No matter how I edit this picture of Alcatraz it always gives me the creeps mostly because of what it stands for – prison.

The debt prison

Like Alcatraz getting into debt as a student can make you feel like you’re in prison. And, when the creditors start calling and attacking you, degrading you, and belittling you, prison is the only word that comes to mind. This can lead to depression and feelings of worthlessness. Some students even think of suicide!

Well I’m here to stay stop!

Your health, your life and your well being are far more valuable than any amount of money. And, there are many ways to get you out of the financial problems you’re currently in – even going bankrupt is a better option than continuing to harm yourself either emotionally or physically. This is not to say that I endorse bankruptcy or even suggest it as a first alternative. But hey let’s be realistic, there are many amazing companies that have claimed bankruptcy only to re-emerge stronger and wiser.

However, here are a few things that you can do that should help:

1. Turn off the phone for a few days to collect your thoughts. No one can operate with someone yelling at them over the phone and insulting them. Technically creditors aren’t legally allowed to do this but we all know they do it anyway (not to mention skip tracing, lying and anything else they can do to degrade you into paying).

2. Assess your situation by putting together a budget (how much you bring in and how much you spend). Use your bank statements to find out the information you need and use the past three months to see how realistic the information is that you’re budgeting. Excel is great for this but we did use paper before computers. So, paper works fine too.

3. Get someone else’s opinion on the budget you put together – friend, parent, lawyer etc…. Don’t do things alone, people want to help!

4. Contact your creditors (or have someone else do this if you’re not comfortable doing it) and tell them you’re situation. Send them a written document with your budget and tell them how you plan on paying them back. Don’t be afraid to tell them you can’t pay everything back and identify what you can pay back.

5. If the situation is worse than this with your creditors get legal help and tell your creditors that they are only to talk to your lawyers. Don’t answer or discuss any information with your creditors after you have told them this and after you have written them. I’d like to say that they are usually reasonable but that isn’t true. Usually they are unreasonable and you will need to take a firm stance with them.

6. If you’re negotiations aren’t going well there are not-for-profit organizations that will help consolidate all of your credit and get you into a payment plan. Certainly look into these for yourself and don’t rush. Some will arrange a one time payment for pennies on the dollar and stop the interest climbing.

7. If you’re creditors are simply not working with you and you have no other option, let them know that you are looking into bankruptcy and will let them know when you are going to file. This should jolt them into negotiations.

As an aside, if you have been taken to a collection agent it most often means that the company you owed money to has sold your debt to a collector for pennies on the dollar – sometimes as low as 30 cents on the dollar. So, oddly the collector may be much more reasonable and willing to work with you – any money they get is making them money.

Go to the beach and take a deep breath and don’t worry.

I’m paraphrasing Tony Robins here and unfortunately quite badly but – “if you stress you die and if you don’t stress you die, so why stress if you’re going to die anyway. Live life to its fullest and remember you’re not alone!”

California Bums we look at life from a different angle!

California great big blue!