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I have accumulated alot of credit card debt over the last 5 years, with it accelerating over the last 1 1/2. About 3 years ago, we got a second mortgage on the house to pay off the debt, and well, it is all back, and more. With the second mortgage, it makes it virtually impossible to pay. Guess we truly lived beyond our means. Our credit isn’t shot, as a matter of fact, it is just poor. Right now, I have a 652 and the wife has a 670. We have never, ever missed a payment, however, the minimum payments on over 40,000 in credit cards is more than we can afford.
My income dropped bad last year, and most of the debt piled up trying to “bridge” the gap. Can’t really sell the house (housing market sucks, and second mortgage was for 95% at that time) without a short-sale. No fancy vehicles to sell, both our cars are used, with one payment of $310, and other $322.
Anyway, any ideas? Credit cards are currently paid, not late. Don’t want to get into a late-fee mess if we can help it. Called the credit card’s to try to get the interest rate reduced, or some help with lowering payments, but no dice.
BTW, I do NOT want to do a BK. I was hoping that I could maybe let it go into collections, and then work out a reasonable deal that way, but I was worried that the late-fees and HIGH interest rates would make that too-little, too-late
Just to be clear, I am not wanting to get another credit card. That is what got me into this mess to begin with. I basically was wondering what works better with high credit-card debt. Waiting for charge-off/collections, or trying debt-negotiation. Either way, it will trash my credit, but as of right now, I honestly can say that I don't want any credit anyway!!!!!!!!
Actually Suzi, my wife got me to watch a Dave Ramsey show with her the other day. We sat down, ran our numbers. The problem is we don't have enough income to pay the bills. It isn't like we are blowing our money right now, we already blew it. Now, we are in the position of having 2 upside down cars, basically and upside down house, and credit cards that are making life miserable for us. Yes, we got ourselves into the mess, and we will pay what we can. I do NOT want to do a BK and neither does she. Nobody forced us to use these cards, and I will not try to sidestep them. Besides, I am pretty sure that we make too much money to do a BK anyway, since we would basically be put onto a payment plan anyway. I would rather do it the "right" way, it's just that we don't have enough money right now to do it the "right" way, thus the asking about trying to work out a settlement thru collections or thru debt negotiation.
I have heard your story over and over. People get into debt, go out and get a second mortgage or consolidation loan to pay it off…but then turn around and run up their credit all over again. The next thing you know, you are in twice the amount of debt you started with.
Sound familiar?
Then you realize you are in big trouble, so you try to do the “right thing”. You start by contacting the credit card companies to either reduce the principle and/or interest rate. The result is they turn you down…and even INCREASE your rates.
Sound familiar?
Let me show you your future. And forget the Dave and Suzies advice….in most cases it doesn’t work.
You can let them go to collections by not paying them. Then they MAY offer to settle for a 25% discount. Will cutting that much from your credit debt help your situation? I’m betting not.
And this will ONLY work if EVERYONE agrees to work with you. That is not going to happen. You will run into the big collection agencies that specialize in making your life miserable. If your cards are over $2000 in debt, you can expect judgments. You say you make too much money now? Wonderful! They will gladly slap garnishments on your income. Can you live with 25% of your wages being garnished?
Like I have said, I’ve heard this story way too many times. Without carefully examining your financial situation, I couldn’t possibly give you any advice. I can say this…debt settlement rarely works. And basically it is the same thing as bankruptcy…except that while you are in settlement your debt continues to grow. They don’t freeze your interest or late fees. It’s going to take you an awful long time to get out of debt.
I would start by searching out a local non-profit debt COUNSELOR that will go over your finances and work out a very strict budget. Then (if your counselor is any good) they can direct you on the correct path to take. But I’m going to bet that BK is your only real course.
Will you qualify? Probably not for a Chapter 7. But under a Chapter 13 plan you will force your unsecured creditors to 1) freeze the interest and late fees, 2) force them to accept a reduced settlement, and 3) be placed on a payment plan that will get you out of debt within 5 years.
The key to deciding if BK is the way to go is simple. Sit down and create an extremely strict budget. Cancel the cable TV and cell phones. No more entertaining, dining out, or movies. Figure out exactly how much money you have left every month to apply to your debt.
Then contact every one of your creditors and see what sort of deal they will give you. You don’t need a debt settlement company to do this…you just need to make sure you tell them that the alternative is you filing bankruptcy. Every one of your creditors must understand that if they don’t work with you, it’s going to cost them when you file BK. This will get MOST of your creditors to work with you, but not all.
Then crunch the numbers and see if your budget works. Lets say you manage to get all of your creditors to knock 25% of your debt. Now you owe $30k….do you have at least $650 in your budget to apply to your credit card debt?
If your answer is no, you have no real choice but to file for bankruptcy. You can do it now, or you can do it in a couple of years, after your credit has been ruined, you have 2-3 judgments on you, and everybody is harassing you on a daily basis.
Like I’ve said, I’ve seen this story many times. I live in an area where factories have been closed, and those still working have seen their huge wages cut. They are forced to live on credit until things improve…..and they never do.
I am not a lawyer or credit counselor, and I am not associated with any of these companies. I’m just someone that everyone seems to come to for advice, and I’ve done a ton of research. I hope thinks work out for you.
November 5th, 2008 at 4:30 pm
STOP USING CREDIT!!! Best advice I can give is to buy Dave Ramsey’s “Total Money Makover” at a used book store, do not purchase it on credit. I successfully did his program and paid off $17,000 in one year. It may take you longer, but you got yourself in it, just like I did, and you should pay the money back however long it takes.
He has a smart, common sense approach to doing it, so get the book!!
References :
November 5th, 2008 at 5:13 pm
Instead of calling the credit company(s) write to them using certified receipt through the US Postal service. Write to all your creditors use the same letter, but put in the appropriate name and addresses. Explain to them your situation, tell them you want to close the card while paying of the account, there will be or you can offer a settlement amount to close the account. If you stop making your payments and allow the accounts to go in to collection the amount owed will almost go up by 25% right off just in the increase of the interest rates which are call the default interest rates between 25-35%. Remember just one card or one account being late one time can cause all your cards and your accounts to go into default activating default interest rates. Although I am not to sure if this will affect your mortgages and their interest rates.
So write to your creditors as soon as you can to head off any headaches down the line, and by all means stay calm and collective and don’t do any thing bad, it was a very sad thing that happened last week with the man that lost every thing. It would be just as sad if more people take his way out of their financial heartaches, his poor family….
Good luck to you and take care….Keep the Faith….Peace….cya….
References :
November 5th, 2008 at 5:36 pm
I would start by trying to get a reduced interest rate on my credit cards. You may even try to get them to put interest on “hold.” I doubt these credit card companies would be willing to do that. The way things have happened to you I am hesitant to suggest you see if you can get new cards which have low or no interest rates for transferred balances. If your debt is too high they may not approve your requests. You and your wife may want to consider getting extra jobs to help pay down your debt. Even an extra $100-200/week would make a difference. You could put everything you earn from the part time jobs on your debt. I would start with the smaller balances and higher interest rates first. As you pay your credit cards off you could maintain the amount you are paying on other accounts. It is never easy to get out of debt. Hang in there, you can do it.
References :
November 5th, 2008 at 6:08 pm
I have heard your story over and over. People get into debt, go out and get a second mortgage or consolidation loan to pay it off…but then turn around and run up their credit all over again. The next thing you know, you are in twice the amount of debt you started with.
Sound familiar?
Then you realize you are in big trouble, so you try to do the “right thing”. You start by contacting the credit card companies to either reduce the principle and/or interest rate. The result is they turn you down…and even INCREASE your rates.
Sound familiar?
Let me show you your future. And forget the Dave and Suzies advice….in most cases it doesn’t work.
You can let them go to collections by not paying them. Then they MAY offer to settle for a 25% discount. Will cutting that much from your credit debt help your situation? I’m betting not.
And this will ONLY work if EVERYONE agrees to work with you. That is not going to happen. You will run into the big collection agencies that specialize in making your life miserable. If your cards are over $2000 in debt, you can expect judgments. You say you make too much money now? Wonderful! They will gladly slap garnishments on your income. Can you live with 25% of your wages being garnished?
Like I have said, I’ve heard this story way too many times. Without carefully examining your financial situation, I couldn’t possibly give you any advice. I can say this…debt settlement rarely works. And basically it is the same thing as bankruptcy…except that while you are in settlement your debt continues to grow. They don’t freeze your interest or late fees. It’s going to take you an awful long time to get out of debt.
I would start by searching out a local non-profit debt COUNSELOR that will go over your finances and work out a very strict budget. Then (if your counselor is any good) they can direct you on the correct path to take. But I’m going to bet that BK is your only real course.
Will you qualify? Probably not for a Chapter 7. But under a Chapter 13 plan you will force your unsecured creditors to 1) freeze the interest and late fees, 2) force them to accept a reduced settlement, and 3) be placed on a payment plan that will get you out of debt within 5 years.
The key to deciding if BK is the way to go is simple. Sit down and create an extremely strict budget. Cancel the cable TV and cell phones. No more entertaining, dining out, or movies. Figure out exactly how much money you have left every month to apply to your debt.
Then contact every one of your creditors and see what sort of deal they will give you. You don’t need a debt settlement company to do this…you just need to make sure you tell them that the alternative is you filing bankruptcy. Every one of your creditors must understand that if they don’t work with you, it’s going to cost them when you file BK. This will get MOST of your creditors to work with you, but not all.
Then crunch the numbers and see if your budget works. Lets say you manage to get all of your creditors to knock 25% of your debt. Now you owe $30k….do you have at least $650 in your budget to apply to your credit card debt?
If your answer is no, you have no real choice but to file for bankruptcy. You can do it now, or you can do it in a couple of years, after your credit has been ruined, you have 2-3 judgments on you, and everybody is harassing you on a daily basis.
Like I’ve said, I’ve seen this story many times. I live in an area where factories have been closed, and those still working have seen their huge wages cut. They are forced to live on credit until things improve…..and they never do.
I am not a lawyer or credit counselor, and I am not associated with any of these companies. I’m just someone that everyone seems to come to for advice, and I’ve done a ton of research. I hope thinks work out for you.
References :
November 5th, 2008 at 6:44 pm
I recommend debt settlement . Total Debt Solutions partners with a company in Texas called Credit Results USA to offer debt settlement. Credit Results USA has been in business for years and is listed with the BBB. My dad used them with great results getting debt free in 36 months. He held the money in a trust account; this isn’t just sending money to some faraway company each month and saying a prayer that you dont get ripped off. Check out the source website and their free evaluation form or toll free number; they can help!
References :
http://www.totaldebtsolutionsllc.com