im in debt its really not that bad l think its between 5 and 6 thousand.This debt is on 2 credit cards (well one credit card and a reserve line).l lost my job and have found a new one which l wil be starting shortly, but the main problem is im in collection on the credit card (i have only been in it for about 2 weeks or so, l have been able to make small payments on both but never the actual amt due).My parents are telling me that they are going to start suing me soon.l wont have money for at least three weeks (or l get my paycheck whenever that is).l was thinking about taking out a larger student loan than l needed, but l am being told that l wont receive a loan quick enough to help out with it.What should l do?Is there a chance l will get sued this quickly?If so what could happen (i really do not own that much just my car which is paid off).Should l continue with my plan of taking out a student loan?

First off pick up the phone & call ur Credit Card Companies & explain to them that u r inbetween jobs & need a ''break'' so that u can catch up once u get paid.

Do this fast. so that the other Credit Card does not go into collections.
Offer to pay half of ur min. payment due each month for the next couple of months but make sure that they drop ur interest rate to zero, waive any fees, etc. & that u get this deal in writing.

On the collection account. Only pay them what u can & only pay them with a check. Do the same thing with these guys. Make a payment plan & ask them to send u written confirmation on any deal u strike with them. Only after u have their letter in hand that confirms that they agree to accept x-amount of monthly payments for a while, should u send them a check.
Make sure to get copies of the check after they gone thru ur bank.
Do not trust them. they love to take ur money & then ''forget'' any deal they agreed to on the phone.

As far as taking out another student loan. Do not do it. You do not need any more debt. Most like u wo not be able to get any more student loans right now. It is hard for students without any prior debt to get a student loan - what makes u think u will get one when u intend to use it to pay down credit card debt?

DO NOT TAKE OUT ANOTHER LOAN TO PAY THE FIRST TWO LOANS WITH!

Your parents r wrong, they wo not sue u as long as they r taking the payments. First & foremost, pay only the credit card people & not any collection agency they have sent the payments too! They add on their own fee is & not worth paying! You should go directly to the actual credit card companies & start paying them again.

5 to 6 thousands is quite a bit of debt, way too much debt in my opinion. Debt is not worth while. Debt for a car is not bad debt & debt for a home is not bad debt, any other debt is bad debt. Credit should not be used unless absolutely have too! Like, ur car breaks down & u need it fixed so u do not lose ur job, that is about the only time i'd agree with credit.

If u r in collections for the credit cards, it is probably not a collection agency yet that is seperate from the credit card company. Have u discussed what has happened to the credit people? Explain u lost ur job & r in the process of getting a new one? Personally, l would have been working at the grocery store bagging groceries while looking for a better job. maybe babysitting, car washing, cleaning homes. something to help get myself back on track with my finances.

This is a great time to cut up those credit cards & learn to never use them again. Emergency use only for the future. Being in debt more than u can pay (you do not have 5 to 6 thousand laying around to pay it off) means u can not afford to have 5 to 6 grand in debt!

Continue to make the payments the best u can & do not use them for the future when u get them squared up again!

Why would u be sued? For the money owed on ur credit cards? The collection agency will try to collect, just make sure u answer the phone & tell them what is going on & how u plan to rectify this (ie. u started a new job & will make a payment in X days). If u r actively working with them & can follow through then u should not worry yourself about being sued. These creditors would rather u pay them than to drag things out in expensive court battles which likely cost more than the amount u owe.

One thing u definitely need to do, however, is to pay down those balances with every penny u can spare (and l do not mean spare AFTER you've gone out on the town, l am talking about post up at ur house & watch some TV for entertainment rather than going out & spending on anything that is not essential).

Also, if u can avoid having the second card go into collections please do so at all costs. Late payments (including payments less than the minimum) r bad on ur credit record & having accounts sent to collection can place a big roadblock on ur path to success.

And while l think it is a good idea to use excess funds from a student loan to pay off those cards l would hope that u then place the cards on suspense or cut them up. From personal experience, when the card is paid down to $0 it seems like there is plenty of money to go around & the balance starts going right back to where it was. Avoid this at all costs!

Relax Clam down just because the collection company sue u that does not mean u r going to jail, the judge would set up a small monthly payment plan due to ur financial situation but if u have money in ur bank they can garnish ur pay check every week until that debt is paid in full(they can not take ur whole pay check amount). Remember plus learn young that it is always best to face any collection agency & not avoid them so pick the phone up & Call them anyway 5,000 or 6,000 its no way to pay that without a payment plan l do not care what the collection agency lie & tell u or if they do take u to court Take Care

Please do not take out a larger student loan. Taking on more debt has never gotten anyone out of debt. If u can avoid a student loan at all then avoid it. Check & see if ur new employer has Tuition Reimbursement. Many employers r more than happy to help u through college. It is to their advantage to have a better educated workforce. As long as u r making payments of any kind, even small ones, the company will not sue you. Suing someone is not cheap & why sue someone who is already sending u money?

Please do not consolidate. It is not free, they will lower ur payments by increasing the length of time until u r debt free, & u will take a hit on ur credit score. There is a better way.

A. Have a garage sale & sell anything that u no longer need or want.
B.Get a temporary part time job, if u have one, get another. The holidays r coming & there will be plenty of temporary jobs available. It is better to have a no fun year or two than a no fun decade.


Here is a plan that can help you. If u work the plan, the plan will work for you:
1. Make a budget. Make the budget a week before u get paid. A budget is not a punishment! It is a tool which will free u from ever having to worry about money again. Put everything in ur budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar u r going to bring home the name of where it is going. Add an ''emergency fund'' category to ur budget for 25 dollars & save up until u have 1000-1250 dollars. Your emergency fund will help keep u from getting into new debt because of an emergency. If u can, set up a direct transfer to a savings account for ur emergency fund. That way it moves automatically & u do not even have to worry about it. You must cut ur spending & live on less than u make.

2.First get current on all of u debts & make no more late payments. Stop using ur credit cards immediately. Do not take on any more debt. Credit cards r like quicksand only the death is much slower. Make a list of all of ur debts in order of highest interest rate to lowest interest. Use cash only for ur spending from now on.

3.Pay the minimum due on all of ur debts & then put ur extra money towards paying off the highest interest one first. After u get that one paid off, u put the money u were paying on debt #1 (the minimum payment & the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, u put all three payments towards card #3 & that one will be paid off pretty quickly. As an example:

To start :
Debt #1 (highest interest): minimum payment+ extra payment
Debt #2 (middle interest): minimum payment
Debt #3(lowest interest): minimum payment

Debt #1: paid off
Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
Debt #3: minimum payment

Debt #1: paid off
Debt #2: paid off
Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.

That way, u will get them all paid off, on time, & pay the least interest. It will also help towards rebuilding ur credit since u will no longer have any late payments. This works no matter how many different debts u may have.

4. After u get all of ur debts paid off, add to ur emergency fund until u have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if u need the money u can take it out without penalty.

5a. When u have ur emergency fund in place, add a category for ''fun'' to ur budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal u want. Remember to enjoy ur life.

5b. When u have ur emergency fund in place, start saving for ur retirement. Join the 401(k) plan at work & contribute the maximum. Your employer probably matches at least part of ur contribution so why give up free money? Open a Roth IRA & contribute the maximum on a monthly basis. If u start saving for ur retirement now, u will probably retire a millionaire.

5c. When u have ur emergency fund in place, start saving for ur next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way u get the interest instead of paying the interest.

You can do it & it is not as hard as u think. Just follow the plan

First relax. The thing to do is call the companies & ask to talk to a credit councilor. They can give u a waiver on payments for a month or two & then u can set up a monthy payment plan at a lower rate than what an active card is at. But avoid getting a reduced debt because that will lower ur debt on the cards.

It sounds like u have let this go for too far though. They can not sue u if u have no assets but if u have a car that is paid for, they can technically put a lien on it.

You will have to set up an automatic payment on a checking account & not screw that up. Usually if u do that they will cut u a break on the default interest.

--Been there, done that.