CORPUS CHRISTI, Texas — 2020 turned into an unprecedented year due to the pandemic. Many lost their jobs, their income, and were forced to live off credit cards just to keep a roof over their head, keep the lights on, and eat.
Now, their credit cards are maxed out and their credit score is in shambles.
In today’s Protecting Your Money segment, a debt specialist talks about what you can do about it.
"It’s a very stressful thing. We all have a certain amount of pride, and we were all raised to pay our bills on time, and to do that the very best we can," said Jack Brandon, senior debt specialist with Debt Redemption Texas Debt Relief.
"People are finding themselves in a situation through no fault of their own. They just can’t continue. They gotta make a decision on what they want to do about their debt. The creditors aren’t going to lay down. They’re not going to go away."
One of Brandon’s first suggestions is to stop trying to pay off your credit card debt. That’s unsecured debt, many times with a high interest rate. Even though unpaid credit card debt stays on your credit report for seven years, Brandon says those are not the things that keep a roof over your head or food in your belly.
Next, he says to consolidate. Make a budget.
"Everybody says they’ve done a budget. Very few actually have. I’d put it on paper. You’ve gotta find out where the leak is. Where all of your money is going. Lots of times, our clients think they know where their money's going, but they don't. They don't even actually know know how much debt they have because they just make monthly payments. And then all of a sudden, they sat down one day, maybe the husband and wife sat down together, and they go 'what? How are we doing this? We don't have any money left'".
Brandon says another possible solution is credit counseling. It can be very expensive, but look at it this way.
You’re still paying off your debt, and perhaps at a reduced interest rate.
Another way you can help yourself is by asking this question. What sacrifices are you willing to make? Can you do without say, a second or third car?
Brandon says while creditors were initially somewhat sympathetic to problems caused by the pandemic, they’re not so much anymore, and they don’t really want you to know that they’re willing to settle your debt.
"These companies are publicly traded. They’re in it to make money. They have investors. They’re going to get their money."
As a very, very last resort, Brandon says there is bankruptcy. He calls it the "worst of the worst". You put your assets at risk with bankruptcy, not to mention retirement planning.