Dealing With Debt Trouble

Ken Dolan: Hi everybody, we’re the Dolans. We’re so glad you joined us. We should be smiling even. Daria Dolan: No, this is a very serious topic. In these tough economic times, more and more Americans are fighting themselves with their bucks against the wall and their debt coming at them faster than they can find them back. Ken Dolan: Sometimes with not a lot of solutions but anyway we’re going to give you a couple of free ideas here. We’re going to talk about debt consolidation and we’re going to talk about debt repayment and then— Daria Dolan: No, debt settlement. Ken Dolan: Debt settlement, excuse me. Debt settlement to solve that repayment— Daria Dolan: To solve that repayment. Ken Dolan: Debt settlement and consolidation and if that doesn’t work, we’ll talk about something else. All right, pick one for us. Daria Dolan: All right, you go first with consolidating. Ken Dolan: Okay, death consolidation. What you’re doing excuse me is you’re making one loan and you’re putting into one loan. You’re not eliminating that you’re transferring it into one particular loan. Hopefully, in one loan payment and maybe even a little bit less of an interest rate, we’re not sure. So, you’re not eliminating it, you are transferring it into one place making it more manageable at least be in one payment per month. That’s debt consolidation. Daria Dolan: Now, debt settlement is where you contact your creditors or someone does it on your behalf and basically says, ”Look, here’s the fact of the matter.” For whatever reason, maybe it’s job loss, maybe it’s too much consumerism. Whatever the—or maybe it was a health issue that made you spend money somewhere else that you’d hadn’t anticipated. Ken Dolan: Or had to use your credit card. Daria Dolan: I can't pay these bills. I’m not going to be able to make the payments. Work with me. How much will you be willing to accept from me so that I can be free of this debt and start over? So, you pick a lower number than what the amount is that you actually owe. Ken Dolan: Typically, it’s negotiable as you said Daria and hopefully it’s part of the negotiation, it might be in a lower interest charge, hopefully. Daria Dolan: Exactly! Now, although both of these ways appear on your credit report— Ken Dolan: That’s okay. Daria Dolan: The better one to have appear on a credit report is that you consolidated into one bill payment rather than you kind of said to your creditor, you can't do it so here, I can only offer you this. Take it or leave it. The creditors don’t like that one as well. Ken Dolan: All right, debt consolidation doesn’t work, debt settlement doesn’t work, you would— Daria Dolan: It’s the B word and we don’t mean budget. Ken Dolan: The bankruptcy with 7 on a 13 and let’s discuss the difference. We hope you don’t need either one of them. Chapter 7 is discharge of debts clearing the sheets. Depending on the value of your home and card, depending on your state rules, state laws, you’ll probably be able to keep your home and car. Discharge of debts, cleaning of the sheet. Daria Dolan: Exactly! Ken Dolan: 13 is a repayment. Daria Dolan: But I will say this, if you are working, you will not qualify anymore under the way the bankruptcy laws where we’ve written in a few years ago. Ken Dolan: Almost, yeah, with little—even what’s a little—even with some income you may not qualify. Daria Dolan: You may not qualify for the total discharge of your debts in a seven because they want you to have a little skin in the game. So the other alternative, if you’re working or have some assets is a chapter 13 which allows you to work with the court and develop a repayment plan that will allow you to pay your debts off to one degree or another in a two to five-year period. Ken Dolan: On typically two to five-year period. Daria Dolan: Debt step may exist that they you know will not be able to go away in two to five years could be discharged in a 13. Ken Dolan: Maybe, yeah, there might be some discharge of debt in a chapter 13 and maybe hopefully avoid foreclosure. So, a seven is a discharge of debt, 13 is a repayment. And basically, we hope you don’t need either one of them. Daria Dolan: Right. Ken Dolan: But there are three or four alternatives that at least you’re informed that they exist. Good luck. Pay down that debt.