I need help now...I'm struggling

Anonymous · ‎10-06-2007

I'm 39 years old with a 9 year old daughter.

I make $110k per year and live paycheck to paycheck. I don't have any savings or retirement.

I have 6 credit cards with a total balance of $43k and a total credit limit of $56k. I also have a car loan with a balance of $23k. Rent is $1000 / month. All 3 credit scores are in 650 - 670 range.

Specific info for my debt (credit limit, current balance, minimum payment, current APR):

CC #1 ($17.5k, $17k, $880, 29.99%)
CC #2 ($14.5k, $14k, $447, 20.74%)
CC #3 ($1k, $350, $14, 24.24%)
CC #4 ($11.9k, $6.6k, $100, 13.99%)
CC #5 ($11k, $3.5k, $50, 9.99%)
CC #6 ($2k, $0, $0, 15.99%)
Car loan requires monthly pmt of $554; APR is 7.5%; pay-off date of March 2011
I can not transfer balances to CC #3, CC #4, CC #5 or CC #6
I have 2 late pmts on CC #2 with most recent being this past month
Except for CC #3, CC #4 and CC #5, the accounts have been open at least 24 months
I have 1 inquiry within last 6 months

What are my options? Should I file for bankrupcy?

Anonymous · ‎10-06-2007

Well I'm not sure how you are falling so far behind with this income. I can see the car payment pushing you over the top though.

I've read this over a few times. With your income you should be able to make $2,000 in monthly payments towards your debt rather easily.

FIRST. Talk to a credit consoler. Non profit or credit union, bank, ect.

1. This is what I would do. Call lenders and ask to help reduce interest rates!!!!!
2. Call a whole bunch of banks and ask what their rates for debt consolidation is.
3. Consolidate with an installment loan for 24 months.
.............. Installment debt payment of $2,000. (Maybe 36 months and try to pay at least $2,000 anyway)
4. You might consider trading your car in for a used car in the price range of $4k-$7k. That would free you up of $10k of debt or more right there. The car probably has equity in it. If not roll that in to the installment loan too if the interest rate is the same or lower.

BK would be an option, but filing BK with debt less then income, is that worth it? Paying this off is doable! But moving the debt is needed and not optional. Best way I can think of is with an installment type loan. I would be interested in what others have to offer too.

Good luck!

Message Edited by ilovepizza on 10-06-2007 10:07 PM

Anonymous · ‎10-06-2007

I have only been making that salary for approx 6 months. I was earning about $75k before that with commissions that were about $500 / month. My credit cards were run-up during that period. Also I got out of a relationship at the end of last year and it wasn't cheap. thanks for your response.

haulingthescoreup · ‎10-06-2007

This thread might do better on another board, maybe General Credit Issues. The Loans board tends to deal more with car loans, mortgages, installment loans, etc. It doesn't get as many readers as some of the others. Don't know, though...

Pizza?

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007

Anonymous · ‎10-06-2007

@Anonymous wrote:
I have only been making that salary for approx 6 months. I was earning about $75k before that with commissions that were about $500 / month. My credit cards were run-up during that period. Also I got out of a relationship at the end of last year and it wasn't cheap. thanks for your response.

Just to give you an idea of debt consolidation installments. I think 24 months is good for you, if you keep the car, maybe extend to 36 months.

$43,000 loan at:
(rounded up to $1)

@Anonymous months @ 10.9% is $3,799/mo
.... $2,581 added would be interest.

@Anonymous months @ 12.9% is $2,042/mo
.... $6,015 added would be interest.

@Anonymous months @ 10.9% is $2,003/mo
.... $5,052 added would be interest.

@Anonymous months @ 12.9% is $2,042/mo
.... $6,015 added would be interest.

@Anonymous months @ 8.9% is $1,366/mo
.... $6,154 added would be interest.

@Anonymous months @ 10.9% is $1,406/mo
.... $7,606 added would be interest.

@Anonymous months @ 12.9% is $1,447/mo
.... $9,084 added would be interest.

Play with the calculator on bnakrate.com
http://www.bankrate.com/brm/calculators/autos.asp

Anonymous · ‎10-06-2007

If you make $110k annually. $40k of that gross amount could apply to debt leaving you with $70k left over with out debt. That could put you debt free in 24 months. You probably could do it even sooner. But this should not effect your present way of life financially. I just hope you can find a low interest installment loan. I recently contacted over 50 banks to find my installment loan. It pays to shop around.

Fees!! Ask all fees to be disclosed, taxes, stamps, what ever.. All.
Ask them to add it all up for you.
Closing costs on loan.
get it written down.
compare.

Take an installment that is comfortable and pay more rather than one that you can barely make payments on. You can always over pay to save interest and PIF early. You'll be ok.

Anonymous · ‎10-06-2007

I bet it doesn't look so bad any more?

Anonymous · ‎10-06-2007

Haulingthescoreup -

Thanks for the suggestion. I certainly wii take your advice and move the thread.

One question relating to loans though.

Credit scores seem to be the most important factor lenders utilize in the determination of whether (or how much) credit will be issued to a loan applicant. A loan applicant's credit score is, in large part, tied to the % of total credit they are utilizing.

In my case, this % is extremely high. To compound matters, I do not have favorable APRs on the credit cards carrying the majority of balance. As a result, a large portion of my monthly debt payments cover nothing more than interest, which ultimately results in a relatively insignifant amount of my monthly payments being applied against the outstanding balances. Fast forward to the following month...my situation is not markedly different from the preceding month.

Consider my situation, however, if I obtained a personal loan to settle all outstanding credit card debt. Assuming an APR of 15% on a personal loan for $43k (the total amount of my credit card debt currently), interest during the 1st month of the loan would be approximately $530. For comparison, the montly interest on the same balance using my current average APR for credit card debt would be approximately $835. The net effect...I pay approximately $300 less in interest, which I can use to pay down debt or use to cover expenses that previously were charged to my credit card.

Considering the above scenario, would a lender tend to consider the favorable effect of approving a personal loan, and how such would make it more likely to pay back the personal loan. By the same token, would the lender be willing to assign less significance to my credit score?

Thanks in advance for your response,

By the way, how do I move this thread?

Anonymous · ‎10-06-2007

Pizza -

Thanks for the info and link.

Anonymous · ‎10-06-2007

Pizza -

How did you come up with the rates you used?