Holding off on bankruptcy for now
Talked with DR Counselor
I was able to talk with a Dave Ramsey counselor today. We discussed my income and the level of my debts and how fast they’re growing. I’ve been working the plan just as prescribed and I’m on the right track. I just need to keep working on getting my income up as much as I can, which I’m doing.
My counselor suggested paying $10 or so each month to the creditors I can’t make a real dent with right now and focusing what money I do have on the next debt in line in the snowball and get it paid off. That will put more money toward paying the debt, and less maintaining a relationship with the other debt collectors. Basically, I stop paying on a pro rata basis and start paying a flat rate. That will leave twice as much money to pay on the lowest debt than I had on the pro rata plan. That will make a big difference in making the money I have work harder for me.
I am making progress. I’ve paid off 6 debts. I’m just discouraged because I’m not making any headway on the back end of my snowball. I’ve got to keep plugging along and work toward getting a bigger shovel (more income, a lot more).
I’m going to try this over the summer and work on increasing my online income while I’m delivery pizzas and tutoring. We’ll see where I’m at in August.
If it gets too tough to handle or I’m not making progress, I can always file for bankruptcy at any time. I found my pre-bankruptcy counseling certificate and I have all my paperwork in order. All I have to do is take it to my attorney. I’m going to keep it ready to go and that is my fall-back position for now.
Need to Get Medical Insurance
This is one of the “inside your own 4 walls” issues I haven’t taken care of. Before I put more on the debt I need to get with the local health insurance ELP about what coverage I could at least get for myself. I need something to cover me if I get really sick and need to go to the hospital. As far as I know, if I needed a hospital stay I could go to the public hospital (Earl K. Long Hospital) and my costs would be waived for lack of ability to pay.
My son is on Medicaid, but I only use it when it’s something bigger than I can handle. I pay cash for his routine doctor visits or when he needs to see his pediatrician when he’s sick. Medicaid pays for his prescriptions because they are really expensive but vital to his survival. They would reimburse me for my expenses, but I don’t do that because I can manage my costs okay on my own so far.
I don’t want to stay in this position any longer than we have to, so I’m seeking reasonable coverage for both of us that won’t break us financially. It may require that I keep searching for a solution for awhile. I have been searching for 2 years now, but things are changing and more products are becoming available in a more competitive marketplace.
The only reason we don’t qualify for food stamps is I have an IRA. The state considers that a usable asset and won’t award food stamps to anyone who has any usable assets, no matter what the tax consequences or how that asset is viewed by any other law, like the bankruptcy law.
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Let me get this straight: you would take food stamps if you qualified for them, but you’re leaving Medicaid reimbursements unclaimed “because you’re managing okay on your own”?
It makes no sense. If you’re entitled to the reimbursements, claim them. You’re not “managing okay”; you’re fighting a huge amount of debt, and every dollar of unreimbursed medical expense is a dollar you can’t use elsewhere.
If it helps, consider that you already paid for Medicaid through your salary deductions in the years you were employed.
On the BK/no-BK thing: you wrote in comments on your previous post that you considered the Ramsey organization to have a very strong anti-bankruptcy bias; you need to view the advice you get from Ramsey counselors through that lens.
Good luck.
Comment by lawnmower man | May 1, 2008
@lawnmower man: you’re right. I’m not managing okay and I am in a huge amount of debt. I’ll get my claims together and submit them for reimbursement.
I did pay a HUGE amount of taxes when I was a salaried chemist for 19 years; around $8000/yr on average if I remember correctly. I’m not getting that much covered in Medicaid benefits. Food stamps would only be about $100/mo if we qualified, but I’d take it at this point. I also know that I will not be in this position forever, and I’ll be paying lots of taxes again in the future when my earnings go back up to my pre-lay-off level or higher.
I wrote this post after getting off the phone with the counselor and I was pumped up on the enthusiasm that I am doing everything I can (short of bankruptcy) and making progress on the low end of my debt snowball. When I go back to the big picture the enthusiasm was short-lived.
I need to talk with my accountant about the tax implications of bankruptcy before I call my attorney. I forgot about the tax side of it and should at least know what it will mean before I file. My attorney didn’t seem concerned about the tax implications, so I need to hear what my account has to say. I emailed him a little while ago and I should hear back from him today or tomorrow.
I am going to hold off filing until school is out so I’ll have time to take care of anything that will need my attention during the process. I know it will require some of my time, and I don’t want to lose any earnings by having to cancel with students during May. I also don’t want to deprive any student who needs last minute help during final exams. They all panic so much more than I remember in high school. School ends here the week of May 22.
I just opened yesterday’s mail and got another letter from a collector. One of my debts has been sold again and the balance has increased because of another fee.
This isn’t a game I can win without a much bigger shovel to fill in the hole. I’ve fought bankruptcy for two years and the hole has gotten much bigger, not smaller.
It’s time to file.
Comment by joubess | May 1, 2008
Sherri,
You write: “One of my debts has been sold again and the balance has increased because of another fee.”
They are scamming you. What relationship do you have with this new ‘creditor’ that entitles them to charge you fees?
Factoring changes the basis of the ‘moral duty to repay’ argument too, because the original creditor has settled the debt in full. Factorers are parasites who buy your debt for cents in the dollar. What this DR guy is not telling you, if when pay the debt in full it’s no longer a repayment to the person you borrowed from, you’re just enriching factorers.
Comment by corey | May 2, 2008
@corey: Yet another of my debts has been sold again and the balance has increased again. I didn’t borrow anywhere near what I supposedly owe right now. I don’t believe I have a moral obligation to pay huge interest and fees to scum-of-the-earth collectors. The credit companies have already written the debts off and have received their tax benefits for doing so.
I am filing for bankruptcy at the end of May, as soon as tutoring is over for the semester. It will require some time to take care of that business, and I don’t want to have to cancel on any students during final exams. Otherwise I’d file in the morning.
Comment by joubess | May 5, 2008