In essence, I’m experiencing a personal debt crisis of my own making, due to poor choices, lob loss, more poor choices, ignoring collection calls because of my own anxieties and generally acting stupid. I know. I feel like this is the scariest thing I’ve ever faced in my life, and I need help.
I’m 28 and I feel like I’ve already ruined my financial life. I’ll try but inevitably fail to be brief on the backstory. When I turned 18, I got my first credit card. I was extremely stupid with it, as a kid working a crappy part-time job, I used it to buy shit I couldn’t afford. I could barely make minimum payments, let alone pay it off month-to-month. This continued through college.
It was all sort of fine for a bit after I graduated and got a full-time big-boy job. I got my debts current, I was slowly paying down things, although I didn’t have a lot of income with which to do so. I was making $35k a year. The credit card debt was about $7K, spread amongst 3 or 4 cards with atrocious interest rates. I was barely able to save money. I put about $1,000 in a 401(k) over the span of 3 years.
Flash forward to 2018 and I had a personal crisis. I got very drunk and got arrested, essentially for resisting police officers who were trying to stop me from running around a main road and getting myself killed. I lost my job. I went to rehab. I was facing two felony charges. (Somehow, this debt situation is scarier to me than that).
I got myself back together, quit drinking, got a job about 6 months later. Of course, my debts had fallen behind, as my income had fallen to $0. I liquidated my puny 401(k) to pay off some expenses, but it didn’t last long. My new job was a significant pay cut – I started out at $25K. I could barely afford rent and utilities, let along anything else. My debts fell further and further behind and I just figured “I’ll deal with this when I’m back on my feet fully.”
I was literally afraid of the collection calls. I have a lot of anxiety issues, I get panic attacks easily, and I figured “well, I don’t have any money for these people, why bother talking to them.”
Oh, and rehab generated its own $1,200 bill. So that’s fun.
After 3ish years at my new job I’m up to making about $32K, which is more comfortable. I want to get my finances in order, but don’t know where to start. I still only have about $400 in savings, and I live paycheck-to-paycheck generally.
I’ve got $3,104 in collections. I’ve got $6,319 in closed accounts that are still with their original creditor, if I’m reading that right. I’ve got $10,445 in student loans, all federal, which I keep current and is the debt I worry the least about. Payment terms are very flexible.
My most pressing issue: A collection agency (Calvary Portfolio Services) with a $1,951 debt (originally a Citi card) is threatening to sue me. I got a demand letter from Federated Law, saying unless I dispute the debt within 30 days, they will assume the debt is valid. If I dispute the debt, they will “obtain verification of the debt or a copy of judgement against you,” the latter of which scares the hell out of me.
There’s a number to call to “discuss your account,” but nothing about repayment terms of any opportunities to reach a settlement. The letter is very lawsuit-y.
I’ve literally considered bankruptcy, not that I have money for a lawyer, and I feel like it might be stupid to file bankruptcy over less than $20K in (problematic) debt. I’ve also just started an LLC as a side business and I’ve heard under bankruptcy they’ll take the LLC. It doesn’t have any assets in it, and about $2K in unearned income (presale of services). FWIW, it’s a drone photography company that the boss of my day-job actually thought was a good idea, and funded the start of.