Estimated reading time: 10 minutes
I live with debt that I can’t pay and terrible credit that I struggle to reverse.
Today, I’m going to share my story with you about what my life is like with terrible credit.
I hope my journey inspires you or motivates you not to stay far away from debt as you can.
I 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, a repair needed to be made on it.
My one credit card with the highest balance 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, keep paying my everyday bills, and put food on the table, which was hard 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 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.
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 layoffs (they eventually went bankrupt two years later).
Before I lost that job, I was going to consolidate my other two 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.
I planned to direct as much money to it as I could each month so that I’d have it paid off within five years.
But then, when I lost that job, I didn’t feel comfortable doing that.
I managed to hold on to my Employment Insurance (EI) for 40 weeks, but my EI ran out when I hadn’t found any work.
I then had to apply for and go on social assistance.
Soon after, I was barely getting enough to pay the bills to keep a roof over our heads and put food on the table; the credit cards suffered.
At first, I was directing about $25 to the three credit cards, but since it wasn’t putting a dent in the debt, it often left me short come month-end. I stopped that.
The other two 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 to use it.
My attitude towards credit cards has changed dramatically over these past five years.
I was on social assistance for nearly three years.
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, in the 2-3 months I could have used the money from Ontario Works (OW), I didn’t qualify.
My reported employment income was highest due to increased hours at work during the Christmas season.
So, from January through March, I struggled financially.
Then OW decided my child support should not have been directed to them, so they returned it to me.
I am adding that into my work income, which they use in their calculations (OW using 50 cents of every dollar earned from employment).
It was no longer worth staying with Ontario Works because I would have been lucky to get money for maybe one to two months a year.
I decided to have them close my file.
Living Pay Cheque to Pay Cheque
I live pay cheque to pay cheque while working retail from January through to March (April, May), and my hours are reduced to the minimum.
I’m part-time, so I’m getting only 12 hours per week.
The problem is that available shifts are quickly grabbed with everyone in the same position, and no one gives upshifts unless necessary.
The only time I saw hours upwards of 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 debt between the three cards in collections is around $32,000.
That’s more than I made when 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 I will lose the child tax benefit this year as my son will be turning 18.
That will 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 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 already did (those two weren’t cooperative).
Eventually, all three 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 won’t 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 when my work income is less than $500 per month.
I’m lucky my rent is subsidized right now, but that won’t last forever, and then I’ll be in big trouble.
Meanwhile, I continue searching for full-time or part-time employment 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 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 provided information.
I’ve talked to others I’ve worked with who have lost their jobs, and they are finding it tough to secure employment.
My résumé has been prepared twice now by professionals to help improve my employment chances.
A couple of opportunities have surfaced, 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 to ensure I have a top-notch resume and interview skills but with no luck.
It doesn’t help that my experience and skill level with specific computer software is not high, which most of the jobs in my field require or desire in a job role.
I can’t afford computer classes, and my self-study isn’t enough.
How I Manage My Money With Terrible Credit
I know my schedule about 2-3 weeks ahead of time, so I can figure out close to what I’ll earn.
I guesstimate my monthly income, then subtract the fixed expenses I 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.
Most of my shopping is completed at work since I have my Walmart employee discount.
I price match whenever possible to help save money on groceries.
If my pantry is getting low on an item, I can’t find a reasonable price when I look at all the weekly flyers.
I use coupons as much as possible, matching them with the weekly flyers to try and get more bang for the buck.
I’ll put off purchasing it until I can get it reasonably priced.
I check my bank account before shopping to determine what has yet to come out of the bank and what is in there.
Doing so gives me an idea of what I must spend on that week’s groceries.
Where Do I Go From Here?
I’ve lived without a credit card for over a year, 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.
We suggest that we motivate customers to apply for the Walmart credit card. I’d earn the reward dollars and not carry a balance.
Looking back, over five years have been without full-time employment; three years were without work.
With losing two sources of income this year, I’m at wit’s end.
I have come to the point where I feel bankruptcy is the only way to start my financial life over.
I have talked to two co-workers who have gone the bankruptcy route advising me to look into my options.
Neither of them was in as much of a bind as I am.
Both are married and have a spouse’s income to fall back on.
However, they felt bankruptcy was best for them rather than a consumer proposal.
Knowing what I do now, I would have considered my options regarding bankruptcy when I had to go on social assistance.
At least I wouldn’t have stressed about the debt all these years.
For the past few years, I feel like I’ve existed and have not been living.
Since I wrote to you in February, I met with a bankruptcy trustee.
The trustee told me that the one thing I have going for me is the creditors.
- I can’t go after assets as I don’t have any.
- Ensure I change banks where I owe nothing.
- He said that the only thing they could do was garnish my wages.
If they figured out where I worked, it would take them six to twelve months to get court approval to garnish my wages.
Declaring bankruptcy isn’t something I need to do just yet if I don’t want to.
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 until I got my income tax refund for this year (this was in February.
Further, he told me I wouldn’t want to file until I had that refund.
If I filed then, I would lose my refund for 2012 and 2013.
By waiting for my 2012 refund, I would lose my 2013 refund if I filed before year-end.
I’ve thought long and hard about waiting to file for bankruptcy — but I’m leaning towards doing it in April.
My income tax refund can pay the monthly bankruptcy fee for those nine months I’d be in bankruptcy.
I can then direct any money from work towards monthly bills and build up some savings for the lean months.
My son works part-time, which has eased up on some things that I used to pay for him.
I want to file bankruptcy, get it over with, start fresh, and eliminate that stress from my life.
Money Management Update
Update on managing money since submitting her post
Flyer inserts inspire my weekly shopping, and budgeting helps me plan what I can afford.
I use coupons more than ever and no longer rush to buy something.
My hours at work have increased to 20 per week as more people are giving up shifts.
I will also open a savings account and direct at least 10% of each pay to that account.
Any money left at month-end after paying all budget categories will go into emergency savings.
Contribution by: This Canadian Budget Binder fan wants to remain anonymous.
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