Finances - At A Collectors Point of View
No matter where you are in this country, chances are you are at the point where you're hurting for money in some way. You might have hours cut at work, or you might have just lost your job. There might be a new baby on the way, or maybe a grown up baby on the way to college.
The fact is, America isn't on steady feet right now, so it's important to make your financial decisions with a little more education behind you. I've worked inside of the collections field for years, and I know the back doors, the way to make a little bit of money go a long way. I can help you try and figure out what the best options are for you, either when entering into debt, or trying to get out of it.
The Basics: When Bad Times Hit, What to Expect.
Everyone has always heard the good old saying that you should always have two months worth of income in savings at a minimum. It's a hard thing to accomplish, but you'll find that its more then a little helpful if something serious were to happen in your life. Loss of job, medical leave, all of these thing your need to be ready for.
The average claim for unemployment takes over a month before you start seeing actual paychecks from it, and even then it is only a percentage of what you were making while on the job. To top the cake off, the job market has probably drastically changed since the last time you were seeking employment.
In the past, the job market worked to the worker's benefit, the jobs were competing for the best possible candidate. Thing's have changed. In the job market today candidates are fighting over positions like piranhas. People that are qualified for a position find themselves booted out of the line-up for someone that is overly qualified, but willing to take the pay cut.
The average person in this economy who suffers a loss of job, is going to find themselves in the job market for the area of one month before finding a new position. A sad following fact is that the average person is experiencing at a minimum of a 25% pay cut when finally finding a new job situation.
The best possible option for you is to make sure that you save when you can, if you have lost your job and find yourself in a position where you don't have any type of money saved, find the things that you can live without. It hurts to have to sell off items to make sure that there's food on your table, but you'll always have a chance to buy a new one. Motorcycles, guitars, pianos, these things can be replaced. Hold onto the things with sentimental value, these things are irreplaceable. Unless it comes down to the very bone dry of keeping a roof over your head, you don't need to make that sacrifice. Just make sure that you're not making things sentimental to you because you don't want to part with them.
The Worst has Happened. Your Unemployed.
Get rid of those movie channels, XM radios, anything that's at least cutting the budget down some. You need to cut corners and preserve what little you have.
If you have credit cards, call now. You might be able to make payments for a little bit longer but you want to get things in order before you go delinquent. Here's some key things that you'll need to know.
If you have a payment protector on your credit cards or any other kind of loan, you need to call before they are delinquent. Get yourself on those deferred payments immediately. You've been paying seven dollars a month for a reason. Help yourself! If you are reading this because you're worried about your job situation and your future finances, get the payment protector now. You will want that extra protection.
If you have a car loan or mortgage, talk to the people that you have the loan through, and ask them about the possibility of deferring a payment. This time next month you could have a job again and things could be back on track. You want to be able to make sure that you have that money in case it takes longer then expected.
Make a list! Order what is most important to you from cell phones (include what is in the package! Ten dollars for text messages can go!) to cable, to your gym membership. If things get tight start cutting things off, little by little. You can get through this if you just prioritize.
Jump on the Internet and start applying everywhere! Gas is too expensive to spend all day driving around to submit resumes. Go to any of the great sites out there form Craigslist to Hotjobs. Apply from home and swarm the market with the chance of a job. Apply to anything that you think that you are capable of doing, in this job market you'll never get anywhere if you aren't willing to try new things. Don't aim for things too below you, shoot high and shoot for something that you can depend on giving you the ability to survive.
TALK TO YOUR CREDITORS!
This means your credit card companies too! In almost all states the credit card companies can come after you with legal recourse if you do not pay. Don't think that you are untouchable, that's how you end up loosing more then you had in mind when you signed up for the card.
I cannot tell you how many people that I've spoken to in my career that were afraid to call because they didn't think that the banks would be willing to help them. There are plans that you can get on with your banks, and they will save you more money then you could imagine. These plans require you to close your accounts, and please do not let this be something that makes you say no.
You do not need to get deeper into debt right now. Close the cards. If you take these steps you will be able to make it through this without having your credit hurt and you will be able to get new cards when you are better off.
When you are speaking to the credit card companies use these key words. You are going through a financial hardship. You need assistance to make your regular payments. You would like to get on a payment plan. They will ask you a lot of questions, answer them honestly. They need to find out what you can afford, and what kind of program to get you on. They can lower your interest and cut your payments down. If the person you're speaking with can't help you, ask them to get you to a department that can help you.
On this note I'm sure that you've heard of Credit Counseling, also known as CCC or CCA. There are a lot of good companies out there, and then there are a lot of companies out there that just want your money and will get it from you no matter what it means to you.
If you call your credit card company and talk to them and they decide that they can't help you, ask them what are the names of some of the non-profit companies are that they work with. Non-Profit in this case means that they don't charge you any kind of fee for you to have them talk to all your creditors for you. Sounds b-e-a-utiful, right? Not having to talk? They are, but you can probably get a better deal talking one on one with your credit card companies. Plus there's also upsides of not having to take the credit hit that CCC's usually give. But Please Do Not Let Credit Score Be A Reason For You To Not Get Help!
YOUR IN COLLECTIONS!! What Now?
Don't worry! It's not as bad as it may seem at first. A lot of companies put you into their own collections first, you usually have about nine months with your company and not paying before they forward you to a third party collections gig.
You want to work with them before collections. You do not want to find yourself in the position of being in a third party collection agency. These people are impossible to work with and they are not going to listen to you about what's happening in your life. They are not working for you, like the collection departments in your loan companies. They are working for your loan company.
I've been on that end, I've been the one telling people we will sue them for everything they have unless they pay. I hated it, I couldn't take being that bad of a person. I decided to start trying to help people again. Part of what I'm trying to do here.
When you in what is called in-house-collections you have a lot of options. Here is what is not an option. You are past the point of deferring payments. You are past the point of ignoring phone calls. You are not past the point of correcting a bad situation.
You are going to have a lot of the programs that I talked about still available with the credit cards, go for them. They are going to ask the same questions, a little more in depth. After your first call, the rest will be a piece of cake. Work through them.
If you have a car that you can replace with an old beater, do it. It sounds bad, but it's better to surrender it now. You don't want to be in the position of the repo guy walking into your work and announcing he's taking it. It will buy you some time. You will not suddenly have no debt! You will be sitting on some time that's it. When a car is repo'd, its then sold at auction. If you owed 6,000 and they only sold it for 4,000, you will still owe 2,000.
This is where a lot of people get upset, they don't want to pay on something they no longer have. Here's the fact. You got a loan for the amount you bought the car for. That is how much the company essentially gave you for the car. You basically "pay" them the car when they repo it. That's a big payment. But its not a full payment. You still owe part of the loan. This is a favorite of loan companies, this is something they will take you to court over. They will have your wages garnished, put a lein on your belongings. Anything to get their money. You don't want that to happen.
Work out a payment plan with them, it will take a few months for the car to be auctioned anyways. You should hopefully be in a better place, moving up in whatever low end job you were able to find. You will be getting closer to your old salary, and hopefully starting on the road of climbing out of your debt.
I want to stress something here very briefly, because I doubt many reading this are actually considering this. A Reverse Mortgage. Wonderful if your retired and don't have any kids. If you don't know what it is, look into it. Again, if you're retired and don't have any kids. But if you are an adult with a family, you dont want that risk. You are basically selling your house back to the bank. You don't want to do this. You really don't. Avoid it at all means. Loose the house before you do that, especially in this housing market. It's too dangerous.
You've made it! Time to Rebuild!
This is going to be short and sweet, because there is very little to say. You just need to be smart. Never commit yourself to anything out of your living capabilities. Houses, Cars, you need them, but don't let them become a large part of your income. Plan around one spouse's income. Plan with the ability of 25% of the total income going to expenditures as far as credit goes. Don't risk yourself! This means car payments and credit cards.
To be honest, keep away from credit cards. I've worked with collections on them long enough to be educated in saying that they are not worth it. Get one to build your credit, but use it wisely. Use it for gas and pay it off immediately. Basically, don't use the credit, use the credit score.
Keep to these tips, you'll make it. Any questions? Send me a request. I'll touch on whatever you want to know a little more in depth. Good luck!