind me.
Of course, you never know, I may be able to find work in the mean time in which case I will be able to repay my cards and keep my car!
I just hope no one finds my blog cand comes after the new video camear I got for Christmas! I dont see anything wrong in keeping that to be honest, it was a present, not bought at my creditors expense…