No credit card required
Browse credit cards from a variety of issuers to see if there's a better card for you.
I am struggling with what I should do.
Here's my background: Bought my house in 2006, have never had a late payment. Refied to lower payment to $920 and am still current. Have two car payments totaling $508/month (camry and tacoma) and never had a late payment with those either. I have a small jon boat that is paid for. My problem is the cc. I have about $50,000 in cc debt. It has slowly been building up over the past few years due to several reasons.
I am now at the point where I can not afford to pay the minimum payments on them. I talked to some DMP and they could not get my payments low enough for me to handle (they could only get my monthly payments to $1200). I thought that BK may be what I should do, but then I started seeing information on settling on these boards.
Could someone out there please give me some more information on settling and how that process works? Do you think that is a good option for me?
Thanks in advance for any and all that reply!
@vanasse2002 wrote:I am struggling with what I should do.
Here's my background: Bought my house in 2006, have never had a late payment. Refied to lower payment to $920 and am still current. Have two car payments totaling $508/month (camry and tacoma) and never had a late payment with those either. I have a small jon boat that is paid for. My problem is the cc. I have about $50,000 in cc debt. It has slowly been building up over the past few years due to several reasons.
I am now at the point where I can not afford to pay the minimum payments on them. I talked to some DMP and they could not get my payments low enough for me to handle (they could only get my monthly payments to $1200). I thought that BK may be what I should do, but then I started seeing information on settling on these boards.
Could someone out there please give me some more information on settling and how that process works? Do you think that is a good option for me?
Thanks in advance for any and all that reply!
Hi vanasse2002 and welcome to the forums!!!! Are any of your cards in collections? are they closed by the credit grantor? Open?
Community Leader,
DaBears
All of the accounts are still open. I have fallen one payment behind on some of them. I have just gotten to the point of not being able to pay the minimum balance so I am stuck and don't know what to do.
I will request a Moderator to move your post to the Bankruptcy thread as you will get more answers over there and the guru's on that thread will be able to guide you in the right direction. Sorry I couldn't be of any help.
Community Leader,
DaBears
@vanasse2002 wrote:All of the accounts are still open. I have fallen one payment behind on some of them. I have just gotten to the point of not being able to pay the minimum balance so I am stuck and don't know what to do.
Have you talked to the creditors to see if they can help you?
Welcome to the BK/DS side of the world! First off, DMPs and Debt Consolidation are worthless, so I'm really happy you joined the forums and asked in here. To give a quick explanation of the above statement: DMP = credit hit AND pay in full, so that sucks, and debt CONsolidation is a scam (built by the CC companies themselves) that tricks you into doubling your debt load.
OK, so:
What's your income/expenses situation look like, not including your minimum payments to your CC's?
The reason I ask is that if you qualify for BK7 and cannot get your debts settled off in 12-18 months, then it becomes a real decision. Here's the math you'll need:
Figure you can settle everything off for somewhere between 35¢ and 50¢ on the dollar. So, your 50K in CC debt is really more like $15K-$25K. Sounds a bit more managable doesn't it? Note: this total will generally be the same whether you use an attorney (don't use a debt settlement company, they're pretty much rip offs) or do it yourself. Attorneys will tend to get you better settlements, but then you add back in their fees. BUT, they can make sure the paperwork is right and sue on your behalf if the creditors get out of line.
Ok, that was a little rambley. So here's the deal, you cannot settle while you're current, so the question is, if you stopped making your mininum payments can you save between $850 and $1400/month (that's an 18 month plan). If the answer is yes, and you REALLY HAVE THE DISCIPLINE to save that money, then yes, settling is an option. But you HAVE to save it, because you need that money to execute your settlements (they're lump sum offers).
Now here's the reasoning... You'll see all over the BK side of the myFico forums how we're masters at rebuilding people from BK7 to 700 FICOs in about 24 months after discharge. A typical BK takes 3-4 months to complete, so generally speaking (and rounding) you're clear of your debt and back to a 700 in about 30 months. However, you do have that BK looming over you for the rest of your life.
On the debt settlement side of the coin, if you settle all your debts, you really can't start a rebuild until the LAST one is recorded as "paid/settled/closed". Then you can start, and you'll typically see yourself back to decent credit within a year or year and a half. So, if it takes you 12 months to settle, add 12-18 for recovery and you're back at 30, but without the BK. You'll have a little less cash on hand, but not having the BK is worth it... trust me. If it takes you 18 months to settle, somewhere around 30-36 months you'll be back to decent credit.
In any event, if you don't have a written budget, you HAVE to start there before you make this decision. If you make it a rice and beans budget, and you can get out in 12 months w/o BK, its totally worth it.
Good luck!
-SM
I agree with soulmaster on many of his points. I don't like DMPs, and that's just a personal thing. I had a very, very bad experience with mine. I'm sure others have had great experiences, I'm just going from what's happened to me in the past.
Also BK is a last resort type of thing. I like his point on that. If there's anyway you can hunker down and get this debt down without going that route, I'd do my research on that.
I do have to disagree that you can't settle a debt that is current. I've been there and done that. It does affect your credit, but it saved me money and I was able to recover from the sting.