Friday, November 30, 2007

Diana Novoa struggles with making ends meet.

"Pretty much, there's more money going out than coming in," she says.

She’s trying to cover her monthly expenses and make a dent in her $16,000 debt.

"I get paid very little and for me to be able to pay everything else it's just really hard on me right now."

Her debt started with credit cards.  Her father encouraged her to get one because he said it would be a good way to help her establish credit in her name.

She maxed out her first card.

“He was trying to help me out and he got more credit cards to lift the balance off that," she explains.

Soon, Novoa was $19,000 in debt.

She decided to join the Navy.  During that time, she reduced her debt a couple of thousand dollars.

After getting out, though, Novoa was struggling to keep her head above water.  She says her paycheck as an automotive mechanic barely covers her expenses.

“The only thing I thought was bankruptcy because that would clear out the debt and it makes me start fresh and still be able to pay for food and gas and a place to live," she admits.

John Allen, a credit counselor with Child and Family Services of Eastern Virginia, cautions against bankruptcy.  He says filing a Chapter 7 will relieve the immediate pressure, but there are drawbacks.

"It could hinder job opportunities in the future; make it more difficult to buy a home. The bankruptcy is going to show up on the credit report for seven to ten years," he stresses.

Novoa isn’t interested in having those troubles. Now, she's dealing with her finances by using a debt management program.

"Without a debt management program, if she was able to make the minimum payments on the credit cards she has, she'd be paying them anywhere between nine and 10 years," Allen says.

With the program, late fees are eliminated and interest rates are cut in half -- to between 10 and  12 percent.

"She's going to have everything paid off in 45 months as long as she's able to maintain her commitment," stresses Allen.

That commitment means making one monthly payment, that she can afford, to the credit counseling service, which will pay her credit card bills.

Novoa feels it's the best choice, even though she knows it won't be easy.  

"I'm trying not to overwhelm myself.  I'm trying to do the best I can and step one foot forward and keep going."

Sources:http://www.wvec.com/news/local/stories/
wvec_inv_112107_living_with_debt_.20aa2aa9.html