Waaaaay OT - Financial Questions

  I recently met a young couple who are struggling financially.  He was laid off from his job and she's doing temp work.  When money was coming in on a regular basis, they didn't save anything, just expected it to keep coming, I guess.  Right now his mom is paying his car note.  I'm not sure where the rest comes from.  They have some debts and were thinking about filing for bankruptcy.  My gut response to that was it seems unfair to skip out on your obligations, but then again, the bill collectors aren't calling my house.

Does anyone know how bankruptcy works?  Doesn't it blemish your credit for like 7 years?   

Also, I've read that some credit counseling services are crooks and people can wind up worse off.  How would they go about finding someone reputable?

I am not a financial advisor, so I don't know how to direct them.  Neither of them had even seen a copy of their credit report.  I recommended that to them as a first step.

Bankruptcy stays on your report 10 years not 7.  It use to be 7 a long time ago.

I agree their first step should of course be taking a look at their credit report to see just how bad off they are.  

The next step should be taking a honest look at their finances to see EXACTLY what they owe, and then trying to make arrangements to pay them off.  I listen to Suze Orman a lot and I don't have any bills at all not even a car note, the only bill I have is my mortgage and monthly bills.

We just paid for our entire summer trip which is $12,000 each and we will pay that credit card bill in 2 days.  We never, ever, ever have a total left over because we never do anything that we can't pay cash for and that includes all our trips.   The only reason we charge stuff is because you have to, and because it gets us points.  But we always pay it off.

But see that is easy for me to say because we make enough money to live this way and don't have any credit issues and I thank the lord for that all the time,  but your friends are ina different situation all together, one i'm familiar with because in my early 20's I was bogged down with bills and so was Becca so we both know how it feels and we both vow not to ever buy or do anything that we can't pay for right away.

Thanks, Lee.  

You live the way I do and also how I'm trying to teach my stepdaughters.  If I can't afford to pay cash for it, I don't need it.   Debt is slavery. 

You are so right debt is the devil I learned that the hard way

If they have a lot of credit card/bill debt, it might not be a bad idea to at least look into a credit counseling service.

There are lots of reputable credit counselors out there, but it takes some leg work to find them. I would start by having them contact their state/local government's consumer protection office, most likely the Attorney General General, and ask them for a list of recommended credit counselors. After obtaining the list, they should check to see if they are members of the Association of Independent Consumer Credit Counseling Agencies and/or the National Foundation for Credit Counseling. They should make several consultation appointments with different agencies and have them get a feel for how they operate, They must be dligent and keep their BS detectors on, get enough quotes to make a good decision, and remember that if it sounds too good to be true, it actually is.

If they are determined to do their own credit repair themselves, I have heard a lot of good things about Dave Ramsey's Total Money Makeover, and he has a lot of his advice and his podcast online for free.

Thank you!