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Repo man threatening to take us to court

Dear Dave,

My wife and I had a Saturn that got repossessed recently. We have been making low payments to them of about $50 a month because that is all we could afford right now. I just found out that they want to take us to court and garnish our wages. My wife was served the papers at her work so she went to the courthouse and filed for slow pay, and we are supposed to appear in court soon. The balance due on it is $4,000. What else can we do?

Peter

Huntsville, Al.

Dear Peter,

If there is any way you can scrape together $1,500, I would do that first. I would bet that you could settle this debt for that amount right now. I am assuming that you don’t have $1,500 right now because if you did you would be making bigger payments on this debt in the first place. You know from listening to me that I never want you to borrow money, but if you could exchange your $4,000 debt for a $1,500 debt with a credit union or even on a credit card, you would be better off, right?

You would offer the $1,500 as a ‘settlement in full’ and, of course, get all of that in writing. You would also need to make sure you have the loan arranged before you get to court.

Your other option is to do the slow pay. In that case the court is going to require that you pay a ten percent interest rate in most states. They will also require that you have a systematic way to pay that debt off pretty quickly; and that won’t be just $50 per month on $4,000. This will keep them from garnishing your wages at this time. Either the slow pay motion and/or the settlement for payments with the attorney that is suing you will most likely work. Certainly, if you could put together a loan of some kind with a credit union and offer $1,500 on a $4,000 lawsuit situation on a deficit on repossession, they probably will take it.

Dave


Plan on receiving Social Security for retirement?

Dear Dave,

I am 36 years old and I would like to know what is happening with the Social Security program. Should I or should I not consider it when I am planning for my financial future? I know I still have a few years ahead of me but I want to be prepared when the time finally comes for me to retire. What is your advice here?

Vincent

Charleston, S.C.

Dear Vincent,

I would not consider it when figuring for your retirement. But I would not panic about it, either. I am not a naysayer; I just don’t like Social Security. I think it is a bad system. However, it is there and you may or may not get anything out of it. I am not going to do any retirement planning that includes it.

Here is the problem: There is no money in it. It used to be that when you paid money into Social Security, it was put aside in a Social Security trust fund. It was just sitting there to pay out Social Security benefits. However, they raided the trust fund many years ago and they’ve continually raided it since then, and they put IOUs in there called bonds. So they took this off-budget item, which is the Social Security system, and stole the money out of it, replaced it with the IOUs and spent the money in the general fund. Now they use it as an income source for all of the other government programs that are going on. The bottom line is that there is a pile of IOUs out there that the government will make good on; I’m not worried about that. Right now there is more money being paid into it than is being paid out in benefits, but that won’t last forever. For instance, some analysts say that when the baby boomer generation gets to retirement, there may be more people alive who are in retirement than who are paying into it. That would break the system.

So save for yourself as if Social Security didn’t even exist, and that you won’t get anything out of it. Then if it goes broke you’re okay, and if it is fixed, you’re even better off than you would have been.

Dave


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