Debt Consolidation

 I am on the phone with a debt consolidation consultant right now.  His name is Jon Foley, and he was recommended by someone in Business Debtor Anonymous.  I had to sign up for their credit reporting service, Smart Credit, which costs $25/month.  I paid it for now, and I'll need to remember to cancel it.  Actually, Jon says he'll check back in with me before the next month and help me cancel it.   

I have an American Express card with a balance of $10,000-ish that isn't on my credit report.  So does that mean that I don't owe it?  It sounds like they have a window to pursue the debt after the business is officially dissolved.  I will make sure the paperwork is all correct with WA state to officially dissolve the business.   Since it's not showing on my credit report, Jon says that I'm not a personal guarantor of the debt.   

With AmEx, I accepted their offer to enroll in their program to help me.  The terms of that were that my card with them is frozen, and the interest rate drops from 29.9% to 9.9% with no late payment penalty.  If I'm able to make the payments (~$250/month) to pay off the balance, then I stay in good standing with them and could re-open the card in the future.  I was worried that enrolling in that program might change the debt to be personal to me, but Jon says it won't.  

I also have a balance of about $3,000 with an Edward Jones business card that is also not on my credit report.  The plan for now is to de-prioritize these debts while I to work to pay off my more consequential debts.  

There are three other bank debts on my credit report.  I owe about $12,000 to Discover Card.  Discover Card also offered to work with me on their debt reduction program.  They are much more generous than AmEx and financed my debt with them at 0.99%, also with no penalty for late payments.   I'm planning to continue working with them through this program.  The monthly payment is also about $250.  

I also have a personal credit card at BECU that I used for the business as well.  Additionally, I have a line of credit on my checking account.  The combined total is about $35,000 in debt.  BECU offered to help me by putting those accounts on hold for a three months with no interest or penalties.  I was grateful for the reprieve, but now they are due again.  Jon can help me renegotiate that with a debt settlement program to reduce it to about $22,000.  This could affect my banking at BECU.  They may confiscate the money in my accounts to put towards those debts when my payments are late, which is likely since I currently have no income.  The first step he recommended is to set up an account with another bank and move my money out so that I don't lose the tiny bit of money I have to make my life work.  I really like banking at BECU.  I've been there since 2007, almost 20 years.  It sure does not feel great to not honor my debts.  

Also, negotiating a debt settlement will reduce my credit score for the near term.  Jon says he has a credit rebuilding program.   

 One complication on opening an account at another bank... My business accounts at Verity Credit Union, where I also really enjoyed being a member, closed with a negative balance of about $7,000.  It doesn't show up on my credit report.  However, Verity may have reported this outstanding negative balance to Chexsystems, making it hard to open another account.  I will find out when I try.   

I also need to call the IRS about $9,000 in taxes owed.  Jon says they are easy to work with once you get through to them.  I also owe $4,000 in back child support, which is $700/month.  I'm not sure there's anything to do but pay that.  This weekend I will fill out the paperwork to request a reduction in the support I owe.  I do have my daughter 50% of the time and make much less money than her father.  However, the court believes I am voluntarily under employed because I am not making my old hourly rate as a consultant full time, and they denied my last request.  The most I ever make was about $70,000 annually, and that was before I became a single mom.  The judge thinks I should be making much more than I have ever made to support me daughter's father.  Anyhow, there's a topic for another post.

Overall, it felt good to talk to Jon and assess the state of my debt.  He said that bankruptcy is not necessary for my amount of debt.  I'll leave you with a puppy pic from my house sitting gig this weekend.      

Later,

Meg