About 3 years ago, my former husband decided to quit working and go back to school, with no thought to our finances. While he got grants and loans to pay for school, all our living expenses and his car loan fell into my lap. I scrambled and managed to keep us above water, even when our house was nearly foreclosed on and I was sued in small claims court for a past due propane bill. However, I fell behind on two credit cards which eventually went to collection agencies and are on my credit report. My ex husband moved out in May and the divorce (which I paid for, he had no lawyer) was final in December. However, because he quit working, my credit is shot......everything was in my name. In April when I ran out of propane, no company would sell to me, even for cash, because of my bad credit record. I am just now getting back on my feet, having paid off enough stuff to make all my monthly payments on time. The only thing left is the two credit cards (totalling $5,000), which are both in my name.

What's the best way to deal with this and get them paid off? I can't borrow money with my credit score, but I don't make enough to make very large payments on the cards....only about $20/month on each. Will that even make any difference?

Can I ask why, for what reason, the propane comp would NOT deliver EVEN if you paid IN CASH, IN FULL, IN ADVANCE? That makes NO SENSE WHATSOEVER, though I would like to hear an explanation.

The only things that will help are 1) time and 2) paying as agreed. If anyone or any company tells you they can "Fix" your credit rating, either they are doing something illegal, or they just want your money and you will see no results.

Most anything these credit fixers claim to be able to do can be done by you for free.

I would suggest the following:

1) Contact everyone to whom you owe money and ask for a renegotiation of the terms. If they will accept a smaller amount, reduce the interest rate, etc. it will keep the past dues and slow pay dings off your report so at least the clock will start ticking

2) Contact your local NON-PROFIT credit counseling agency. They have a lot of ideas for renegotiating with your creditors

3) Contact legal aid in your area for advice on whether bankruptcy is an option for you. Laws have changed, but it may help to get you back on the road to recovery.

It's too bad that all of this was in your name. I wish there were easier answers, but there are none. Chalk it up to a very expensive lesson learned.

Mr. Goodwrench: The only debt I have now is the $5,000 on two credit cards that went to collection companies. Everything else is paid off, or current, like my house payments. So, bankruptcy would really be overkill.

As to the Propane companies, this one blew me away too. I had been with the company for 4 years. Last summer when my ex moved out, we still owed them $470, which they sued for, but my mom loaned me the money and I paid it before it got to court. I was able to buy propane over the winter and paid them $1400 when I got my tax refund, so my account was paid in full, although it had been delinquint before that. In February I paid $500 cash for 250 gal. When I ran out in April, I didn't have the money so I called LIHEAP (an agency that helps with heating expenses) and they offered $300 towards the $500 fill. They made the arrangements with the propane company. A friend used his debit card to pay the rest in advance. I called the delivery guy to arrange delivery when I would be home so he could light the furnace pilot and was told I was no longer a customer, call the office. I did call the office and they kept changing their story.....said I owed them money until I pointed out my last statement had an $88 credit, then said I'd had payment problems in the past and they didn't want my business. So, they refunded the money my friend had paid. I then called the only other company in the area and they said they couldn't deliver, even for cash, unless I had an account with them and to get that they had to run a credit check. I didn't pass because of the outstanding collections, so they wouldn't give me propane even for cash. So.....unless I get my credit straightened out by fall, I don't get propane.

However, I decided to buy a corn furnace instead, so the propane companies can all take a flying leap..... but I still want to straighten out my credit.

Gotcha, still a good idea to contact your creditors and perhaps the consumer credit agency. If you can negotiate a lower rate, or perhaps a payment schedule that allows them to report you as current, it will help.

Sounds like you have the propane sitch solved, but I was going to suggest perhaps a cash deposit with them in lieu of a good credit rating.

There are some articles on msn.com about improving your rating, but in the end, it takes time.

Hi annasnewlife-

Have you heard of the book "The Total Money Makeover" by Dave Ramsey? He also has a radio show and is on Fox Business channel but I don't know when-I do listen to his radio show on the way home and also use his financial curriculum in the program I teach. Oh, and there's a website: DaveRamsey.com.

He knows what he is talking about because 20 years ago, he and his wife declared bankruptcy after having 4 million in real estate assets. So-he's been there.

In his book (and on his radio show) he tells how to deal with creditors. You might find the information useful.

I know that once a debt has been sent to a creditor you can sometimes negotiate a settlement with them for less than the amount owed-IF you have the money to pay it. For instance, if you owe 3000, and you offer them 1500 to settle the debt, they might take it. Make sure that they agree to send you a letter indicating that before you send them any money.

Also, NEVER let them have any kind of electronic access to your account (through a debit card or even a check) because they may agree to one amount, but then deduct the whole debt from your account. Get the letter, and then send them a cashier's check for it. And keep that letter for the rest of your life because these things have a way of popping back up.

There's also a sample letter to send to creditors who are harassing you with lots of phone calls. It's against the law and you can tell them to cease and desist according to the Federal Fair Trade Act.

Gee, I must have learned something from that curriculum too!

I hope this helps.

Oh yes, I *love* Dave Ramsey! Definitely, please go to his website. There's lots of free information there, I think the sample letter to send to the creditors is also available in the free material.

Read about the "Debt Snowball." That stuff works. H and I had thousands of dollars of debt, including expenses from a major medical crisis. We are now on track to be totally out of debt except for mortgage payments by the end of 2008. A year ago I heard ads talking about "Get out of debt within x years!" but I didn't believe them. I didn't think we'd be able to do it even after reading about it. But it's working, even on just my income.

Dave Ramsey also warns against debt consolidators. They have to make a profit you know, or else they couldn't stay in business. Anything they could do, you can do yourself and end up paying less interest. You can negotiate with creditors. Some of our medical bills were negotiated.

It's also based on upstanding morals, representing Christian values and family values. He doesn't advocate hiding or running from your debt. He says to keep in touch with your creditors, paying them what you can, even if you can't pay what they want. They will use illegal techniques so know your rights, and do your honest best and be fair to your creditors. If you can't make all your payments, then send each creditor a portion each month, along with a letter.

Do you have a credit union in your area? Or a bank that offers this service:

Talk with your banker/credit union person about rebuilding your credit. That you'd like to put saved up money into a six month certificate of deposit and borrow against that (sort of like a pre-paid credit card, but it is a formal loan process). Then you make the six payments ON TIME, paying off the loan in six months. Then check your credit score to see if you need to repeat this process one more time.

Ask your banker which will build credit faster - this CD/loan process, or a pre-paid credit card. Some say that a prepaid credit card is not as effective.

Also - pull your credit report - see if the propane company is showing an unresolved balance on there. Dispute with proof any unresolved balances from anyone.

My credit union had encouraged me to take out bankruptcy due to the loss of a business back in 94. During the crisis, in 1993, our car had been repo'd and my FIL bailed us out and got our car back for us. So I had a really bad credit score. Two years later, we were going through a crisis refinance to consolidate personal debts under our equity and that car was paid off. My credit score was below 500 when we did that, so our interest rate was upward of 8%. Not bad from our perspective because we bought the house during the 80s, when interest rates were above 10%.

Anyway - I needed to replace the old car, and asked the credit union what I needed to do to get a loan for one - the manager had me fill out an app and pick out my car - then after the committee met, told me that while my credit score was very bad, my personal track record with them - not taking out bankruptcy and instead toughing things out, honoring my commitments meant something to them. They were a big part of my credit score being much much higher today than it was 13 years ago.

Thanks for the help! I think I may actually have dave ramsey's book somewhere, I'd forgotten about it.

As to paying off loans and the bank knowing I'm good for it, I've done that. My ex and I had two bank loans; one for his car and a tractor; the other is a 2nd mortgage. I paid off the first one (yes, he got a free car and then he sold the tractor and only gave me half) and I've got the 2nd mortgage down from $10,000 to $5,000 and my banker knows whose name is on those checks and who is really paying it. I did talk to my banker about a home loan to pay off the contract for deed and the 2nd mortgage, as well as buying out my ex for the house and paying off those credit cards. The total loan is $50,000 and my credit rating varies from 570 to 640 depending on which company you look at. I should be hearing from my bank this week on whether I can get the loan, or need to figure out something else.

Oh, Kayla, the credit report does not list any unresolved balances fromt he propane company....and their statement showed a credit balance. All the unresolved issues on my credit report are, unfortunately, legitimate.

Nothing against Ramsey, I think his program would work well if you have the right attitude.

But Ramsey is not about helping your credit score, he's about paying cash for everything, and not utilizing credit.

Check out this article, if you are interested in improving your score:

http://www.selfgrowth.com/forum/ubbthreads.php?ubb=showflat&Number=7609&page=1#Post7609