Biblically Based Money Management Planning
Exodus from Debt Valley, Step 3
BUT WHAT IF I CAN’T PAY ALL MY BILLS???!?!?!
Good Question! Let’s first consider – – – WHAT HAPPENS WHEN MY BILLS ARE NOT PAID?
Within 30 days of missed payments your name and account is usually flagged in a missed payment query. At that time either or both of two actions begin: a warning letter is automatically printed out on a statement requesting immediate payment, and a follow-up phone call is programmed into an automatic dialer. Creditors will continue to attempt to reach you by phone, using increasingly aggressive scripts, until they either obtain a check confirmation date or a phone pay for at least a partial amount. The danger of the intense and aggressive demand for a payment is that a creditor from an unsecured debt may cause you to short a payment for a secured debt. If that occurs several months in a row and you have to go bankrupt, you have paid excess for debts that could likely have been forgiven in bankruptcy. Secured debts from the first priority list often still have to be paid. If you are unable to make payments for secured property the results could be any or all of these:
- Foreclosure on Home
- Repossession of Vehicles
- Seizure of Tax Refund or Income for Tax Liens, Student Loans, Support
DON’T LET THINGS GET TO THIS POINT!!
If an unsecured balance is over $1,000.00 a creditor may sue for judgment. Regardless of your excuse, the creditor will file the judgment against you. The only acceptable recourse for a judgment is for you to bring a money order to court for the full amount of the suit. Creditors can sue for as little as $1.00, but generally, they find it not to their advantage to sue for less than $1000.00
Immediately after obtaining a judgment, the creditor will apply for a wage garnishment. This will be delivered to your employer and they must take money out of your paycheck and forward it to the creditor. Only one garnishment may be ordered at a time. Other creditors may then file for judgments, waiting in line until all are satisfied.
If you let a debt go unpaid for three to six months, depending on the creditor, the creditor may write off or sell the debt. This does not translate to cutting you free from paying the debt. The creditor will list your balance as a loss. However, according to a recent modification of the Internal Revenue Code, Section 108 under Discharge of Indebtedness, the creditor has to report the loss to the Internal Revenue Service and issue you a 1099C form on which you must report the discharged amount as miscellaneous income.
Even if you do a settlement with a creditor and pay the agreed percentage of the balance, the creditor reports the amount forgiven and you count that amount as income. Very quickly, your taxable income could increase to the level that you slip to a higher income bracket for taxation.
Alternatives for CRISIS Situations
Yes! Crisis Happens to everyone at one time or another. Because creditors aggressively call demanding immediate “check by phone” payments, consumers often panic and use mortgage, auto, or utility payment moneys to pay credit card (unsecured) debt. Consequently, their checking account is depleted to the point that they have insufficient funds to cover their secured debts. Knowing which bills are most critical and what to pay first can help establish priorities for your spending patterns and bring you to a real world perspective.
Priority Schedule for Bill Payments
- Pay all secured debts first.
- Home mortgage/Rent
- Child/Spousal Support
- Student Loan
- Income Tax Lien
- Utilities (Check for special programs and services for hardship)
- Pay unsecured debts with remaining funds.
- Credit Cards
- Department Stores
- Small Finance Companies
- Pay Medical and Personal debts with whatever remains.
- Hospital Bills
- Physician Bills
- Family and Friends
What Alternatives do I have when I cannot make my payments?
Make arrangements with all creditors for a temporary hardship:
- Get an extra job, work extra hours.
- Hardship Hotel: NO VACANCY!!!
Temporary Hardship is vital to the mindset that Debt tries to impose. You do not want to begin imaging yourself as a lifetime hardship case. Hardship Hotel can be very comfortable and secure at first, with everyone sympathizing and trying to assist you with free handouts and privileges. Then, several months down the road, you have adapted to the expectation of others taking care of your responsibilities. You learn the “Poor Me” Language, Culture, Folklore-every excuse in the Land of Never Enough for not having to pay our obligations.
Credit Counseling, “Debt Management Plan”with DebtFreeAmerica.com, of course! DebtFreeAmerica.com has special terms with your creditors to reduce fees, charges, and monthly payment amounts to relieve your cash flow burdens. We establish a Mutual Covenant Adjustment between what the creditors demand and what you can afford to pay. This helps you keep your covenant with creditors to pay for your purchases.
Hide and Wait – for a judgment or garnishment. Pay one creditor by cheating all the others. Keep changing jobs, cities, living quarters/mates Turn off your phone!
Bankruptcy – offers forgiveness of unsecured debts through a “credit counseling type payment plan.” Your debts may qualify for total forgiveness of unsecured debt. Still must pay mortgage or lose home. Still must pay student loans and tax liens. Surrender vehicles and liquidate all other assets with some exceptions Negative? You BREAK your covenant with your lenders.
“The wicked borrow and do not repay.” Psalm 37:21
IF bankruptcy is the ONLY choice?
Year of Jubilee We must remember:
1. God does not want us to live in permanent financial slavery. Leviticus 25: 35-54 “?if thy brother be waxen poor, and fallen into decay with thee; then thou shalt relieve him: yea, though he be a stranger?take no increase of him?thou shalt not give him thy money upon usury (for gain) nor lend him?for increase?thou shalt not rule over him with rigour (break apart)?then he shall go out in the year of Jubilee, both he and his children with him.”
2. God will not have you suffer more than you can bear. In some cases we are placed in a bankruptcy position unrelated to our mismanagement, poor judgment, and/or rebellion. Examples could be massive medical expenses, abusive marriage conditions, divorce, or death of family member. We should never seek reasons to not have to meet our financial responsibilities. As Covenant children of El Shaddai, we should expect to have sufficient income and resources for our obligations and still have extra for those in need.
The GREATEST Alternative God’s Plan for Abundance (Ps. 66:12)
1. Accept that God is bringing you into wealth.
2. Prepare yourself for facing the Giants.
3. Rid yourself (and family) of Grasshopper Mentality
4. Consider your ways! Are you using your gifts and talents to full potential?
5. Identify and repent of any slothfulness. Work more-spend less!
6. Re-set your affections for Kingdom increase.
7. Get in agreement with God on the wisest use of your money.
8. Examine opportunities to be a servant to others.
9. Give time and talents as an extension of your tithe.
10. Consider yourself a producer of wealth!
“If ye be willing and obedient ye shall eat the good of the land.” Isaiah 1:19