Barely paying interests off monthly, looking for advice please.

[BadDebtor]

5k - Lendingclub (Webbank) - 30 days late

2k - OneMain - current

 

[BackFromTheDebt]

Your first step is a debt triage.

There are certain bills you MUST pay.  Pay them.  

How much do you have left after this?  Put that aside for now.  Better yet, open up a bank account, and have your wife put the money into that account, in your name, but let her have control over it.  

The credit card debts can probably all be settled for about 25-50% of what is owed on them.  You are talking about approx. $20k in credit card debt.  With interest, that will go up a bit.  You are talking about $6k - $12k you could use to settle these accounts.  Cut down on your expenses, and see if you can save that kind of money as quickly as possible.  

IF there is a credit card with a low interest rate and fairly low balance, you may choose to keep that one credit card.  For example, when I was in deep doo-doo I kept a USAA credit card with low interest rate, and it was worth it to me.  Otherwise, stop paying on all the cards, and set aside the money for settlements.

Also, check to see which cards have arbitration agreements.  You can probably settle those for a lot less.  I settled all the cards with arbitration agreements for $0.  I think Credit one has an arbitration agreement.  You need to check on that.  

Bankruptcy is a possibility, but that is more of a last resort.  

In the meantime, you need to stop gambling.  Do whatever you need to do.  If that means giving all the money for your wife to handle, do so.  If you gamble away your settlement money, you are stuck with ONLY bankruptcy as an option, and you won't have the option again for a long time afterwards.  

 

When I was in a bad situation, I bought a device with caller ID that would block certain phone numbers.  You may need something like that later on.  As long as the debt is with the OC, they will ring the phone off the hook until you talk to them, then they don't bother you for a few weeks.  YMMV.

By stopping paying ALL the bills, and setting aside as much money as possible, you are buying yourself at least a few months, maybe the rest of the year or longer, to figure out your next strategy.  A lot of your next strategy depends on how much money you can save.  

[BadDebtor]

14 minutes ago, BackFromTheDebt said:

 

There are certain bills you MUST pay.  Pay them.  

At the moment, the only bills that need to be paid are the mortgage and car loans. 

14 minutes ago, BackFromTheDebt said:

 

The credit card debts can probably all be settled for about 25-50% of what is owed on them.  You are talking about approx. $20k in credit card debt.  With interest, that will go up a bit.  You are talking about $6k - $12k you could use to settle these accounts.  Cut down on your expenses, and see if you can save that kind of money as quickly as possible.  

The credit card debts are just about 1500.  The rest are unsecured loans (Avant, Lendingclub, Mariner, and OneMain)

14 minutes ago, BackFromTheDebt said:

 

Also, check to see which cards have arbitration agreements.  You can probably settle those for a lot less.  I settled all the cards with arbitration agreements for $0.  I think Credit one has an arbitration agreement.  You need to check on that.  

 

Avant and Lendingclub both have Jam arbitration where they pay the fees.  OneMain only does AAA where they pay the fees.  I need to find Mariner's agreement clause.

14 minutes ago, BackFromTheDebt said:

In the meantime, you need to stop gambling.  Do whatever you need to do.  If that means giving all the money for your wife to handle, do so.  If you gamble away your settlement money, you are stuck with ONLY bankruptcy as an option, and you won't have the option again for a long time afterwards.  

My paycheck goes to my wifes bank account and I don't have the user ID or PW for any more of any of our financial stuff. 

14 minutes ago, BackFromTheDebt said:

 

When I was in a bad situation, I bought a device with caller ID that would block certain phone numbers.  You may need something like that later on.  As long as the debt is with the OC, they will ring the phone off the hook until you talk to them, then they don't bother you for a few weeks.  YMMV.

By stopping paying ALL the bills, and setting aside as much money as possible, you are buying yourself at least a few months, maybe the rest of the year or longer, to figure out your next strategy.  A lot of your next strategy depends on how much money you can save.  

Thanks for your advice.  I really appreciate it.  I know I need to comfort my wife more than myself at the moment regarding the financial stuff.  I put us in this mess and the last thing I want to do is have a lien on the house or have her stuff taken away. 

[Harry Seaward]

I don't get it. $5,700/mo income, $1,200/mo mortgage $1,000/mo to the loans and credit card minimums and $1,000/mo in car loans. If you've stopped gambling, how are you past due on anything and where's the rest of the money going? 

[WhoCares1000]

18 minutes ago, Harry Seaward said:

I don't get it. $5,700/mo income, $1,200/mo mortgage $1,000/mo to the loans and credit card minimums and $1,000/mo in car loans. If you've stopped gambling, where's the rest of the money going? 

I think the wife is not contributing her income to the mix to pay off the loans (she probably providing for the car and 1/2 of the house + 1/2 of the bills) leaving her husband to figure this out on his own.

[Harry Seaward]

6 minutes ago, WhoCares1000 said:

I think the wife is not contributing her income to the mix to pay off the loans (she probably providing for the car and 1/2 of the house + 1/2 of the bills) leaving her husband to figure this out on his own.

Ok, $3,700/mo income. $600/mo mortgage, $500 to cars and $1,000 to loans and credit cards. If you've stopped gambling, how are you past due on anything and where's the rest of the money going? 

[BadDebtor]

17 minutes ago, Harry Seaward said:

Ok, $3,700/mo income. $600/mo mortgage, $500 to cars and $1,000 to loans and credit cards. If you've stopped gambling, how are you past due on anything and where's the rest of the money going? 

I pay the full mortgage (1200), cars (600), loans (1000), utilities (400).  The 3700 is before taxes, insurance, etc.  After all my bills, I don't have enough for the utilities most of the time.  She pays for daycare, food, her own student loans / bills, and adds to savings.  I do admit we can afford to pay if we both use or salary, but since it was my fault I got us into this mess... She isn't going to help with her portion. 

[WhoCares1000]

23 minutes ago, Harry Seaward said:

Ok, $3,700/mo income. $600/mo mortgage, $500 to cars and $1,000 to loans and credit cards. If you've stopped gambling, how are you past due on anything and where's the rest of the money going? 

How much for utilities, food, gas, insurance, etc. How much for taxes. $3700 might be the gross but I bet that is not the take home.

[Harry Seaward]

20 minutes ago, BadDebtor said:

I pay the full mortgage (1200), cars (600), loans (1000), utilities (400).  The 3700 is before taxes, insurance, etc.  After all my bills, I don't have enough for the utilities most of the time.  She pays for daycare, food, her own student loans / bills, and adds to savings.  I do admit we can afford to pay if we both use or salary, but since it was my fault I got us into this mess... She isn't going to help with her portion. 

I understand her not helping with your debt, but you're also paying the full mortgage on a house you both live in, both cars when I'm guessing she drives one and utilities you both use.  On the flip side, she pays the full amount of daycare for your kids and buys all of the food for the house.  Maybe it's time to re-evaluate the distribution of your incomes.

If you feel like that's out of the question, get a second job.  You can drive Uber/Lyft/DoorDash/GrubHub/Amazon Flex or deliver groceries or pizza on the evenings and weekends.  If you put in 10-15 hours a week you can have your unsecured debt completely paid off in 2 years. (Be sure to track your mileage so you can get the $0.535/mile tax credit and don't end up with tax debt.)  Also, if you have $2,000+ equity in either of the cars, sell it and buy a $1,500 beater to drive around until you get everything else paid off.

[Harry Seaward]

17 minutes ago, WhoCares1000 said:

How much for utilities, food, gas, insurance, etc. How much for taxes. $3700 might be the gross but I bet that is not the take home.

I'm asking him.

[BackFromTheDebt]

No matter what, unless your wife agrees to the plan, nothing will work out.  

I guess the choices are, either get a second job to pay off the debts, or else default on everything and save up enough to settle. 

Bankruptcy is another option, but this is a small amount to waste that on.

Just be warned -- if you decide NOT to pay off the debts, and to settle instead, here is what you can expect:

1.  You will never get a loan or CC from those places again.  Ever.

2.  Your credit score will be trashed for the next 7 1/2 years.

[BackFromTheDebt]

Let me elaborate a little.

Settling saves you money.  In cases where there is a JAMS arbitration agreement, you could drag this out for years, and use JAMS to leverage a really good settlement, sometimes even $0.  

That is what I did (in fact, the amount of money I got from violators was approximately equal to what I paid in settlements), but I was about $150,000 in the whole, without any way to pay off the money, and I had some debts on rental properties that were foreclosed on.  I also had a larger mortgage because I had refinanced for more than the house was worth to pay off some CC debts.  

In my case, defaulting, settling when I had to, and fighting it out, was done out of necessity.  

There was a big price to pay.  It destroyed my credit rating for many years.  I was finally able to refinance my house a few months ago, but at a higher interest than I could've a few years earlier.  Also, I was paying a higher interest rate for all those years because of my financial troubles.  

It also in some cases made employment difficult.  I did eventually get a temporary job in the finance industry, which I left about 2 years ago, but that meant everything had to be past SOL by that time.  Even so, that worked because I had no money judgments against me, and I was able to show the foreclosures did not come with money judgments.

The money you could save by settling might be about $10,000, give or take a few thousand.  Could be more, could be less.  Also, settling takes time.  It is almost like a second part-time job in the time it takes.

Settling or bankruptcy MIGHT be your best option, or it might not be your best option.  The suggestion to take a second, part-time job to get to where you can pay off your loans isn't a bad suggestion.  If you are 100% sure you will stay in the same house for the next decade, and you will never refinance, and you will never need a credit card for the next 7 or 8 years, and if even a second job wouldn't pay off the debts in a reasonable amount of time, then default and plan your next strategy.  

If you COULD make enough from a part-time job to pay off the debts in a reasonable (you and your wife define reasonable) amount of time, then strongly consider that option.  

That is something you and your wife will have to decide.  Not us.  

[BadDebtor]

28 minutes ago, Harry Seaward said:

I understand her not helping with your debt, but you're also paying the full mortgage on a house you both live in, both cars when I'm guessing she drives one and utilities you both use.  On the flip side, she pays the full amount of daycare for your kids and buys all of the food for the house.  Maybe it's time to re-evaluate the distribution of your incomes.

Gross for each paycheck is 625.  We've discussed this and there isn't any wiggle room on her end... and I fully understand it.  Her stipulations were I needed to go to GA weekly and every debt I accrued was my problem that I needed to resolve. 

 

 

[BadDebtor]

7 minutes ago, BackFromTheDebt said:

Let me elaborate a little.

Settling saves you money.  In cases where there is a JAMS arbitration agreement, you could drag this out for years, and use JAMS to leverage a really good settlement, sometimes even $0.  

That is what I did (in fact, the amount of money I got from violators was approximately equal to what I paid in settlements), but I was about $150,000 in the whole, without any way to pay off the money, and I had some debts on rental properties that were foreclosed on.  I also had a larger mortgage because I had refinanced for more than the house was worth to pay off some CC debts.  

In my case, defaulting, settling when I had to, and fighting it out, was done out of necessity.  

There was a big price to pay.  It destroyed my credit rating for many years.  I was finally able to refinance my house a few months ago, but at a higher interest than I could've a few years earlier.  Also, I was paying a higher interest rate for all those years because of my financial troubles.  

It also in some cases made employment difficult.  I did eventually get a temporary job in the finance industry, which I left about 2 years ago, but that meant everything had to be past SOL by that time.  Even so, that worked because I had no money judgments against me, and I was able to show the foreclosures did not come with money judgments.

The money you could save by settling might be about $10,000, give or take a few thousand.  Could be more, could be less.  Also, settling takes time.  It is almost like a second part-time job in the time it takes.

Settling or bankruptcy MIGHT be your best option, or it might not be your best option.  The suggestion to take a second, part-time job to get to where you can pay off your loans isn't a bad suggestion.  If you are 100% sure you will stay in the same house for the next decade, and you will never refinance, and you will never need a credit card for the next 7 or 8 years, and if even a second job wouldn't pay off the debts in a reasonable amount of time, then default and plan your next strategy.  

If you COULD make enough from a part-time job to pay off the debts in a reasonable (you and your wife define reasonable) amount of time, then strongly consider that option.  

That is something you and your wife will have to decide.  Not us.  

Thanks again.  Yes, right now... I'm still paying all the loans, cards, etc.  I know part of GA is you are suppose to take responsibility and I'm trying to make all the payments right now.   That's what I'd like to do first.  My main concern was if I start to fall behind like I have for two of the loans, what's going to happen and will the judgements against me (if I lose in arbitration ) hurt my wife / family .  I understand about my credit score and job search, but those two aren't high on my list at the moment. 

[Harry Seaward]

33 minutes ago, BackFromTheDebt said:

No matter what, unless your wife agrees to the plan, nothing will work out. 

This is false.  He can get a second job.  Defaulting/BK is not the only option.

5 minutes ago, BadDebtor said:

part of GA is you are suppose to take responsibility

That's right, and taking responsibility means not stiffing your creditors.

[BackFromTheDebt]

2 minutes ago, Harry Seaward said:

 

BackFromTheDebt said:

No matter what, unless your wife agrees to the plan, nothing will work out. 

This is false.  He can get a second job.  Defaulting/BK is not the only option.

If you look at my more recent posts, I agreed with you that a second job is a good option.

Look a little more carefully.  He says all his money goes into an account his wife has complete control of.  That is what I meant that his wife has to be in on the plan, or else this will fail.  The plan could be a second job, or it could be default and settle, but he would need his wife to allow him to use the money he is earning for whatever plan he implements.  

If his wife has control of the money and won't agree to a plan, then the plan will fail.  

So far it appears his wife is willing to work with him on his issues.  Solving these issues is the way to preserve the marriage.  

[Harry Seaward]

29 minutes ago, BackFromTheDebt said:

If his wife has control of the money and won't agree to a plan, then the plan will fail. 

Gotcha. It never occurred to me this is what you were talking about since it's obvious it won't work if his wife won't let him pay his debts. If she in fact won't let him solve this, there's any entirely different discussion that needs to take place. 

[BadDebtor]

Right now, I'm just trying to gather as much information and options to her as possible.  She's talked to attorneys and getting information from them as well.  Most of them are just telling her to have me declare bankruptcy (which I would not like to do)... I also tell her of course they'd say that, because that's the only way they would get money. 

I don't oppose getting a 2nd job because that will keep me busy and having free time isn't doing myself any good at the moment.

[Harry Seaward]

42 minutes ago, BadDebtor said:

Most of them are just telling her to have me declare bankruptcy

With your income-to-debt ratio, I'd be surprised if you would qualify for chapter 7 because your wife's income will be factored in. That leaves chapter 13 which is a 5-year repayment plan. In either case you'll have to declare the $15,000 in savings. Depending on PA BK laws, this money may or may not be exempt.

If you were disabled or had $200k in debt, that's one thing. Since you're presumably able bodied and your debt is relatively low, I'd rather work out my own solution that you can complete in 2-3 years with some monthly flexibility rather than be forced to turn over $X every month for 5 years.

And honestly, BK will be a much less rewarding solution, considering the origin of your debt. 

[BackFromTheDebt]

I agree with @Harry Seaward on this point.

$20,000 debt may seem to be crushing debt, but if you are making more money that what you need to get by, it can be manageable.  

The default and fight/settle option might actually be cheaper than BK, and you might be able to keep more of your money.  

Attorneys make their money off of bankruptcy.  To a hammer, every problem looks like a nail.  It isn't bad to have the BK option as a last resort.  That is what many of us, including me, have done.  I just never had to use that option.  

 

Here is the single biggest argument against bankruptcy for a relatively small debt:

You don't have a crystal ball.  If you file for bankruptcy now, that can tie things up for a long time.  If it is Ch 13, you have a 5 year (sometimes less) payment plan, PLUS all the money that goes to lawyers.  If anything bad happens in the next 5 years, you cannot discharge the bankruptcy, and you are liable for the debts.  Sad to say, most people fail in this.  It might not be something bad.  It could be kids who take up a lot of your money.  

The other side is Chapter 7.  They may or may not be able to take the $15,000 from your wife, and they might make you sell one of your cars are replace it with a beater or a bicycle.  That is over quickly, BUT, you can't file again for another 8 years.  God forbid something bad happens to you or your wife and you wind up with some horrible medical bills, but those things happen.

If you either work off your debt with a second job, which seems to be the way you are leaning now, or else default and settle/fight, you can get this taken care of in a couple of years.  Your credit report will stink for 7+ years if you default.  BUT, if something really unexpected happens and you have to declare bankruptcy on a rather large medical debt, you can.

 

There is also the question as to whether working off your gambling debt with a second job would do more to convince you to stay away from gambling.  

 

I use to gamble a lot.  Not what you would call a compulsive gambler, but I have seen people get into MUCH worse problems than yours.  A friend of mine once found himself down $30,000 to Mafia bookies after the Sunday games, no cash on hand, and settlement day on Tuesday.  He flipped a coin, used the results of the flip to determine his Monday Night Football bet.  He put 30 dimes on the game, won, and broke even for the weekend.  Had he lost, well, maybe he wouldn't have been around to tell me that story.  Your situation is bad enough.  Your wife may have saved you from getting into a situation like I described.  Imagine being in that situation, and betting on the wrong team?

[WhoCares1000]

I kinda like the idea of a 2nd job and possibly getting rid of the car that is in your name only and driving a beater if that will break the log jam. Those two things might be enough to convince you to never gamble again.

If even after a 2nd job you cannot pay you accounts in full, then you work settlements as best you can. I know that GA says to take responsibility for your actions but they do not expect you to be superman either. You are expected to do the best you can do.

Finally, BK should be the option of last resort because you and possibly your wife will lose control of either the income or the assets. You should try everything else you can first. Also, a BK right now would almost feel like you cheated and might not help your recovery.

[Harry Seaward]

37 minutes ago, BackFromTheDebt said:

There is also the question as to whether working off your gambling debt with a second job would do more to convince you to stay away from gambling.  

True addicts are never "cured", but I'm of the opinion that any little 'celebration' reinforces sobriety.  Paying off gambling debt is a pretty major celebration for a gambling addict. BK is just 'meh'.

[Harry Seaward]

10 minutes ago, WhoCares1000 said:

Also, a BK right now would almost feel like you cheated and might not help your recovery.

This

[BackFromTheDebt]

16 minutes ago, Harry Seaward said:

True addicts are never "cured", but I'm of the opinion that any little 'celebration' reinforces sobriety.  Paying off gambling debt is a pretty major celebration for a gambling addict. BK is just 'meh'.

There is some debate as to whether or not a true addict can ever be cured, and there is a lot of debate as to whether addicts are treated properly in the US.

Be that as it may, paying off a gambling debt might be a very strong reinforcement to stay the heck away from it.  

[Goody_Ouchless]

4 hours ago, BadDebtor said:

My main concern was if I start to fall behind like I have for two of the loans, what's going to happen and will the judgements against me (if I lose in arbitration ) hurt my wife / family .

We lost everything during recession because we were living WAY beyond our means and stuck my head in the sand and trusted that my wife knew what she was doing. To recover we concentrated on fixing my credit writing hers off. It's a strange quirk of Community Property states, but somehow my credit improved, even though it should have been in shambles if hers was factored in. On the flip side, now that her bad stuff is has fallen off credit report, she is getting approved for credit that her salary in no way justifies.

We put all of our money in one big pile, so there's no "mine," and "hers," so at first I didn't understand your wife's unwillingness to help clean this up. Then I started thinking about my brother-in-law who lost everything through gambling. He is currently living with a woman who keeps bailing him out. He can't stand her, but she owns him and reminds him every day. So I've come full circle - your wife's stance seems correct in order to minimize resentment reaching a toxic level (not to say it isn't really bad, already.)

As a fellow addict, I feel your pain. Folks who don't have the "gene" (whether it be gambling, drugs, drinking, etc.) have no idea.