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credit card debt should i or shouldnt i

Established Contributor

Re: credit card debt should i or shouldnt i

@OpenG


"how can they make money off the next recession."


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Message 21 of 29
Established Contributor

Re: credit card debt should i or shouldnt i

Saw what you did there...
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Message 22 of 29
Community Leader
Valued Contributor

Re: credit card debt should i or shouldnt i

OP, sorry you are in this situation.  What kind of APR are you paying on these balances?  Do you have any balance transfer offers available?  Would you consider opening a new card with a 0% BT offer for an extended period (18-21 mos)?  While perhaps not a permanent solution, that could easily cut off a few hundred bucks a month in minimum payments.  Best of luck.


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Message 23 of 29
Established Contributor

Re: credit card debt should i or shouldnt i

I'd consider a consolidation loan, that way you would have 1 payment instead of 5 and possibly a much lower interest rate.

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Message 24 of 29
Valued Contributor

Re: credit card debt should i or shouldnt i

The most useful advice in this thread is from Sarge.  OP, you need to ask yourself if you reasonably believe that your situation might change.  If you have a reasonable (emphasize again reasonable) belief that the situation could improve, then continue struggling ahead with what you're doing.  If there's not reasonable reason to believe that things will change for the better, you need to make some tough choices.

 

When considering whether there is any possibility your situation will improve, you need to consider your wife's job prospects, your own prospects, opportunities to cut bills and expenses and everything else where you can either earn more money or spend less.  If you aren't already maximizing earning and minimizing spending, do that immediately.  If after all that you don't have any reasonable reason to believe you can make it, you have to consider other options.

 

One would be to consult a BK attorney and work towards a BK.  I don't have any experience with that, but it actually seems that credit recovery from BK could be much quicker than if you default and let the situation drag on.  Another option would be to consider defaulting on one or more of your cards.  My suggestion would be, if you go down this route, defaulting on all 5 cards might yield the best result if you think it through.  Defaulting on one card will pretty much lock you out of the credit marekts, and could trigger CLDs and balance chasing that will minimize your score; pretty much the same effect as if you default on all 5.  You say you have 17k total, so if that's even across 5 cards, that's about 3-4k each; I'd say unlikely that they will try to get a judgment for those amounts (every lender varies of course).  In any case, CCs are unsecured credit, so they can't put a lien on your home or anything like that.

 

Obviously, this would be the last resort.  You'll be locked out of the credit markets for years and some lenders may never want you back.  And you know what?  That's the least of your concerns right now, based on your description.  All the advice people have been giving is how to preserve your credit scores and such, but it seems like you are beyond that stage.  Do whatever you can to preserve your home and if you're in a better position in 2-3 years, some lenders may be willing to give you another chance at that time.

Message 25 of 29
Valued Contributor

Re: credit card debt should i or shouldnt i

It sounds like money is super tight, effectively you were living on less than $800 a month after paying the basic bills, perhaps even less.  My guess is this $17,000 debt is a significant amount versus your income.  Making the minimum payments on this debt will do nothing to reduce the principle which is the problem with CC debt.  I would talk with a bankruptcy attorney because even if your wife gets employment my guess is that 17k will continue to be a huge burden for many years to come.  The consulations are free and even if you decide to not file at least you know all of your options.  As others have stated I would do this sooner rather than later.  

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Message 26 of 29
Senior Contributor

Re: credit card debt should i or shouldnt i


happypill wrote:

The most useful advice in this thread is from Sarge.  OP, you need to ask yourself if you reasonably believe that your situation might change.  If you have a reasonable (emphasize again reasonable) belief that the situation could improve, then continue struggling ahead with what you're doing.  If there's not reasonable reason to believe that things will change for the better, you need to make some tough choices.

 

When considering whether there is any possibility your situation will improve, you need to consider your wife's job prospects, your own prospects, opportunities to cut bills and expenses and everything else where you can either earn more money or spend less.  If you aren't already maximizing earning and minimizing spending, do that immediately.  If after all that you don't have any reasonable reason to believe you can make it, you have to consider other options.

 

One would be to consult a BK attorney and work towards a BK.  I don't have any experience with that, but it actually seems that credit recovery from BK could be much quicker than if you default and let the situation drag on.  Another option would be to consider defaulting on one or more of your cards.  My suggestion would be, if you go down this route, defaulting on all 5 cards might yield the best result if you think it through.  Defaulting on one card will pretty much lock you out of the credit marekts, and could trigger CLDs and balance chasing that will minimize your score; pretty much the same effect as if you default on all 5.  You say you have 17k total, so if that's even across 5 cards, that's about 3-4k each; I'd say unlikely that they will try to get a judgment for those amounts (every lender varies of course).  In any case, CCs are unsecured credit, so they can't put a lien on your home or anything like that.

 

Obviously, this would be the last resort.  You'll be locked out of the credit markets for years and some lenders may never want you back.  And you know what?  That's the least of your concerns right now, based on your description.  All the advice people have been giving is how to preserve your credit scores and such, but it seems like you are beyond that stage.  Do whatever you can to preserve your home and if you're in a better position in 2-3 years, some lenders may be willing to give you another chance at that time.


I once had a judgement for $150.00.

 

It is very likely if it got to that point that judgements are a real concern. As you stated in your post "I'd say unlikely they will try to get a judgement for those amounts" and then you say "they can put a lien on your home or anything like that".

 

They need a JUDGEMENT to do those things.

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Message 27 of 29
New Contributor

Re: credit card debt should i or shouldnt i

This is sound and immediately effective advice +1

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Message 28 of 29
Highlighted
Valued Contributor

Re: credit card debt should i or shouldnt i

So sorry you're going through this. 


What was her prior career/experience? I have been earning about $200/month writing for a data content site. I keep it minimal because I don't want to devote a ton of time to it but it's possible to bring in several hundred per month on these sites.

 

Can she pick up another PT job?

Can she (or would she be interested in) nannying/baby sitting? It can be quite lucrative as child care is one of the largest expenses for many families.

 

Based on your current credit scores and your existing loan terms, would it make sense to try to refinance the house and/or car? 

How much are your minimum payments totalling on those 5 cards? e.g. when I plug in $17k personal loan at 6% for 5 years the payment is around $330. At double the rate - 12%, the payment is just under $380. Could a consolidation loan provide relief?

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Message 29 of 29