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Sharing more of my debtor story
What this has taught me so farIn the past I was not a careful manager of our money. Oh, there were times when I would get super organized, create a budget and stick to it.
For about two or three months.
Then I would go right back into my old spending habits.
I had see-it-want-it-buy-it- itus. Instant gratification, oh yeah baby.
Oodles of things I just thought we couldn’t live without.
It wasn’t big things necessarily- instead it was little things. A $30 purchase here a $20 purchase there. If went errand running to 3 different stores and overspent by $25 each store- that’s $75 over budget. It didn’t look so bad in my mind because I was only seeing it as smaller purchases- I was always thinking, “Hey, it’s just an extra $20 bucks- we can afford an extra $20.”
Truth be told- we couldn’t even afford an extra $5.
All these purchases were paid for, by you guessed it,
Credit cards.
I knew it was bad when the budget was so lousy (due to all those credit card bills) that I started putting groceries on the credit card.
My Grampa & momma always told me you don’t put perishable goods on credit- “things you’ll eat and po*p out tomorrow” is what Grampa would say. Momma was more tactful and said that by the time the bill comes you don’t have anything to show for it. I agreed and at first I listened.
And then I didn’t.
I remember once when I put myself on a strict diet- one month cold turkey, no use of credit cards. I didn’t tell anyone I was doing it- heck, nobody knew we had a credit card debt problem, not even Mr. Steady. So I went one month cold turkey- no accountability either since I couldn’t/wouldn’t tell anyone of the problem. I barely made it through the month. I distinctly remember cashing in pop cans in order to be able to buy the bare minimum of groceries that last week. I was sweating bullets. It was painfully obvious that we couldn’t even meet our bills and needs due to my overspending.
And so this is when you think I realized I had to stop. It totally shames to me to admit that not only did I not stop- I got a new offer in the mail to transfer a balance to another card for 0 percent interest and a larger credit limit.
And I did.
And things went on for another year or so. Until one day when I realized that the monthly outgo outweighed the monthly incoming by about $350. Even if I stopped using the credit cards (three of which were at their limits) we wouldn’t make ends meet. I checked with a “Christian” debt consolidation company and was told that they could consolidate all my credit card debt into one monthly payment and it would be paid off in 4.5 years. The problem was the monthly payment didn’t decrease from what I was already paying- which I now knew I could not keep paying.
At this point, hindsight being what it is- I wish someone had told me about Dave Ramsey. I wish someone had assured me that I could actually work with the credit card companies myself- that I didn’t need a go-between. But I wasn’t broadcasting my shame, no one knew the secret therefore no one knew I needed advice. Instead this nice “Christian” debt consolidation company told me that I was a candidate for debt solutions (aka debt settlement) and gave me a number to contact. The person who spoke with me was wonderful, of course. And best of all, or so I thought, he even prayed with me!! I though I was on track- I thought this was God making a way for me.
I got sucked in just like the little old lady who sends her life savings to the televangelist who supposedly is gonna heal her thru the TV screen.
I totally bought it when they assured me that I would make one monthly payment to them (which was about $400 less than I was paying out at the time) and they would in turn pay my creditors. They assured me that all of my creditors would accept their proposals and work with them. “We do this all the time,” he said. “Trust me,” he said. “We’re gonna get this all taken care of for you and you’ll be debt free in 3 and ½ years- maybe even sooner. Yeah, really, I guarantee it won’t be more than 3.5 years and you’ll be re-establishing your credit.”
What he should have said would have been, “Ok, Amy, you send us $xxx amount each month and we’ll work on paying off your debts. BUT you need to understand that some of your creditors won’t accept our proposal. They will sue you. Probably garnish your accounts and go after your wages. You will have to go to court. And Amy, just so you completely understand- I’m not going to let you know in advance if a creditor won’t work with us and when they do serve you with papers, I will no longer be able to help you with that debt and you’ll have to work on it on your own. In fact, I won’t even tell you what to do when you’ve been served- I won’t even return your calls. But I will, however, expect you to continue to pay the amount stated in a timely manner as set up in our contract. And just so you completely understand, not only will we charge you a monthly service fee to sit on your money (until we deem enough has been accumulated to make an offer of settlement) but we will expect you to pay us an additional settlement fee for each account we settle. This fee with be 30 percent of the difference.”
Since I am a pretty sensible person, I’m pretty sure I would have opted out if the dude had been truthful. Which is quite obviously why he wasn’t.
And so I remained blissfully unaware for the first year. Yeah, I was served with a court paper and various other mailings but I did as I was told and just folded them back up and mailed them to the debt counseling agency. Every once in awhile I’d get a nagging doubt and I’d call and leave a message with my credit counselor. Once or twice he called me back, assuring me all was well, that all my creditors had accepted their proposals and that I didn’t have anything to worry about. “Just keep sending us whatever you get in the mail.” And so I did. When the court papers came, hand delivered by a police officer and me having to sign for—I became upset. Again I was told to send the documents to them. I did. Then I called and asked what I should do. And then I called again and yet again leaving messages and not getting answers. I took no answer to be a good thing and just kept on keeping on. Just like I was told. For another 9 months I lived in “blissful” unawareness. La-de-da-de-daness. Until I got the mail one day with three large overdraft notices and two letters of account garnishment. In one day we went from paying our debt and putting aside money to pay our taxes and car insurance to having a negative balance. Poof. Gone.
And what did the debt counseling agency do? “Oh, Amy we’re so sorry. Didn’t you know that was court document and you were being sued? Didn’t you know you missed your court date and they garnished your accounts? We can’t help you with that now. It’s out our hands. You’ll have to work on that one on your own.”
And so I did. And I stayed with the company. We were sued again- this time I knew what the court document was but couldn’t do anything to stop it. Again no help from the debt counseling agency- expect that they did accept a lower monthly payment (we needed it lower so that we would have money to pay on the court judgement). In fact they were quite accommodating about accepting a lower monthly payment. Saying how sorry they were that this had happened and that it was no problem to lower our monthly payment to them. They even allowed us to skip a month’s payment so that we could make the first payment to the other collector on time. Hello?! I should have smelled the rat when they were so accommodating. This is their way- this is their way of keeping me longer- with me making smaller payments there was no way they’d be able to negotiate better, quicker-to-pay-off settlements on my behalf. It would take longer than the 3.5 years I was so absolutely assured of in the beginning.
How much longer?
Who knows? We won’t because I finally wised up enough to get out. After 30.5 months I finally figured that I had traded one never ending cycle for another and I jumped ship.
So what did I learn?
Well- from the debt counseling agency- I learned that they will tell you whatever they think you want to hear, sometimes it will be the truth, sometimes part of the truth, and sometimes they wouldn’t know the truth if it came up and bit them.
I learned that it is absolutely paramount that you keep meticulous notes. Keep detailed notes of the date and time of every phone call, fax and email. Ones you send and ones you receive. Write the date rec’d on every piece of mail. Keep a log of messages you left and when they were finally answered. Keep files of papers and notes on your computer but also in hard copy in a folder. Save/record phone messages. Save and make note of every possible detail.
When I would speak with my “credit counselor” on the phone I would pull up my specific file on the computer and type notes while we spoke on the phone. This would often lead me to ask more questions so that I made sure I understood something. I would go back through my notes as soon as I was off the phone, polishing and adding while it was fresh in my mind.
I know that my copious notes helped me in the end with terminating the contract and getting the fee waved. I had proof.
Continued next post- because this is getting awful long.
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10:09 AM, 2008-Jul-17 .. Posted by AnonymousI can see you have had a big learning lesson here. I can't wait to see you all get out from under neath all your debt.
We are taking a great money class in our Sunday school class. It is not a Dave Ramsey thing. Our pastor is teaching us how he has lived and how he has saved money. It is amazing what he has done.
I love reading books about others. I love hearing about families like you that have struggled but have over comed.
You will look back at this and thank God for such blessings that will come from this:)
Can't wait until your future posts!!!!!!!!!!!!!!
Ma
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10:15 AM, 2008-Jul-17 .. Posted by IsabellaThe Lord is going to use this "hard" lesson for the good. You are teaching so many families how to use their money wisely. If they are in the same situation that you were in, they can learn what not to do. What a blessing. I
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2:07 PM, 2008-Jul-17 .. Posted by AnonymousHave you reported this debt consolidation company to the Better Business Bureau or your state's Attorney General? It seems that their actions and practices are shady and should be investigated.
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2:13 PM, 2008-Jul-17 .. Posted by LynneAmy,
This is quite a relief. I hope everything goes well with you last bill.
Thanks to you we no longer use a credit card at all, just the bank debit card that takes the money right out of my checking account.
Once before you talked about some kind of Visa card that you put money on and it can only be used for the dollar amount on that card. Where do you get those?
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2:24 PM, 2008-Jul-17 .. Posted by seventhheavenI think this is a lesson most americans are now having to learn. Credit was made to pretty for us huh. We are trying to rebuild our credit too. A little different reason. My hubby lost a job and was without one long enough to have to file bankruptcy. We did this so we wouldnt totally default on a house and our car. Well, the bankruptcy has been over for two years and my husband is going to school. We are debt free. But we are trying to wisely re-establish credit to be able to buy a house in a few years. I am starting to really see that paying cash is the best way. We now use a credit card for re-establishing our credit and pay it off every month. We are not using it really for credit but to show we are responsible with our money for our house purchace. We are even starting to have a savings and do not need a credit card for new tires or what ever else happens. Its been hard to turn our mindset around but its worth it. Now i wouldnt go back to having all the headaches. Im glad to hear you are heading in the right direction. Stay on the path even tho it seems hard. One thing we also did which was perhaps the hardest..... we increased our giving. In doing this we saw God perform the impossible with our finanaces in so many ways. Hope this is a word of encouragement to you.
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3:07 PM, 2008-Jul-17 .. Posted by LauraOh, Amy... thank you for sharing this, but I'm so sorry you had to go through such struggles.
We went with a credit counseling agency years ago, when we moved to an area that had a much higher cost of living and we could no longer afford our payments. For us, though, it was a good experience - they truly didn't charge any fees (it was a non-profit agency) and worked on our behalf. We cut our debts in half in less than a year working with them... until I read your blog, I had no idea that debt consolidation programs could go so horribly wrong!
Thank you for making me (and others) aware of that fact. With things getting tight once more, I have contemplated going that direction again - but now, I'll be sure not to. (BTW, the organization we went through can longer serve our area - they are only allowed to operate in the state they are located in - because of their non-profit status. Sad - they had a great ministry!)
I'll continue lifting you up in prayer - you are doing a fantastic job - I pray I can follow your lead as well during these tough times we are facing personally.
Thank you Thank you Thank you
8:49 PM, 2008-Jul-17 .. Posted by YPAmy5Thank you all for the encouragement. It has not been easy for me to swallow my pride and share this experience but I remind myself that I must speak up so others will not fall into the same pit.
I am currently working on putting together a letter full of information for the BBB. You better believe I'm gonna report them!!! Thanks for the support!
Lynne- You can pick up a prepay Visa/Mastercard at Walgreens, Wal-mart and more- they are sometimes located right with all the other shopping cards. I ,myself, find it quite hilarious that I can pick up a gift card for Red Lobster and iTunes plus a pre-pay Visa right next to the check out at Walgreens. It just seems so odd to me!
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