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About 20K in debt..Advice please?

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Jbb2788
Regular Contributor

About 20K in debt..Advice please?

Hello everyone-

My wife and I have iccumulated roughly $20,000 in credit card debt. We live in Oklahoma so I'm not yet finished with my degree so we are living on a pretty low income. (About $26,000/year) Currently, my wife is pregnant and unable to work, this will be our second child. We want to pay our debts but at this time we just cannot. I'm 100% against filing for bankruptcy and I'm thinking about asking if the credit card companies to settle. My questions are; has anyone ever settled debts with the credit card companies themselves or is a debt relief company the only way this can be done? Do I have any other options? Looking to stay as far away from legal consequences as possible, if possible. Thank you for any advice you may give me.

**10/31/13
EX-650
EQ-660
TU-660
GOAL: 750 ACROSS THE BOARD
Last App: 10/13
Gardening Until: 4/14 (At least)
Message 1 of 13
12 REPLIES 12
Anonymous
Not applicable

Re: About 20K in debt..Advice please?

You can settle with the credit card companies but usually this is done after the debt is reported as late. 

 

The open secret in the industry is that you can get away with paying probably 20% or less if you wait long enough. However, to my knowledge the banks will not settle while the debt is current. You need to wait until you are officially late, and this will severely damage your credit, and will take quite a few years to build it back up (others should confirm this). 

 

What does your credit look like? Do you have 20k in debt on credit cards that have a total of 100k in available credit? If your credit is still good at this point, you might be able to apply for an installment loan with lower interest. You can also flatly call the bank and say "Can you please decrease my APR? If not I will transfer my balance to a lower APR". They will sometimes do that. If your credit is good you can also apply for a card that has a 0% APR for a year and 0% Balance Transfer fee for intro period, like the Chase Slate. This will only be worthwhile if Chase will give you a high enough limit (10k or more). 

 

The responsible way to do this is try to decrease APR as much as possible. Then put everything into paying that debt. You have a familiy and are growing it, so now is the time to be responsible. Cut all your expenses to the bone for a few years. Shop at the cheapest grocery store out there. Buy the cheapest things. Cut cable, high speed internet that you might not need etc. Take extra jobs cutting people's lawn etc in any spare time that you might have. Have the wife do anything she can do from home (does she have any skills designing websites or such?). Then when she has the baby and is not planning on going to work full time, set up a home daycare and take care of other people's kids for money. Move to a cheaper apartment, furnish on Craig's list. It will hurt, but 5 years down the road you will thank yourself. 

 

Message 2 of 13
Jbb2788
Regular Contributor

Re: About 20K in debt..Advice please?

My credit scores are currently sitting at around 650 so they are not completely shot. I have a lot of inquiries within the past year that are really hurting me getting a credit card or loan with a high enough line to transfer the credit card balances to so that I could take advantage of a 0% offer for a while. I'm pretty stuck at this point so getting my hands dirty and calling the credit card companies and asking for a lower APR is probably my best option. The downside to this is that they will probably want to see my credit report which will end with another ding on my credit and no guarentee of a lower rate. 

**10/31/13
EX-650
EQ-660
TU-660
GOAL: 750 ACROSS THE BOARD
Last App: 10/13
Gardening Until: 4/14 (At least)
Message 3 of 13
EW800
Valued Contributor

Re: About 20K in debt..Advice please?

I believe much of what was expressed by LearningFast is spot on. My wife and went through some horrible credit card debt for many years, that caused us a lot of sleepless nights. I can just imagine what you are going through with another child on the way.

I tried to settle with some of my creditors, however as mentioned above, my experience was that they will not even consider it until you are behind a few payments, but that wrecks the credit.

Is there anything that can be done to increase income? We had to settle on one card, but with everything else we completely changed our living. We cut every possible expense, and then some. It was painful. We then took every single dine we could and sent it to the credit card companies, while not charging even a dime. It was hard work, but after about 18-24 mobths of basically eating rice and beans, we got rid of 100% of our credit card debt. As cards got paid off, I then sent what we had been sending to the paid off card to the next card. It was a lot of pain, and embarrassing at times, but SO worth it now. It is great to not be owned by the credit card executives.

I am not an expert in this area, therefore you will receive much better advice than mine, but thought I would at least share my experience.

Best wishes!!
Year 2012: All Scores in the 520 range, during a foreclosure, CC Settlement and high UTIL. Very ugly days...
April 2023: EX8: 840; EQ8: 832; TU8: 842 -- Middle Mortgage Score: 822
In My Wallet: Discover $73.7K; Cap1 Venture $48.7K; Amex ED $38K; Amex Optima $2.5K; Amex Delta Gold $18K; Citi Costco $22.5K; Cap1 Plat $8.4K; Barclay $7K; Chase Amazon $6K; BoA Plat $21.6K; Citi TY Pref $21K; US Bank $4K; Dell $5K; Care Credit $6.5K. Total Revolving CL: $296K
My UTIL: Less than 1% - Only allow about $10 a month to report, on one account. .
Message 4 of 13
RobertEG
Legendary Contributor

Re: About 20K in debt..Advice please?

Your current creditors can pull your credit report at any time without any express permission from you.

Internal account review is a permissible purpose, and will be coded as soft.  Thus, I would not be concerned about your request for setting up terms as triggering an inquiry that would otherwise not be done.

 

If you feel you have sufficient funds to offer a settlement at this point, that suggests that you can handle reduced payments.

I have seen posts by others relating to settlement of non-delinquent accounts, so I would not summarily exclude thatt as a possible offer if you have the funds.

 

Speaking with them and getting under a reduced payment plan seems like the best bet at this point.

 

Above all, my goal would be to avoid account delinquencies.

 

Message 5 of 13
ando35
Frequent Contributor

Re: About 20K in debt..Advice please?

find a reputable debt consolidation firm and settle. You will have to pay only 50 to 60 % of what you owe. Do not file for bankruptcy it is much harder to rebuild then what people will tell you . 

Message 6 of 13
ando35
Frequent Contributor

Re: About 20K in debt..Advice please?

Oh and make sure your payment is condionL that they will delete any bad marks they are currently reporting. 

Message 7 of 13
Anonymous
Not applicable

Re: About 20K in debt..Advice please?

Might help if you could list the individual debt amounts, credit limits and minimum payments along with any current assets (that could be applied) and the monthly amount you could reasonably put towards this debt.

Message 8 of 13
sjt
Senior Contributor

Re: About 20K in debt..Advice please?


Jbb2788 wrote:

Hello everyone-

My wife and I have iccumulated roughly $20,000 in credit card debt. We live in Oklahoma so I'm not yet finished with my degree so we are living on a pretty low income. (About $26,000/year) Currently, my wife is pregnant and unable to work, this will be our second child. We want to pay our debts but at this time we just cannot. I'm 100% against filing for bankruptcy and I'm thinking about asking if the credit card companies to settle. My questions are; has anyone ever settled debts with the credit card companies themselves or is a debt relief company the only way this can be done? Do I have any other options? Looking to stay as far away from legal consequences as possible, if possible. Thank you for any advice you may give me.


 

Look into a non profit consumer credit counseling service. They can get your interest rates reduced and a good payment plan. In many cases they creditors will positive re-age your accounts after a few payments or completion of the program.

 

 

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Message 9 of 13
Lyythine
Established Contributor

Re: About 20K in debt..Advice please?

I concur with the previous poster, posting the debt, company, amounts due, apr, etc: will greatly help in giving you some alternatives.  I am whole-heartedly against letting the accounts default unless its the only option. 

Message 10 of 13
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