Weathering The Storm

The Federal Credit Reporting Act Section 605 states that negative information stays on a consumer credit report for no longer than seven years (bankruptcy stays on for ten years).

 Can you weather the storm for seven years? Weathering the storms means waiting seven years for the negative information to drop off of your credit record. If within seven years, you know that there is not a chance of you raising the thousands of dollars needed to pay off your debt, then what do you have to lose?

“Mike” suffered from a long illness that prevented him from working steady. Since his first priority was to keep a roof over his family’s head by paying the mortgage, he suffered an automobile repossession and several charge-offs from credit cards. Charge-offs are when creditors decides after an extended period of time that they will not be paid, and they write the debt off as a loss. The charge off stays on your credit report for seven years.

Of course, there are exceptions to the seven-year rule such as credit transactions and life insurance that are greater than $150,000 and employment when the annual salary is greater than $75,000. In cases such as this, a creditor or a potential employer can obtain information about your credit history beyond seven years.

Anyway, back to “Mike”. After he fully recovered from his illness, he was able to repair an old automobile to get back and forth to work. During the course of his illness, a little over three years had elapsed. After another four years, the vehicle repossessions and charge-offs were no longer on his credit file. Mike had a fresh start with his credit without filing bankruptcy.

Bill Payment Help

As mentioned in the previous post, "Roger's Story", payment arrangements are a great way to help you get keep your gas and electric bills paid when you have fallen behind, which can happen regularly when you are a broke man (or woman).  However, unforeseen circumstances can come out of no where.  Maybe your car is suddenly in need of a new transmission.  Hours get cut at work.  The water heater breaks down.  It happens.  These type of emergencies can cause you to miss a scheduled payment arrangement and instantly get kicked out the program.  A week later you get a disconnection notice demanding full payment.   Where do you get the hundreds of dollars needed to keep the lights on?

 

Federal and state governments provide funding through various programs that can help you pay vital bills, such as past-due rent and utilities. Here are a few: Emergency Shelter Grants (ESG) has a homeless prevention component that provides funds to aid people who are at risk of becoming homeless due to eviction, foreclosure, or utility shutoff by paying first-month's rent, rent arrearages, and past-due utility payments.

FEMA does more than just help during national disasters. They also sponsor the Emergency Food and Shelter Program (EFSP) which was created to help people in need of emergency assistance. EFSP is utilized to assist individuals and families with issues regarding payment of utility bills, rent and mortgage payments, as well as temporary shelter and food.

The Low Income Home Energy Assistance Program (LIHEAP) is a federally-funded program that provides a once-per-year payment for heat (primary utility) and electric (secondary utility) to income-eligible applicants. The LIHEAP Program is able to provide once-a-year reconnection assistance payments for applicants whose utility has been disconnected for non-payment or applicants who are being denied service because of an old bill. LIHEAP is also able to provide emergency furnace repair or replacement for eligible applicants whose furnace does not work or is red-tagged by the utility company.

Various social service agencies apply to federal and state governments to receive these funds and distribute to those who qualify within their service delivery areas.

(Excerpts taken from The Broke Man's Survival Guide)

Roger's Story

Today I want to tell you "Roger's" story.   It is a story that I am sure many of have faced when seeing red.  

 

Roger sorts through his bills for the month. He notices the envelope of the electric bill isn’t as thick as it normally is, and there is a familiar bit of red paper peering through the clear portion of the window envelope. Roger knows right away that it’s a disconnection notice.  He’s been down this road before.

He opens the bill to discover that the electric company is once again threatening to disconnect his electric service in 14 days. He was unable to pay the electric bill last month because he had to pay the mortgage, gas bill and his son needed eye glasses. Being a “broke enthusiast, Roger knows all of the stalling tactics. He immediately contacts the electric company to request a 7 day extension. Now he has three weeks to come-up with the money. Therefore, he can pay the car note, which is two weeks late with this week’s pay check and the electric bill with the next paycheck.  Unfortunately, this payment method has been a way of life for Roger since he lost his high-paying job a year ago. He was forced to take a lower paying job which makes it more difficult for him to make ends meet.   

When you are broke disconnection notices can be a frequent visitor to your mailbox.  Many utility companies have budget billing plans are payment arrangements to help you stay on course with your bills.   However, when you find yourself out of work for longer than expected or forced to skip a bill to handle emergency situations, you sometimes are unable to live up to the payment agreements.  This breech will normally result in the utility company kicking you out of the payment arrangement program and demanding full payment in a matter days.  This amount could equate to upwards of $700 or more depending on how much you were delinquent.   What do you then?  We'll there is a way to get help in this extreme situation.  I will cover that in my next blog.  Stay tuned...