What My Life Is Like With Terrible Credit

Final Notice Credit

photo credit freedigitalphotos.net/Stuart Miles

I am a person living with debt that I can’t pay and terrible creditI am a single mother of a now 17-year-old son soon to be 18. Over the years there was never enough money and debt just seemed to keep piling up and I wasn’t sure what to do about it. I needed the car to get my son to daycare, then me to work. It  seemed every time I turned around there was a repair that needed to be made on it. My one credit card with the highest balance which is now in collections was typically used for repairs to my vehicle at the time.

I was working full-time to pay some of the mechanic’s bills as well as to keep paying my everyday bills and putting food on the table which was hardly enough. That meant that the repair bills often ended up on the credit card. I eventually refrained from using that credit card because the balance was just too high but luckily had a low-interest rate of only 10%. What’s worse is the car had to be junked as it was no longer in a state of repair. I haven’t had a vehicle since that time in 2001.

Employment Status

I lost my full-time job of 10 years in 2006 but I was lucky to find another job within weeks of this happening.  One year later that job was gone when the company started lay-offs (they eventually went bankrupt 2 years later). Before I lost that job, I was going to consolidate my other 2 credit cards (each had balances of about $2,000 on them) with the one I was no longer using but had the better interest rate. My plan was then to direct as much money to it as I could each month so that within 5 years I’d have it paid off.

But then when I lost that job, I didn’t feel comfortable doing that. I managed to hold on through my Employment Insurance (EI) which was for 40 weeks, but when I hadn’t found any work during that time period and my EI ran out. I then had to apply for and go on social assistance. At that point I was barely getting enough to pay the bills to keep a roof over our heads and put food on the table, it was the credit cards that suffered.

At first I was directing about $25 to the 3 credit cards but since it wasn’t putting a dent in the debt and often was leaving me short come month-end, I stopped that. The other 2 credit cards are now also in collections. I have one credit card in good standing however, I have not used it in a year and do not intend on using it. My attitude towards credit cards has changed dramatically these past 5 years.

Social Assistance

I was on social assistance for nearly 3 years. At one point while on social assistance I wasn’t allowed to job search because of a medical issue. Once I was given the go ahead I looked for work again. In May 2010 I finally found part-time employment at Wal-Mart. From May 2010 until November 2011 my wages were topped up by social assistance. However, the 2-3 months where I really could have used the money from Ontario Works (OW) I didn’t qualify because of my reported employment income when it was highest at work due to increased hours because of the Christmas season. So, January through March I struggled financially.

Then OW decided that my child support should not have been directed to them so they turned it back over to me. Adding that into my work income that they use in their calculations (OW using 50 cents of every dollar earned from employment) it no longer was worth staying with OW because I would have been lucky to get anything from them except for maybe one to two months a year. I decided to have them close my file.

Living Pay Cheque to Pay Cheque

I basically live pay cheque to pay cheque while working retail January through to March (April, May), my hours are reduced to the minimum. I’m part-time so right now I’m getting only 12 hours per week. The problem is that with everyone in the same position any available shifts that come up are quickly grabbed and no one is giving up shifts unless necessary. The only time I saw hours upwards to 37 per week was the week before Easter, the week before school started, during the anniversary sale, and then the month of December. When I need to buy something that’s not in my budget, I have to figure out what can be cut that month. My bills (other than the credit card debt) are paid each month.

Terrible Credit and Potential Bankruptcy

I’m at the point where I feel I need to speak with a trustee in bankruptcy. The total of the debt between the 3 cards in collections is around $32,000. That’s more than I made when I was working full-time and my work income these past few years has been no more than $12,000 give or take. It’ll never get paid off and this year I lose the child tax benefit as my son will be turning 18. That is going to remove close to $400 from my monthly “income“.

When the debts were still with the credit card companies I tried many times to get them to cut me some slack based on my situation. For a couple of years the credit card with my bank at the time was understanding and allowed me to pay what I could. Then that credit card company started demanding payment for the balance just as the other two were already doing (those 2 just weren’t cooperative) and eventually all 3 turned them over to collection agencies (which have changed so many times I’m no longer clear which one is with who).

If my son decides he’s not going to continue his education the child support of $344 will also end. That means that ANYTHING I can save each month has to be put aside to cover my expenses when those months come around where my work income is less than $500 per month. I’m lucky right now my rent is subsidized but that won’t last forever and then I’ll be in big trouble.

Job Search

Meanwhile, I continue to search for full-time employment or part-time if I can find something that works around my current job schedule. Despite responding to job postings and sending out resumes I rarely get called for interviews. I really believe it’s because of my age and even though my résumé is modified they can still guess roughly how old I am from the information that is provided. I’ve talked to others I’ve worked with before who have lost their jobs and they are finding it tough to secure employment as well.

My résumé has been prepared twice now by professionals and after the changes I’ve received a couple of opportunities but nothing that has offered me full-time employment. I’ve done plenty of reading online regarding resumes/cover letters and taken out books from the library in hopes of making sure I have a top-notch resume and interview skills, but with no luck. It doesn’t help that my experience and skill level with certain computer software is not high which most of the jobs in my field require or desire in a job role. I simply can’t afford to take computer classes and the self-study I do just doesn’t seem to be enough.

How I Manage My Money

I know my schedule about 2-3 weeks ahead of time so I can figure out close to what I’ll earn. I guesstimate what my monthly income will be then subtract the fixed expenses I have to pay each month. The remaining money is what I have to work with for groceries, miscellaneous, clothing etc. I avoid paying full price for anything if it can be helped. I complete most of my shopping at work since I have my employee discount so I price match whenever possible to help save money on groceries.

If my pantry is getting low on an item but I can’t find a good price for it when I look at all the weekly flyers I’ll put off purchasing it until I can get it at a good price. I use coupons as much as I can matching them up with the weekly flyers to try and get more bang for the buck. I check my bank account before I go shopping to determine what has yet to come out of the bank and what is in there so I have an idea what I have to spend on that week’s groceries.

Update on managing money since submitting her post

I’m budgeting now and planning my weekly shopping around the flyer inserts. I use coupons more than I ever have and I no longer rush into buying something. My hours at work have increased to about 20 per week as more people are giving up shifts which I can pick up. I’m also going to open a savings account and at least 10% of each pay I’ll direct to that account. If there is any money left at the end of the month after paying all the categories in my budget the money will go into emergency savings for when it is needed.

Where Do I Go From Here?

I’ve lived without a credit card for over a year now and should I choose to get one in the future the first one would be a secured credit card with a low credit limit to start rebuilding credit. Since I’ve been fine paying debit or cash all these months I’d use the credit card but then make the payment to it immediately (as we suggest to customers when we motivate them to apply for the Walmart credit card) so I’d earn the reward dollars and not carry a balance.

Looking back now over 5 years having been without full-time employment, 3 of those years were with no employment whatsoever and with losing 2 sources of income this year I’m at wit’s end. I have come to the point that I do feel bankruptcy is the only way to go in order to start my financial life over. I have talked to two co-workers who have gone the bankruptcy route and they are advising me I should look into my options. Neither of them were in as much of a bind as I am (and both are married and have a spouse’s income to fall back on), yet they felt bankruptcy was best for them rather than a consumer proposal.

I kept thinking things would improve if I knew back in 2008 what I know now. I believe I would have considered my options in regards to bankruptcy the moment I had to go on social assistance. At least I wouldn’t have stressed about the debt all these years. The past few years, I feel like I’ve existed, and have not been living.

March Post Update

Since I wrote to you in February, I did meet with a trustee in bankruptcy. The trustee told me that the one thing I have going for me is that the creditors a) can’t go after assets as I don’t have any b) I had already done what he would have said to do and that was change banks to one where I owed nothing c) he said that the only thing they could do is garnish my wages.

Even if they figured out where I worked it would take  them upwards of 6 months to a year to get the court to approve garnishing my wages. So in that regard, my declaring bankruptcy isn’t something I need to do just yet if I don’t want to. The fact that I’m losing one if not two income sources this year is a concern. He said I could wait until later in the year to file or wait until I got my income tax refund for this year (this was in February, and he told me I wouldn’t want to file until I had that refund.  If I filed then, I would lose both my refund for 2012 and 2013.

By waiting until I had my 2012 refund I would lose only my 2013 refund if I filed before the year ended). I’ve thought long and hard about waiting to file for bankruptcy — but I’m leaning towards doing it in April. My reasoning is my income tax refund can pay the monthly bankruptcy fee in full for those 9 months I’d be in bankruptcy. Any money from work I can then direct towards monthly bills and building up some savings for the lean months. My son works part-time now which has eased up on some things that I used to pay for him as he buys them himself now. I just want to file bankruptcy, get it over with, then start fresh and eliminate that stress from my life.

Contribution by: This is a Canadian Budget Binder fan who would like to remain anonymous.

Editor’s Note: The contributor wanted to share her life with terrible credit in hopes that others who are in her position don’t feel alone and can learn something from her story. It’s always nice to hear success stories but it’s also important to hear the stories of those people who don’t know where to turn and feel like they have “just been existing”. Life is about learning from mistakes we make and hoping that we don’t make them a second time. I believe by sharing her story today she has opened the gate and now she has to walk her path which she has started with budgeting. I wish you all the luck in your journey towards fixing your credit and understanding your personal finances.

Questions:

  • How did you turn your credit around?
  • What tips do you have to share with other readers that might have terrible credit and on the verge of bankruptcy?
  • What motivation can you give to our contributor today?

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Mr. CBB
I’m from the UK and now a recent permanent resident in Canada. I bought my first house at the age of 21 after University then my second at the age of 24. I’ve always been fascinated with personal finance, savings, learning to make money and watch it grow while combating debts along the way. Canadian Budget Binder is a place where I get to share my experiences with personal finance and learn about yours along the way. I hope you stick around and check me out on Twitter, Facebook and Pinterest where I am active on all social media sites. Cheers, Mr.CBB
Mr. CBB
Mr. CBB

Comments

  1. Hope you find a new job soon, it’s great that you’re taking the initiative to better your chances.

  2. I feel for you and your circumstance. My mom was a single parent of my brother and self, and I really don’t know how she make ends meet?! My father who we never saw, sent $25/month for support. Today, she still finds it a struggle and has three part time jobs to support herself. I hope that things work out for you and you are able to land a full time job that is able to meet your needs. Best wishes!

  3. That is such a difficult place to be. I hope you continue to update us as to your progress. My credit went terribly downhill for a while due to credit cards and medical bills. We found that as long as we were able to send the collection agency something – even if it was only $10 every six or eight weeks – that kept them at bay. So much of the time, it’s not worth the paperwork and the manpower for them to go after your wages if they know you’re trying. Hang in there.. it’ll get brighter. And you have a lot of people who will read this post and be cheering for you!

  4. Hard choices there. Thank you for sharing your story – that was really brave – and good for you for working to improve your circumstances. I hope you find better employment soon.

  5. MJstillhoping says:

    I can totally relate to what you’ve gone through. Between job layoffs for both myself and my husband, it was a continuous battle to meet all of our obligations and still provide some sort of life for our family. We eventually opted for a Consumer Proposal, which meant paying a set amount to the Trustee in Bankruptcy for a certain period of time, so that the creditors each got something and would settle all of our accounts. Knowing what I know now, I would have opted for Bankruptcy. Even after we paid off the consumer proposal in full, we were penalized by every lender/financial institution, etc for doing a consumer proposal. You would think they’d give you credit for paying something to your creditors, instead of complete bankruptcy, but they really don’t. You still have R7 or R9 and 300-400 credit scores on your credit bureau, so any one who pulls your credit can see what’s happened for a minimum of 7 years (I think).
    Since you don’t have a vehicle to worry about loosing (which they will allow one vehicle to be kept) or a house, I would definitely do the bankruptcy and have the weight taken off your shoulders. You’ve struggled long enough, it’s time to give yourself a break and some breathing room.
    I wish you all the success and good fortune possible!

  6. I remember when my wife’s paychecks started getting garnished. All of a sudden, our grocery budget was $20/week and because food stamps doesn’t consider debt in their calculations, we made to much to qualify.

  7. Christine Weadick says:

    I totally understand your spot. We are on a downward spiral with health issues with my husband and are trying to get by with CPP-D, and ODSP, it’s not enough but it’s money coming in and that’s about it….

  8. Catherine says:

    I wish you well. Have you looked into credit counselling as an option? We had 25k in credit card debt which i used to charge my tuition to, consolidated at 0% to pay off. I’m in NS and not ON but I know it’s country wide. Please be careful though and make sure you talk to a NOT FOR PROFIT agency (ie not a trustee). I can give you my info if you want and have a few contacts that I could get try and info for you if interested? Let Mr. CBB know- he knows how to contact me. Good luck!!

  9. I’m sorry you are having troubles, but I absolutley hate it when people even consider bankruptcy.I am going to make a lot of assumptions as to why “people in general” and not you specifically, get into this mess.
    When someone is not earning enough money to cover their expenses, they put their head in the sand.I will bet they still have mobile phones, and cable. Internet would be the only one I would consider useful, because you can access jobs online, and info for so many ways to reduce expenses.
    People will always say they ‘need’ this.(whatever it is). They need a vehicle, when we all know how expensive they are. Move to somewhere, where you can use public transpor or can walk.
    If your wages decrease, find a way to bring in more money. Rent out the second bedroom.If that means bunking up in the same bedroom with your child, do it. Take a paper route. Babysit kids, either in your home or theirs.
    If your groceries include kleenex,laundry detergent, bathroom/kitchen cleaners etc, you are wasting your money. Make your own. Stop buying chips,soda,pizza pops etc.You cannot afford them.Buy ingredients and make real food.
    Declaring bankruptcy won’t change anything. As soon as they have access to credit again, the cycle will start over.Shop secondhand for everything.
    If people in trouble would post their income and expenses, I’m sure we could all give many helpful solutions to start getting out of this mess.
    Most of us think we are only existing, and not living. Unless you can afford the ‘living’lifestyle, you stay with ‘existing lifestyle.

    • I think you are absolutely right about people making assumptions about what they “need” versus “want”. I also like a lot of your suggestions of squeezing the most out of your resources.

      However, I’m struggling a lot with your statement:”I absolutley hate it when people even consider bankruptcy” statement. Compassion and understanding for people and their individual situations are just as important as the accountability you are speaking about.

      I am wondering if you need to this feedback as much as she needs tips on saving money.

  10. :-( no offense to the person who wrote this but it makes me sad to see people in these situations. I guess I’m too empathetic. I hate knowing when people hurt and suffer like this. I hope whatever decision they make it helps them to feel like they are living and not just existing.

    • It’s hard to hear but it happens and it she hopes that from her experience others understand they are not alone. I also am sure she hopes to share with others how important it is to keep personal finances in order. She is moving forward and I’m sure she will get to where she needs to go.

  11. Thanks for sharing your story. I applaud how you did whatever you could and took whatever job was available, even if it wasn’t maybe something you enjoyed. I wish you the best of luck for the path ahead. Sometimes just telling the story makes it seem easier to manage.

  12. James Petzke says:

    I would say one thing that you should be doing is focusing on the content of the resume, not necessarily the format. If you can add some kind of schooling or volunteer experience or special skill to a resume, that helps much more than what any professional can do simply tweaking the format.

  13. I have so much compassion for this reader. She has worked hard to better her situation and hasn’t had the support or opportunity to perhaps better her situation in important ways. I declared “Orderly Payment of Debt” which was my only option since student loan debt can’t be absolved through the bankruptcy program. for me, taking that step was the beginning – not the end – of things. I urge her to seriously consider this as an option. A fresh start sounds like the perfect thing for her right now. My best wishes go to her.

  14. I am so sorry for your current circumstances. What you’ve been going through is obviously difficult, but you’re still standing and that is what matters most. Declaring bankruptcy is not a decision to be taken lightly, but it sounds like you’re doing your homework. A suggestion I’ve seen other commenters make and would like to encourage as well is looking to increase your skill sets through volunteering. It could give you the duo bonus of new skills and experience to put on your resume.

    I applaud you for sharing your very personal story and wish you the very best.

  15. Thanks for sharing your story, dear one. Know that you too are not alone, and that many of us out there are sending good thoughts your way for an improvement in your situation and wisdom on what to do next. I think it’s great that you’re being so intentional in trying your best to be responsible here and keep at it. Sometimes bankruptcy is the best way out, so if you feel that it is for you, don’t feel guilty about it. It seems you’ve tried very hard over a period of many years, so take heart in knowing that you are doing your best.

  16. This community can be a support system for you. And there is also another community, Underearners Anonymous, which you can look into for ideas on how to turn your financial life around. In the meantime, whatever your beliefs, try the prayer “Help!” We all need that kind of help now and then. Lean there for awhile, and catch your breath. And with all the work you’re doing, and the extra added power from a spiritual source, you’ll be amazed at the out-of-the-blue good things that start happening.

    Try it now: Help!!!

    Big smile and hug to you. :)

  17. Go and see your Community Credit Counselling office, it is a free consult visit. They will provide information to help yourself, and a copy of a form letter that you use as a guide to do up your own letter and then you send a copy off it to each of your creditors. In essence the creditors can not garnishee your wages or raid your bank accounts for your outstanding balance, and collection agencies just step back and leave you alone for the time being. Once they have received your letter, about a week depending on where the letter was going, contact them and negotiate if you want to, many are very willing to accept ten dollars a month as a stipend payment rather than get nothing and spend money to try to get water from a stone as the saying goes. It is also better for your credit score because even though you are carrying debt, you are making regular payments and that goes a long way when your credit rating is calculated. It reflects personal integrity and shows that you will not be running away and bailing on your debt obligations. AVOID filing for bankruptcy that just opens another can of worms(issues) you don’t want to have to deal with.

    As for the Social Assistance situation, stay with it as long as needed because even if they are not providing you any financial assistance, you get to keep your medical and medication coverage, as well as access to programs and services that will help improve you employability skills at no cost to you. When you obtain employment with benefits, then close your Social Assistance file. Go online and check out Trillium Benefits, medical support for the working poor and those struggling to make sure that the family is covered for medication and other medical needs at little or no cost to you. They used to cover dental and optical issues also but I have not dealt with them in a while and there may have been some new changes. It does not hurt to inform yourself now, so if a situation arises you know where or who to call to help you. Beats the by golly out of panicking and crying which does not help anyone.

    • Already talked to a trustee in bankruptcy, and with the debtload I have, the income I have (and it falling later this year), there is absolutely no way unless a lottery is won that it will ever be paid off. The highest debt, the lowest amount they would accept as full payment was $10,000 more than I make a year right now working. Credit already sucks. I’m not looking for loans of any type anytime in the near future, so I know bankruptcy is what is going to happen…just a matter of exactly when.

      I was approved for Trillium benefits for my drug coverage (but even with that, those months where I have the deductible before I’m fully covered, with the cost of my prescriptions, I’m still having to struggle to pay for the meds). When I was on assistance, they were no help when it came to doing anything to improve my employability skills. I attended the mandatory workshops you had to attend, but got nowhere when I wanted to improve my computer skills (their priority was on those without any, not someone like me with 28 years of computer use under my belt).

  18. Thanks for everyone’s kind words! I’ll try to remember to post an update as time goes on.

  19. Great story! Wow! Survival debt is a terrible thing. Thank you for sharing your story. I know there are plenty of people in your situation right now that are thankful to know they are not alone.

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