Unemployed - DEPLETED of all funds: 2 Credit Cards unpaid for first time ever!

[Looking_4_Answers]

Hi everyone - I will make this as short and sweet to gather some ideas on how to proceed in the very uncertain future...

My unemployment was terminated earlier this year, my bank account was just drained officially with perhaps 4-8 weeks in reserve for the most BASIC necessary living costs, and I have zero other options I haven't already tried (I sold my car, collectibles on Craig's List, cashed in my 401(k) at a massive 40% penalty/loss etc etc over the the last two years - and even with my obsessive resume sending I now for the FIRST time in my life have no prospects or finances whatsoever). I am actually surprised I "lasted" this long with no consistent income - but that's in the past now, and the future is of course pretty bleak at the moment.

I have always (literally, ALWAYS) had a ridiculous Fico score that at many times over the last 10-15 years exceeded 800, it was always a cake-walk for me since my first credit card in high-school to apply for any loan imaginable -- but, I suppose none of that matters now... sadly. I have YET to miss a payment on ANYTHING - but this is the end, I am 101% certain after going over the numbers over and over. I am done, and have cancelled all of my "Auto Pays."

My main point for this post and joining the Forums... is WHAT DO I DO NOW, and HOW BAD WILL IT HURT ME?

1. I have just enough finances left at this point to keep my house and get groceries for another month or two at the most

2. I was able through very hard work and sacrifice over the last 2 years to pay off ALL of my credit cards, except for two (Citi Bank and Bank of America). Even though after cashing in my 401(k), selling my car, and selling everything I had that was of any value on Craig's List etc... I was able to pay off nearly $20,000 in credit cards, BUT, I still have $17,000 on Bank of America and $2,600 on Citi Bank's card - two years of zero income with food, mortgage, electric, gas etc etc etc REALLY adds up when you go from 50 hours a week to ZERO.

So my ultimate question is: Since I have no ability to pay these cards, what do I do, and how bad will it affect me in the future (since although this seems so hopeless, it can't last forever)? Will I be totally screwed out of a mortgage or car loan for all of eternity, or for the next 7 years... or 7 years from the point my card(s) go into "collection" phase after I haven't paid them for 3-6 months in a row? Or - if by some ridiculous miracle I'm able to find work very soon, would it benefit me to ask for a "settlement" from my card companies (or is that just as bad on my credit score anyway, and I might as well save the meager money I have)?

THANK YOU so much for ANY thoughts, insights, and direction. The hard part is knowing I have OBSESSED for more than a decade over timely and even early payments on EVERYTHING from cell phone to utilities, and I was so proud when six years ago I bought my first home and saw I had over an 800 credit score - but, this is now, and I have to face reality - but I'm just not sure if there are any options or choices I have no entertained or exhausted? Thanks again!

[MissCredit9]

I think finding employment is what u should put all of your focus into.... maybe u should try something outside of your field until the job market improves.. the service industry might be a great way to make a decent living for now... good luck

[Looking_4_Answers]

If I put any more effort into finding work, I'l end up on medication and in a wheel chair staring at the ceiling. I totally understand what you're saying, but I have tried everything from applying at convenience stores (and I'm an engineer used to making over $30 an hour), to GAS STATIONS!

What I really need is some answers to prepare me for the worse of what's coming. I cashed in a 401(k) I worked 50 hours a week at the maximum contribution only to see nearly half of it eaten up by the government, penalties, and early withdrawal taxes and fees --- I'd say I'm trying everything I can. I even sold my collectible 1960's Muscle Car at a $22,000 LOSS (not for $22,000, but for a $22,000 LOSS!) last year... so, what I would really like are some answers to my specific questions. Thanks.

[randeman]

You have my sympathy.  I know your pain as I was in a similar place years ago, and it seemed like every time I was coming out of my rut, something else happened.  I was beginning to feel like Job financially. 

Now that that is out of the way, listen up: 

FIND A JOB.  ANY JOB.  Actually, find two.  Flip burgers, clean houses, wash cars, whatever the &%$# it takes.  Don't sit around feeling sorry for yourself.  That's the easy way out.  I don't know what the minimum monthly payment is on $19,600 in cards, but find out and cover it.  Credit is your good name.  Credit is, for all intents and purposes, your honor.  That may sound old fashioned, but that's the crux.  Nothing is forever in life.  You're down, but I sincerely doubt that you are out.  I know that that is easy for someone to say who has a good job with a decent income, but you were where I am once and if you really make an effort, you can be there again.

Or, you can sit around, feel sorry for yourself, let your accounts go into collections, file bankruptcy, and pay exorbitant interest rates for the next ten years, assuming someone will give you credit.  Actually, it will be much longer than that, because not only will you suffer through the ten years of bankruptcy, then you have to start all over  again.  You will have a few more years of rebuilding with small credit lines and exorbitant interest rates.  Either way, not a lot of fun. 

Hang in there and my very best wishes.

[CBTS]

---

@randeman wrote:

You have my sympathy.  I know your pain as I was in a similar place years ago, and it seemed like every time I was coming out of my rut, something else happened.  I was beginning to feel like Job financially. 

Now that that is out of the way, listen up: 

FIND A JOB.  ANY JOB.  Actually, find two.  Flip burgers, clean houses, wash cars, whatever the &%$# it takes.  Don't sit around feeling sorry for yourself.  That's the easy way out.  I don't know what the minimum monthly payment is on $19,600 in cards, but find out and cover it.  Credit is your good name.  Credit is, for all intents and purposes, your honor.  That may sound old fashioned, but that's the crux.  Nothing is forever in life.  You're down, but I sincerely doubt that you are out.  I know that that is easy for someone to say who has a good job with a decent income, but you were where I am once and if you really make an effort, you can be there again.

Or, you can sit around, feel sorry for yourself, let your accounts go into collections, file bankruptcy, and pay exorbitant interest rates for the next ten years, assuming someone will give you credit.  Actually, it will be much longer than that, because not only will you suffer through the ten years of bankruptcy, then you have to start all over  again.  You will have a few more years of rebuilding with small credit lines and exorbitant interest rates.  Either way, not a lot of fun. 

Hang in there and my very best wishes.

---

I agree wholeheartedly with everything randeman said.

[enharu]

Sorry to hear about your situation. Like randeman said, find ANY job as a temporary gig, rather than to just sit at home. You should consider relocating for a job if you have to.

In the meantime, you might want to enroll in a debt management program, or even consult local legal aid for free legal advice about the possibility for filing bankruptcy as a LAST resort.

Have you also tapped into unemployment benefits? That's one avenue you can explore.

If you have other assets remaining, such as property, you might want to consider selling too now. The banks probably will eventually sue you to obtain a lien on your assets if you default on them.

[enharu]

To add: if you default on those accounts, you will have a very hard time obtaining any kind of new credit for a good amount of time. Those banks might blacklist you indefinitely as well. Some people continue to be blacklisted by citi even after more than 2 decades.


You also would want to sell any assets before the bank obtains a lien in them. Most people do not want to buy property without a clean title.

[Crashem]

OP,

Obviously finding work is your first priority.  At this point, I wouldn't worry about what effect this all is going to have on your credit.  You have more pressing concerns.

There are no real options.  Some banks (i forget if the ones you listed have one) have a program to work with you if have a financial emergency.  I would consider calling and asking about it.  Usually involves reduced or suspended payments for a certain time period.  The reality however is that if you don't find a source of income soon, your credit will get ruined.  There is no preventing that aside from paying eventually.  Hopefully they will give you breathing room.  But do not pay the credit cards instead of mortgage or other must have living expenses.  If your house has equity, I would definitely consider selling before any foreclosures etc.  If it doesn't have equity, you might consider a strategic default.

[09Lexie]

Welcome to the forum. Sorry that you've come to the forum under these circumstances. You have already indicated that you've sold your valuables and I'm assuming you are also doing without frills like cable TV, cell phone etc. As others have suggested, any job would help keep the lights on and food on the table.

You've asked about your credit cards and I can understand your concern about your credit rating but if things are as dire as you state IMO your mortgage and basic necessities are far more important. Your credit will rebound if your accts go to CAs and/or COs-how long or how bad it drops is anyone's guess.

The time to talk settlement is when you have an ability to settle. From your post it sounded like that will happen when you find employment.

It is time to look outside of your field and secure employment first. Whatever happens to your cc's now can be addressed when you have the ability to pay your bills.

Good luck.

[jeffery581]

1) apply for food stamps if you can or home energy assistance programs,  and or obama phone? call dhs and ask for any help. salvation army

2) If working at wendys keeps your house(and credit) then its worth it. (nobody has to know)

3) Food pantry

4)apply at places that don't run help wanted ads

5) Welcome to the new global economy- im afraid it won't get any better(just look at daily job cuts.com). 

6) roommate?

7) apply for zero % financing?

I went through this years ago. And let me tell you this economy is literally killing people. I know it seams nobody cares but some do. (although you wouldn't really notice it looking around and seeing the state of everything.)