Jana writes in with a credit emergency. She's been following Get Rich Slowly, and is learning how to handle her own personal finances, but she has a friend who is in a predicament beyond her realm of knowledge. (And beyond mine, as well.) Can any of you offer advice? She writes:
Kerry is a 23 year old living in Utah. She works a full time job, pays rent on an apartment, and has a car payment. She has about $6000 in debt that she has been managing over the past couple of years. However, this week she received a letter regarding a credit card she forgot she had while in college in Georgia. I guess the debt collection agencies had been sending her notices to her old dorm address, and finally hunted her down. She now owes an additional $3300 on this credit card in two weeks or she goes to court. Going to court means losing her car and having her credit ruined.
Kerry is considering one of those loan places that charge a huge amount of interest. I know this is a cringe-worthy solution and I am wondering if you are aware of any legitimate loan places or programs that could help her overcome this $3300 debt and help her begin paying off the other $6000. She's pretty much month-to-month on the paychecks. Her family situation is such that she is uncomfortable asking them for money.
I'm at a loss, but I REALLY don't want to see her go to one of those skeezeball loan places. Any thoughts at all would be extremely appreciated, and thanks so much for reading.
It seems to me that it is to the credit card company's advantage to work with Kerry. They want to get their money, and they'd rather not have to pay a collection agency or lawyers to do so. I recommending calling the credit card company directly to explain the situation. She should be completely honest, and ask them to work with her. This may not work, but it sounds as if at this point she has very little to lose.
If this fails, she might want to speak to a credit counseling service such as American Consumer Credit Counseling. I'm not sure how effective these places are. But again, it cannot hurt.
Standard advice for debt elimination is based on having time to slowly pay the debts down. What can you do when you're faced with a credit emergency?
Author: J.D. Roth
In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.