My wife and I did the Dave Ramsey course that met once a week for a few hours at a time. We weren’t in debt, but we were concerned about getting there since our spending was outstripping our earnings and starting to eat into our savings. The Dave Ramsey thing helped offered a few simple solutions (family budget, debt snowballing, etc.) and a lot of inspiration. There were a lot of people in the class who either were currently in a situation like that of the OP or had been. There was also a lot of good old fashioned education about things like insurance, 401(k) plans, stocks, bonds, etc. And advice on handling debt collectors.
I highly recommend you find one of these workshops and try it. I think it’s called Dave Ramsey’s Financial Peace University or something along those lines. The only caveat I should mention is that the program has a mild Christianity flair to it and meet in churches. But in our experience that never amounted to anything beyond having the facilitators say a prayer before each class and Ramsey occasionally interjects scripture into his otherwise very direct and down to earth lectures. Even if that kind of thing would normally turn you off, the content of the course was still highly educational, practical, and motivating.
Until quite recently, debit cards were actually a lot more dangerous than credit cards. The problem is that while you might think they were PAYGO, they were actually PAYGO until your bank balance hits 0, at which point they’re a credit card with a $50 per-transaction fee.
Thankfully, this is now illegal without your permission. Banks are, of course, eagerly attempting to secure your permission to continue this kind of “protection” scheme.
Unfortunately for me, I got nailed by this before the change. (Shuffling money around accounts while buying a house left me with less in my checking account than I realized. This was a very expensive mistake, and thinking about it still fills me with the burning rage of a thousand suns. No, Wells Fargo, letting me pay $52 for a toothbrush is not a service.)
How hard was it to get the consolidation loan? My CU offered this recently, and I wondered whether my existing debt would make it hard for me to get approved for the consolidation loan, even if its stated purpose was to pay off debt. Did the CU pay off your loans directly or trust you to do it?
I’ve dodged the replies but here’s my story (UK law differs to US) and what I wish I knew at the time.
I never went bankrupt, which fucks you over in the UK something stupid but I came close.
obvious perhaps, stop spending money you don’t have. Acknowledge you’re in debt. I didn’t for a long time, perhaps $15,000 of I’m not in debt on top of the knowing the hideous amount I was in debit which was perhaps $75,000.
Service that debt. Every $1 you can pay over and above that is less interest payed on it. Target whatever charges the most interest first.
If you can’t pay it. talk to the company. There isn’t a company you owe money to that would rather sell your credit to a collection agency than work an arrangement out. Ignoring a payment or two though will cost you more in the long term.
Don’t promise something you can’t meet though, they will screw you.
do NOT ever use a credit card to pay off something you can’t meet otherwise.
Especially don’t use a credit card to pay off a credit card.
Cut your credit cards up.
You’re in debt, they’re only going to cause you more hassle.
If you have savings, shares etc.
Cash them in, they don’t earn a fraction of what you’re losing. At the lowest point I could have moved house in a shopping bag. I don’t know about US but DO NOT touch your pension fund(s). Offer shares etc to your folks, wider family etc, but cash it in.
get every piece of advice, help and opinion you can.
Take it heart but don’t take it personally.
Don’t ignore your family.
I was 32 when I went “home”, I was there for a month and I never moved in. Don’t sponge them for money, but if it gets rough don’t ignore the possibility. You don’t want to be there and they don’t really want you there either, but don’t be proud.
I had the choice of camping in a laybye or going home and I’d not told my folks how bad it was, asked for any help etc until it was make or break. Talk to them.
if you own a car and it’s out of warranty sell/scrap it. the second garages quote you more than £200 to fix it over the value of it, it isn’t worth it.
don’t give up.
After 10 years I’m a few pennies away from being debt free.
Don’t punish yourself. I lived on rice for 2 years, As things got better a bunch of spring onions or a box of eggs, a bottle of beer, a pizza. Should I have spent that 2p-£2 elsewhere? probably, but I’d earned that treat.
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Lordy. Can you give any vague indication of how you ran up that much debt in the UK Nellie? Student loans aren’t the issue they are in the US, and you have that communist healthcare system, so they don’t get you that way either…
If a lot of that 80k is from the student loans, you aren’t in as bad shape. I have pretty high student loans, but I consolidated them and have a 3% interest rate, which really is pretty manageable. It would be nice to have to have that extra 300 bucks a month, but it’s not back breaking at all. But if a lot of that is credit card debt, obviously pay that first. The Dave Ramsey method is simple and doesn’t require you to buy anything, be it a course book or whatever. You pay off the smallest, highest interest debts first, because this starts the snow ball effect. There. That’s the plan.
I know a lot of the “get out of debt/start saving” stuff is psychological, but man, Ramsey creeps me the fuck out. He always sounds like a fucking cult leader. But hey, people like cults, I guess, and might as well use cultishness for good.
Anyway, to the OP, your stuff is complex and whatever-y enough that you should definitely see people. Especially that corporate stuff is going to be complex – if it really is owed by a corporation and unsecured (which seems unlikely to me), and that corporation is no longer a going concern, you can probably lose that debt easily.
Just to jump in on the student loan angle, I’ve had times when I put my student loans into deferrment - it’s suprisingly easy to do for six months at a time. Obviously not a long term strategy, but it gives you some room to maneuver if you are close to the edge for a time.
And as others noted, you can talk to lenders about programs they offer. Most CC companies will agree to a pay off program if they think the alternative is you declaring bankruptcy or walking away. It will ding your credit, though.
Ramsey’s snowball method isn’t to pay the highest interest debt off first - it’s to pay the lowest balance debts off first. This provides a psychological boost at the cost of, well, time and money.
OP: Did you personally guarantee the loan you took out on your LLC? I’d be surprised if the bank gave you $25,000 otherwise, but if so then you’re pretty much on the hook for it LLC or no.
You may be able to talk the bank into forgiving part of the debt if the threat of bankruptcy is significant and you have very little in the way of assets and several other creditors that might have more secured claims. Please note that if a bank forgives you debt, the amount forgiven IS taxable as income, so make sure you consider that in any calculations as the penalties/interest charged if you can’t pay your taxes are generally much worse than other forms of debt.
That’s what I said. The smallest ones first, that also have the higher rates. It’s a combo. You go with the smallest first, but if they are close to the same and one has a higher rate, you would go that one. Sorry if that wasn’t clearer. I listed smallest first because it is the more important factor.