We religiously kept up with our bills and credit cards. Last Sept one of our credit card compannies drastically changed the rules. Specifically, out of the blue they said, we had to pay something like a minimum $400 a month. That broke our back and we sought relief with an outfit called consumer law group I believe through consumer credit counselling. They tell us that they have contacted all our credit cards to indicate a desire to negotiate a reduction in the debt which is to be paid out of a $400 a month payment we are now making to this consumer law group. So far, after 9 months there has been no settlement but we just received a summons of a suit by one of the creditors. Yes we know we owe and we have always paid but now we are overwhelmed and weren't getting anywhere with the debt anyway. We live in Missouri. I'm the head of the household and have the only wage but that is soon to be at a third due to retirement. It's a non social security pension plan supplemented by a 401 type savings. Can any garnishment be applied to either of my sources of retirement income? Should I seek relief through Bankruptcy since it appears we have made no headway in negotiating down the debt which is rapidly approaching 40K. Thanks for the information.
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Hi ranellmorris,
Welcome to this community :)
You should always join a credit counseling agency only after checking their authenticity, whether or not they are accredited with the Better Business Bureau, whether or not they are in this business for more than 10 years, whether there are any complaints against this company. Can I know whether or not you have already stooped taking help from them?
However, in Missouri, like most of the states, retirement benefits (any kind) cannot be garnished. So you need not worry. Still you yourself can try checking your state laws on garnishment, and retirement benefits. Another thing is that, you should declare to the bank where you have the retirement savings account, that the money comes from retirement. Request the bank to mark the account as Retirement Benefit Account.
Rather than considering bankruptcy, you yourself can try to negotiate debt settlements with your creditors. Debt settlement will lower the outstanding debt amount by 40-60%. Bankruptcy will hurt your score all the more, and will stay there on your credit report for 7-10 years. Write a letter to the creditors mentioning about your financial problem, requesting for the settlement. Send the letter through certified mail, requesting a return receipt (CMRRR).
However, before you can make the payments, get the settlement agreements in writing, so that no kind of dispute arises later. Also, send the money through CMRRR, so that you have the return receipt as proof.
Thanks,
Aaron