Dear Charlie:

I am in credit card debt from college, my parents were helping me out for a while until my father was laid off from his job for a year and a half. Due to school, I could only work part time and barely being able to get by, I was unable to make any payments or arrangements to pay because of the circumstances. My credit is severely affected. I am about to graduate this semester and am extremely nervous of how this will affect my future. I thankfully have a job lined up and will be able to pay on the debt once I graduate. I have printed out my annual credit report, but am confused about what I can do to help myself until I start making money. Most debts have been turned over to collections. I need debt counseling, but there are so many scams. Does Ball State offer any services directly related to this matter?

Signed: Unavoidable Debt Circumstance

Dear UDC:

Charlie hears your concerns. Like many college students, you have accumulated a significant amount of debt during your time in school. Now that your time in school is drawing to a close, you’re feeling worried both about paying back the money and about your credit rating. Charlie will provide some suggestions for taking on these issues.

Though Charlie doesn’t know the specifics of your situation (e.g., how much you owe and to whom), Charlie wants you to know that many of my friends have exited college under very similar circumstances. Though their debt feels overwhelming at first, once they get out of school and begin earning a regular salary and making regular payments, their anxiety about the whole situation decreases. Eventually, the debt is paid off and they celebrate! In your letter, you say, ”I …have a job lined up and will be able to pay… once I graduate”. Thus, it is sounds very hopeful to Charlie that you will have a similar, positive experience in the long run.

You also express concerns about your credit. Credit scores are based on an aggregate of your financial transactions over a number of years. To name a few examples, each time you make a monthly payment on time or pay off a credit card or loan according to the terms of the loan agreement, your credit score goes up. Similarly, each time you are late with a payment your score goes down. If you default on a loan or credit card balance, your score takes a big “hit”. Judging from your statement “most [of my] debts have been turned over to collections”, it sounds like this is part of your history. In a worst case, sometimes people get so far into debt that they’re best option is to file for bankruptcy. If this is might be the case for you, Charlie recommends that you speak to a lawyer about your legal options (see below).

You mention say you are confused about what you can do until you graduate and start making money. Though you are financially strapped, Charlie suggests that you do your best between now and then to accumulate as little additional debt as possible and also do your best not to default on any more payments. This will prevent things from getting any worse. The real rehabilitation of your credit, however, will have to wait until after you graduate and get on more stable financial footing. This will take time, careful attention to making timely payments, and patience on your part.

You ask about debt counseling. Charlie wants you to know that some of my afore-mentioned friends utilized debt counseling and found it to be very helpful. Charlie agrees, however, that it is important to work with a reputable service to avoid being scammed.

To discuss your all of these concerns, Charlie suggests that you contact my friends in Student Legal Services. When Charlie called to ask about your case, they said it would be best if you stop by the office which is located in SC L17. Once you are there, they can help you think through many of these issues as well as help you chart a course both for getting out from under your debt and alleviating your concerns about future credit.

To financial peace of mind,
Charlie