Results 1 to 6 of 6

Thread: Dealing with various debt... and one case of ID theft? Wanting to buy CDs instead.

  1. #1
    Veteran Member domina's Avatar
    Joined
    May 2014
    Location
    EST, USA
    Posts
    254
    Thanks
    375
    Thanked 538 Times in 165 Posts

    Default Dealing with various debt... and one case of ID theft? Wanting to buy CDs instead.

    So... today i started to finally go over my situation... and here's where I'm at... Any help or advice would be appreciated, I'm a little lost and overwhelmed and not sure what's the best way to approach this...

    I'm about to take a 6-month break from dancing to work a temporary vanilla job (minimum wage)... and then I'll probably go back in January (i know, unwise timing, but due to circumstances this is what i have to do right now).

    I also have some debt from student loans... (about $18k)... I somehow have missed out on paying taxes for the past 3 years (kept meaning to, but never got around to it, or always happened to be broke/ just scraping by). I paid off my student loans from college the first time around, using dance money, so i thought i would have excellent credit score... but now its really bad again. Like mid-500s bad.

    I have a school bill for an outstanding amount of approximately $450 in misc fees... and some attempt to collect $1000 for medical bills... i dont even know what that is exactly but that I wish they would go away. I dont mind paying the school one if i have to... but the medical bill one didn't even spell my name right, so im skeptical whether or not its even real...!

    I dont have any credit cards open. Closed the one I had at BoA a while ago, tried to get one at Chase but was rejected when they did the background check. Not sure what to do next to build credit.

    Someone used my information to open a fraudulent account(s) with T-mobile and I've been getting slammed by debt collection agencies for the past 3 years. I moved to another state since the thing occurred (in 2009), so I couldnt file a police report over the phone or online. It was only this month that i got to take the 8+ hour bus trip over there this month and i FINALLY officially filed the report but i still havent talked to debt collectors about it yet.

    I managed to save up an extra $5000 in cash and i'm thinking that the best way to invest it would be to ladder CDs?*

    Needless to say my financial life is kind of a mess but at least I have this extra money right now. I'm stressed out about dealing with everything but its better that i have an extra few thousand, than not having it at all. I wish I could just keep dancing, I really need the money, but due to certain circumstances i just cant right now, i have to wait until next January.

    Tomorrow I'll call the collection agencies and hopefully finally get closer to resolving that... but i dont know if it would even make a difference with the damage already done to my credit score.

    P.S. I dont actually know what it means to "ladder CDs" besides that i'm putting money into these bank accounts at different intervals in time and then they'll come back out as more... but I was trying to read up on how to invest smart and that seemed like a good thing to do.

    p.p.s I already started a Roth IRA years ago so there's that as my emergency lifesaver... I've got some money in there, bought some mutual funds, not gonna touch it for a while.

    Would really, really appreciate any feedback or advice....

    Thanks in advance!

  2. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Dealing with various debt... and one case of ID theft? Wanting to buy CDs instead

    In truth I don't even know where to start to intelligently respond to this situation ...

    Obviously the police report about the T-Mobile 'identity theft' will lead to increased gov't attention to your finances. Given the fact that you have paid college tuition ( with corresponding automatic reports by the Bursar's office ), and taken out / made payments on student loans ( with corresponding automatic reports by FAFSA ), but haven't filed or paid income taxes for the past 3 years, there is a good chance that the increased gov't attention to your finances will also lead to increased gov't attention to your tax situation. And depositing $5000 in a bank to purchase CD's is likely to lead to a corresponding automatic cash transaction / 'suspicious activity' report from the bank as well, which would only increase the degree of gov't attention to your tax situation.

    If the IRS were to 'put two and zero together', you could potentially be hit with a major bill for unpaid taxes plus penalties. And to 'insure' that you will repay the IRS, they could very well place a 'freeze' on the funds in any of your bank, investment or other accounts ... plus place a garnishment on your 'vanilla job' paychecks. As such, ironically, your $5000 in cash may be the only 'asset' which would remain beyond the potential reach of the IRS.

    In regard to your credit score, if you wind up with back tax problems your credit rating will be 'toast' in any case. However, it couldn't hurt to officially contest the $1000 medical bill with the credit reporting agencies. Regarding the $450 bill for additional college fees, given that the college Bursar's office is a potential 'back door' source of your financial information for the IRS, it's probably worth it to simply pay that bill .

    In regard to 'laddered' CD's , that is a common technique to build up an 'emergency fund' to cover living expenses if and when an 'emergency' arises that leaves you unable to work etc. In it's simplest form, this means purchasing a $1000 6 month term CD this month, purchasing another $1000 6 month CD next month, etc. until six $1000 6 month term CD's have been purchased. When the 7th month rolls around, the first CD purchased will mature ( paying back the $1000 principal plus interest ), and the proceeds can be 'rolled over' - with another $1000 added - to purchase another 6 month term CD for $2050 ( or whatever ). Repeat for the following 5 months. Ultimately, when the dollar amount of the individual CD's equals the dollar amount of monthly rent payment + utility bill + grocery bill + any other necessary living expenses, you can then stop adding money and simply let the CD's 'roll over' for the amount of maturing principal plus interest. Once you have established the six CD's, and built the CD dollar amounts up sufficiently to cover your normal monthly bill cost, you can then redirect your monthly $1000 'contribution' to other types of investments.

    While today's low interest rates make the higher CD interest rates a small issue ( versus a standard bank account deposit ), the primary 'value' of the laddered CD's is that by definition they impose financial 'discipline'. With one CD maturing each month, in an 'emergency' situation only the principal and interest money of one maturing CD becomes available each month to pay that month's bills ( absent early withdrawl penalties anyhow ). This helps to assure that the 'emergency funds' will actually last for the intended 6 months.
    Last edited by Melonie; 06-26-2014 at 03:30 AM.

  3. #3
    Veteran Member domina's Avatar
    Joined
    May 2014
    Location
    EST, USA
    Posts
    254
    Thanks
    375
    Thanked 538 Times in 165 Posts

    Default Re: Dealing with various debt... and one case of ID theft? Wanting to buy CDs instead

    OK, i couldn't handle the idea of having all this weird debt (some mine, some not mine, but under my name) sitting around anymore, I spent the afternoon making phone calls and emails and am slowly getting to the bottom of this.

    I'm thinking of also calling my accountant tomorrow, to start filing for those past years of unpaid taxes... so that at least IRS can see that I'm working on it? I might not be able to pay off those taxes right away but will it be good if I've started the process and at least see how much I owe?

    Also... for the damage already done to my credit score by the fraud (and it looks like the $1000 hospital bill might even be a mistaken charge), can i get that "repaired" if I call in and show that I've filed a police report and am innocent? Who do i call?

  4. #4
    Featured Member Vamp's Avatar
    Joined
    Jul 2004
    Location
    Missouri
    Posts
    1,111
    Thanks
    271
    Thanked 757 Times in 289 Posts

    Default Re: Dealing with various debt... and one case of ID theft? Wanting to buy CDs instead

    Quote Originally Posted by domina View Post
    So... today i started to finally go over my situation... and here's where I'm at... Any help or advice would be appreciated, I'm a little lost and overwhelmed and not sure what's the best way to approach this...

    I'm about to take a 6-month break from dancing to work a temporary vanilla job (minimum wage)... and then I'll probably go back in January (i know, unwise timing, but due to circumstances this is what i have to do right now).

    I also have some debt from student loans... (about $18k)... I somehow have missed out on paying taxes for the past 3 years (kept meaning to, but never got around to it, or always happened to be broke/ just scraping by). I paid off my student loans from college the first time around, using dance money, so i thought i would have excellent credit score... but now its really bad again. Like mid-500s bad.

    I have a school bill for an outstanding amount of approximately $450 in misc fees... and some attempt to collect $1000 for medical bills... i dont even know what that is exactly but that I wish they would go away. I dont mind paying the school one if i have to... but the medical bill one didn't even spell my name right, so im skeptical whether or not its even real...!

    I dont have any credit cards open. Closed the one I had at BoA a while ago, tried to get one at Chase but was rejected when they did the background check. Not sure what to do next to build credit.

    Someone used my information to open a fraudulent account(s) with T-mobile and I've been getting slammed by debt collection agencies for the past 3 years. I moved to another state since the thing occurred (in 2009), so I couldnt file a police report over the phone or online. It was only this month that i got to take the 8+ hour bus trip over there this month and i FINALLY officially filed the report but i still havent talked to debt collectors about it yet.

    I managed to save up an extra $5000 in cash and i'm thinking that the best way to invest it would be to ladder CDs?*
    It sounds like you have pulled your credit report. Are your student loans with sallie mae or a bank? Has sallie mae sent it to collections? If they have Call them and find out all the details. My brother is going thru this. You need to be aggressive about a dollar amount you can afford and stick to it until you get the deal you want.

    The medical bill I would research to find out if it was yours or not.

    The fraud accounts I would call Tmobile (or other companies) and the credit reporting agencies about this. Let them know you never opened these accounts. They will let you know about the process and the accounts will be flagged. If the dollar amounts involved are not extremely large ie over 5k there is a chance they will write them off with some paperwork. Whatever you do....do not dispute these transactions. It is the number one mistake people make in these situations. Disputing alot of information can throw up red flags to the credit reporting agencies which makes it less likely for them to believe your case. Call first and let them tell you what to do. This process has no connection to the IRS in any way shape or form. So no worries there.

    With your taxes you are assuming you owe money when you may not. The taxes are the first thing I would tackle in this list. The longer you wait the more the years and penalties will pile on. Go to a tax preparer and get them done. You were a student which can give you alot of deductions. If you owe anything, pay it, and move on.

    Finally to build credit you need to get all the negative stuff off your credit report first. There are so many myths about credit but from my experience as a banker this holds true. Get the negative off and then add the positive to build credit. The student loans (student loans not in default status do not hurt scores if they are in default make removal of default status a demand of the payment arrangement) and medical collection isnt what is holding you down really, everyone has those on their report these days. It is everything else. It will take some time to clean it up but it is possible.

    Until all these collections are cleaned up I would keep my money out of banks. Collection companies are known for garnishing bank accounts of all types. Creating a business name with a business EIN can slow down this process and help with future tax filing. If that is too much to deal with... keeping your money in a safe box at a bank would be another alternative. They can not garnish safe boxes.
    Nature knows no indecencies; man invents them. ~ Mark Twain


  5. The Following User Says Thank You to Vamp For This Useful Post:


  6. #5
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: Dealing with various debt... and one case of ID theft? Wanting to buy CDs instead

    If you're paying high interest on any of your loans, you're much better off paying down those loans than putting money in the bank at practically zero percent interest.

    Have you spent much time looking for a job? Maybe you can find one that pays higher than minimum wage. There are even some fast food places that pay better. In-N-Out Burger starts their employees at $10.50 an hour.

  7. The Following User Says Thank You to eagle2 For This Useful Post:


  8. #6
    Veteran Member domina's Avatar
    Joined
    May 2014
    Location
    EST, USA
    Posts
    254
    Thanks
    375
    Thanked 538 Times in 165 Posts

    Default Re: Dealing with various debt... and one case of ID theft? Wanting to buy CDs instead

    Quote Originally Posted by eagle2 View Post

    Have you spent much time looking for a job? Maybe you can find one that pays higher than minimum wage. There are even some fast food places that pay better. In-N-Out Burger starts their employees at $10.50 an hour.
    Yeah i know, more money would be fantastic right about now.
    Unfortunately i already signed up last year to work as a project coordinator from July-Dec in another country (which is why the pay is so low). I already booked and arranged for at least 10 projects to happen under my supervision, people bought their plane tickets, got visas, and are ready to go (two are already there, waiting for me to arrive), there's no way i can drop out now. Its a great job for gaining experience in the field, making connections, international networking, etc... but not for money.

    I'm dying to pay my old taxes, actually! But i cant even do that because I was an idiot and i packed my records into storage when i left home state last week (visiting parents at the moment). Anyways i probably wouldnt have time to get that done, my plane ticket leaves in two weeks. My best option is to resolve as much as i can right now, then do major life overhaul when i get back in 2015. I have my fingers crossed that there will be no major problems between when i leave, and when i get back.

    Thanks everyone for your input, it's been really helpful so far.

Similar Threads

  1. wanting to dance, not wanting to lose the boyfriend...
    By AnjilsBaby in forum Newbie Board
    Replies: 16
    Last Post: 04-11-2012, 12:26 AM
  2. Replies: 5
    Last Post: 02-14-2012, 10:38 PM
  3. Replies: 17
    Last Post: 11-10-2011, 10:03 AM
  4. Replies: 1
    Last Post: 08-16-2011, 09:53 PM
  5. Replies: 44
    Last Post: 01-23-2008, 03:27 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •