A Minneapolis, Minn., couple paid off $97,000 in credit card debt in 5-1/2 years
The couple's massive debt reduction earned them the Clients of the Year award from the National Foundation for Credit Counseling, a nonprofit association of credit counseling agencies that help consumers manage their finances and get out of debt. The winners were announced this week at the group's annual meeting in San Francisco.
How did the Baileys end up in such a predicament? From 1992 to 2005, they ran up bills on 17 different credit cards. During that time, they paid for two weddings for their daughters, replaced the transmission in their car when it blew out, made numerous repairs on their home and replaced the roof when it started to leak.
Everything went on a credit card. Jim was a local pastor and handled the family finances but didn't let his wife, a nurse, know how much debt they were amassing.
The magnitude of their financial woes hit home when he told her they had to put the cost of their daughter's wedding reception on a credit card. When they added up all the bills, the $97,000 total debt was staggering.
They recall being afraid to go to the mailbox for fear of the bills they would find there. Sue Bailey says when she was home alone, she checked the caller ID before answering a call. If it was a bill collector, "I wouldn't answer the phone," she says. "That is no way to live your life," Jerry Bailey says.
The couple sought help in May 2005 from their local credit union. A representative suggested they file for bankruptcy, but the couple dismissed that option. "We just don't believe in that," Sue Bailey says. "We believe in paying what we owe."
The credit union then suggested they contact GreenPath Debt Solutions, a nonprofit credit counseling agency and NFCC member based in Farmington Hills, Mich.
GreenPath and other nonprofit credit counseling agencies enroll financially troubled consumers in debt management plans to pay off outstanding debt. Clients agree to make monthly payments to the credit counseling agency, which distributes the money to creditors each month until the debts are paid off. The agencies have a long track record of negotiating with creditors to reduce interest rates and make affordable monthly payments.
The Baileys' road to debt freedom wasn't easy. Sue Bailey had to briefly stop working as a visiting home nurse when she needed foot surgery. Their GreenPath credit counselor, Mary Haas, stepped in to help, contacting creditors seeking further reductions in payment amounts. All but two agreed to reductions.
Through budgeting, sacrificing and taking on extra work to earn more income, the Baileys paid off their debt in October 2011. Jerry Bailey says he didn't believe it when he got the call from Haas that they had completed the program. He couldn't believe he was finally finished. "I had her repeat it because I wasn't sure," he recalls.
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Barry Norman is a contributor to and blogger at firstcredit.net. For over ten years FirstCredit.net has provided consumers free information helping them make sense of credit cards and the financial industry. Whether you are a longtime cardholder or looking for your first credit card, FirstCredit.net can help you make informed credit decisions.
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