Financial Channel

A friend of mine has a couple of outstanding debts. She has a mastercard for 6000.00 and a citifinancial loan for $5000.00. The Citifinancial one was for an air conditioner that originally cost $3000.00 and she paid minimum payments for a year. Somehow though it's up to $5000.00 with all the fees and interest! Now the mastercard only has one late payment but she hasn't been making payments on the citifinancial one for almost a year. I think at this point her credit is pretty bad as she has done a settlement on another credit card debt as well (she owed $1500.00 and settled for 1000.00) and she's had quite a few late payments in the past. Any ideas as to what she should do? She owns a 4 year old Honda Civic but she can't sell it as she needs it for work. Can they take her car if she doesn't pay? Any advice would be great! She just got a new job after being out of work for 8 months and her mother passed away last year so things have been tough for her. I know it's no excuse but I really want to help her get this sorted out. Thanks in advance!

Your friend should get a credit counselor ... and get all of her debts consolidated. The counselor might be able to reduce the debt by negotiating with creditors too.

Other things to do: Get a lower interest rate CC OR apply for a line of credit. Cut her spending... dump every penny from her new job into her CC debts. Sell the air conditioner - does she really need it? Yes I know it's HOT in the summer - but it'll save a bundle of money

In anycase, your friend seems to have a chronic spending problem - perhaps once her debts are cleared you should drag her to a financial planner to get finances in order...

On second thought... might be better not to do anything - next thing you know, she'll be asking you for money

Thanks for the tips! She can't get a loan or lower interest credit card as her credit is really bad. I'm just wondering if she should even bother trying to repay the debts as her credit is quite bad. Is there any point in paying? Can they try to take her car? Also re: the air conditioner it's attached to her condo and can't be removed (one of those wall unit deals). She sold her condo already but didn't make anything from it after the realtor fees (she bought very high). She is seeing a counselor and he suggsted that she speak with a credit counselor so she will be doing that in the future. Thanks again!

Why wouldn't anyone try to pay it back? Whoever recieved goods using that credit so they should pay it back.

It's not that she doesn't want to pay it back. I assure you that if she had the money she would. She lost her job (her new one doesn't pay nearly as well), her mother died and she's having a hard time right now. She just needs a break (and no she's never been in this situation before). And yes she did receive the goods however the Air Conditioner was 3000.00$. She paid $90.00 a month for a year on that debt (minimum payments) and she somehow now owes them $5000.00 with interest and fees. So don't ask me to feel sorry for the credit card companies that she owes this money to. Yeah she screwed up (who of us hasn't). If you don't have any helpful advice please just keep it to yourself, kay. Thanks!

tough situation but your firend should have realized CC debts are the ABSOLUTE WORST RATE! 18%! Maybe she can talk to the banks and get a consolidated loan with a better rate and get on a payment plan.

Her's are 21% and 22% (choke, lol)! She doesn't qualify for a consolidation loan unfortunately. Thanks for the suggestion though!

Well if she chooses not to pay and the creditor finds out about her employment situation they can go to court and have her wages garnished. Then the employer will know that she is having credit problems. As mentioned previously her best bet is to go to a credit counsellor and try to work out a plan of some sort.

holy shiznit! i work for a bank so i get 9% and i still NEVER carry a balance because i want my money working for me not against.

definately talk to a bank advisor though.

To hell with paying it back, tell her to file for bankruptcy.

If she has already settled one previous card and hasn't made payments for a year on another card, that means her credit is already screwed.
Paying off her debts will not actually improve her credit score.

She should file for bankruptcy, because paying $11,000 in debt when there's no hope in hell of salvaging her credit score just doesn't make sense.

I believe she can keep her car even if she files for bankruptcy.
But pretty soon they are going to start garnishing her wages if she doesn't do something.

if you file for bankruptcy and your vehicle is over 5000$ then they are allowed to take it

this applies only to alberta and varies from province to province

if you do want to declare bankruptcy you may want to discuss the disposition of your car with your trustee

I think it is more than you can handle on her problem.

do she realize she is having financial problem and spending problem?
IF she does not realize it, it is harder to convince her of any help at all.

Anyhow... this is a site from Bankruptcy Alberta.
you can try to submit your questions that you have or you can read some of other Anonymous posts.

http://www.moneyhelp.ca/bankruptcyaskaquestion.php

She has to ask herself does she really need the car for work? Is she travel with her for sales?? Can she get to work though other transportation (bike, walk, bus). It is alot to spend on the car expenses with routine maintainence ~$1000/yr, insurance ~$1500/yr, and gas ~$2000/yr that she can save up for paying her creditors faster.

She has to cut all of her wants and go for the basic necessaity.

good luck

I think it is more than you can handle on her problem.

do she realize she is having financial problem and spending problem?
IF she does not realize it, it is harder to convince her of any help at all.

Anyhow... this is a site from Bankruptcy Alberta.
you can try to submit your questions that you have or you can read some of other Anonymous posts.

http://www.moneyhelp.ca/bankruptcyaskaquestion.php

She has to ask herself does she really need the car for work? Is she travel with her for sales?? Can she get to work though other transportation (bike, walk, bus). It is alot to spend on the car expenses with routine maintainence ~$1000/yr, insurance ~$1500/yr, and gas ~$2000/yr that she can save up for paying her creditors faster.

She has to cut all of her wants and go for the basic necessaity.

good luck

Yep... as everyone else says, tell her to ;
1. Sell the car
2. Buy an annual TTC Metropass (EDIT: or ABTransit whatever you guys have up there)
3. Sell the A/C... (you really only use it for about 30 days a year anyways)
4. Lend her a few thousand dollars of whatever else she owes (IMPORTANT: You probably wont get this back)

Or if she refuses to give up the car and A/C... shes not that serious about it so...

1. Dont lend her anything (which you would not get back anyways)
2. Look in the yellow pages under bankruptcy trustee and give her one of those numbers to call.

if she is worried about losing the car, tell her to take out some of the equity with a loan secured by the car.