Valued Contributor
GregB
Posts: 1,670
Registered: ‎05-24-2007
Huge CC Debt and still need $25K more
[ Edited ]

I'm near the end of a huge drain on my finances. It was caused by multiple factors:

 

- I have a small business where the entire industry has been going downhill since late 2000. It has now been hit really hard by the current economic conditions. The gross is currently off 75% from the peak in 2000.

- I have another small business that has been hit by the current economy.

- My ex embezzled money from both business and dug a big financial hole.

- I'm at the end of a 5+ year divorce that has cost a fortune. When filing for divorce, my ex maxed out all accounts to which she had access.

- I've become a single parent as my ex does not contribute to any expenses of my son. I have also had huge legal expenses as a result of her being convicted of criminal charges including Willful Child Cruelty but still wanting conpletely unrestricted visitation.

 

I started with very good credit and substantial savings but now have substantial debt. I now need $25K more for final property settlement in divorce. My CC are now:

 

Account         Rate%   Balance     Limit     Notes
 
Personal Accounts:        
Amex            15.24         $0    $3,100   
BMW             13.24         $0   $15,000   
HomeDepot       25.99         $0   $13,500    Store Card   
Kohl's          21.90         $0    $1,500    Store Card    
Sears MC        14.49         $0    $8,000   
       
HELOC            4.63    $30,000   $30,000       
CapOne           5.99    $16,380   $18,000   
Chase#1          4.99     $7,450   $13,500    BT Promo Rate, goes to 24.24 2/1/2011 
Chase#2          2.99    $18,390   $20,000    BT Promo Rate, goes to 14.24 3/1/2011 
       
Business Accounts:
BofA             0.00    $30,567   $46,000    BT Promo Rate, goes to 8.49 7/1/2010 
CapOneBus        9.99     $3,939   $20,000   
Disc             0.00    $11,392   $15,000    0% Short Term Promo, goes to 18.24 4/1/2010 
---------------------------------------------------------------------------------------- 
Total Revolving on CRs  $118,118  $203,600    58% utilization on Credit Reports   


       
Business Accounts that don't appear on Personal CR      

       
Advanta         10.99     $7,000    N.A.      Advanta cancelled all CC so no new charges 
Amex-LOC         9.49     $2,700    N.A.      Amex cancelled all LOC so no new charges  
BofA MC          7.99     $7,100    $7,400   
BofA Visa       16.49         $0   $56,000   
Lowes Bus       21.00         $0    $7,500    Store Card  
       
       
TotRevolving            $134,918  $274,500

Average Interest Rate on actual balances:      3.91%    
(Rate*Balance) / Balance    

 

My current FICO has dropped to 708 and current FAKO from EX is now 744. I'm afraid that any more debt might start the landslide where creditors see too much debt and lower my limits, leading to further AA. As you can see I have a current effective interest rate on this debt of only 3.91%. Charging the $25K on the BofA visa at 16.49% would be a killer from the standpoint of average interest rate AND I would then owe BofA a total of $65K, which seems it would catch their attention.

 

I'm using the temporary Discover 0$ promo to pay the CapOne Business to $0 by next reporting so I should get a slight score boost when I have one more CC reporting $0.

 

Any great ideas that I'm missing?

Message Edited by GregB on 02-09-2010 08:20 AM
Senior Contributor
BungalowMo
Posts: 4,237
Registered: ‎05-01-2008
Re: Huge CC Debt and still need $25K more

GregB wrote:
- My ex embezzled money from both business and dug a big financial hole.

- I'm at the end of a 5+ year divorce that has cost a fortune. When filing for divorce, my ex maxed out all accounts to which she had access.

- I've become a single parent as my ex does not contribute to any expenses of my son. I have also had huge legal expenses as a result of her being convicted of criminal charges including Willful Child Cruelty but still wanting conpletely unrestricted visitation.


 

Any great ideas that I'm missing?


A great lawyer & ..... a Louisville Slugger?  (JK)

 

I cannot believe you have to PAY HER when she's, quite obviously, been draining your finances to the hilt!  :smileymad:

 

I think a top notch lawyer will be worth every penny they charge.



Starting Score: 07/2011 TU 732 - EQ 717 - EX 702
Current Score: 06/2014 TU 739 - EQ '08 709 - EX 721
Goal Score: 850

Bury me in the garden...last app 06.18.14

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Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
Re: Huge CC Debt and still need $25K more
Any chance you can get the HELOC up to $55K (or more)?

That $30K might be included in your revolving util on one or two of your reports. I think Experian, maybe? keeps counting lines of credit in revolving util until the CL's are somewhere in the $30-$35K range. Once they're up around $40K, they aren't included in util.

At any rate, I really think I'd try for a loan in your situation. It won't affect your revolving util, even though the balance will show on your reports. The trick would be the repayment period, of course.

I'm sorry, what a God-awful mess you've had to go through. I hope you're in the home stretch now.
* 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
Valued Contributor
GregB
Posts: 1,670
Registered: ‎05-24-2007
Re: Huge CC Debt and still need $25K more
[ Edited ]

BungalowMo:

 

I've got a great lawyer who is recommending we settle as I would spend that much "winning". To win, I would have to sell my house and then she would owe me lots of money that I would never see from her as she has violated every court order I can think of. She dumped much of it into a stupid house purchase that is worth less than the loan. The system is nearly useless.

 

Too late for a Louisville Slugger now.........similar ideas suggested by all of our friends and most of her former friends, none of whom associate with her now. I'm partial to cattle prods and cliffs........J/K.

 

Hauling:

 

With my house in both our names a new HELOC can only be done after this settlement. My attorney says that immediately after property settlement I am able to get a new trust deed on the house. I can't see doing that through the existing lender as there isn't much additional equity over Mortgage and HELOC. I might be able to find a private lender, more likely with house as collateral. I was thinking that made sense eventually but it doesn't help this issue where I'm afraid of AA from CC companies. Advanta closing, Amex discontinuing LOC, CapOne reporting Business card on Personal, Private Loan needing paid back which resulted in $16,000 on personal CapOne have all added up to a big number showing on my reports. I'm actually amazed that my scores are still above 700. I find it amazing that CapOne personal going from $1K to $16K and Discover going from $6K to $11K together dropped my EQ FICO only 7 points. This would be less painfull if I still had the $82K limit on Amex-LOC that was there before the credit crunch.

 

I do think that the HELOC is showing on revolving on all three CRAs now. I think it was reported as Home Loan by one of them a year or two ago. I'm only using ScoreWatch and CreditExpert currently. EX gives me full reports whenever I want and ScoreWatch gives me an actual FICO score even though I would have to pay extra for a full report.

 

The best I'm coming up with is pay very little on the Business accounts that don't show even though the interest is higher, pay the CapOne Business to $0 before statement cuts in a few days, then charge the money on March 1 on cards that just cycled a few days before. This gives me max time to try to adjust amounts that report in late March or so. If Discover doesn't get paid off with business cash flow by end of Promo in April and goes to 18.24%, at least it won't be all of it, it won't be long, and it is deductable as business expense.

Message Edited by GregB on 02-09-2010 07:29 PM
Regular Contributor
OnWayUpinTexas
Posts: 142
Registered: ‎01-19-2010
Re: Huge CC Debt and still need $25K more

GregB,

 

This may seem like a random idea, but have you considered a Prosper.com or LendingClub.com loan?  I think you can get up to $25,000, can be a business or personal loan (I think), and you can likely get a lower interest rate than on your BoA card.  Don't know if that gets you the money fast enough.  I've had two loans from Prosper (both paid off now) in liquidity-crunch situations.  Prosper does a soft pull from Experian to see how much you can qualify for, so you can at least "test the waters," then reports to EX and TU as an "unsecured loan" after the loan is funded.

 

Anyway, might be worth looking into.  Just an idea ...

Starting Score: 542 (in 2006)
Current Score: 661 (TU FICO), 677 (EQ FICO), 672 (EX FICO)
Goal Score: 750+
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008
Re: Huge CC Debt and still need $25K more

Social lending might be an option.  I did a $25,000 loan from Pertuity Direct last March at 10%.  They aren't in business any more (sold everything off)...but some of the others might be an option.  Social lending has gotten a little more conservative and restrictive though, from what I have seen. 

 

 

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09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Valued Contributor
GregB
Posts: 1,670
Registered: ‎05-24-2007
Re: Huge CC Debt and still need $25K more

OnWayUp & TxJohn,

 

That sounds interesting. I wasn't aware of this option. As long as I don't have an inquiry on my reports to hurt my score, it seems worth persuing. 10% interest on a loan that does not show on my reports is worthwhile. From the info on the websites, It looks like interest could be higher than that unless my credit is in their best catagory. My credit has zero negatives but my util on revolving is over 50% and it is a big number.

 

A FICO of 708 is not exactly AA credit. I just paid off the CapOneBus where the statement cuts tomorrow so now have less than 50% of revolving showing a balance. Hopefully that will give my score a good bump.

Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008
Re: Huge CC Debt and still need $25K more
[ Edited ]

The 10% rate I got was partially due to the fact that I was in the first $500,000 of total lending that Pertuity Direct funded.  In fact their Sr. Vice President called me on the phone and asked me if I would be willing to do an interview with the Wall Street Journal just to honestly answer their questions on my experience and opinion.  I agreed, but then the date ended up being a conflict with other things.

 

After 6 months I noticed they started reporting they didn't do new loans in Texas.  Then I heard that their board voted to divest and they sourced out all the loans to a third party servicer and shut down their funding company.

 

I had a hard pull on EX, but Pertuity never reported the loan.  However, all the other social lenders do report.

 

In what I have seen on Prosper and Lending Club, you have to have really good credit to get their top tier rates. And you need really good credit to get their max loan amount ($25k).  The underwriting will grade your credit, then you have to "verify" certain info such as employment and income.  Once you are approved and graded they allow investers to bid...but at anytime, based upon underwriting they may come back and reduce the amount you are allowed to borrow.

 

I had a friend who had requested $15k.  Underwriting reduced "allowed/approved" amount to $7800.  Investor bidding had the loan funded 100%, but then underwriting cancelled the loan because when they did a search on his employer, they determined the employer was not good enough (I guess the age of the company or something they found about the company) anyway the source of income was cited as the problem.

 

IME  :smileyhappy:

 

 

Message Edited by txjohn on 02-11-2010 09:04 AM
Message Edited by txjohn on 02-11-2010 09:09 AM

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09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Senior Contributor
fishbjc
Posts: 3,414
Registered: ‎11-30-2007
Re: Huge CC Debt and still need $25K more

If I win Wednesday's lotto, I'll *hook you up*!

 

Kudo's to you for caring for your child, keep your eye on that prize....there is NOTHING more important.  Your *ex* sounds like a real piece of work. 

 

I'll say a prayer for you, if you don't mind.

Valued Contributor
GregB
Posts: 1,670
Registered: ‎05-24-2007
Re: Huge CC Debt and still need $25K more

This got even more interesting with the CC Companies changing things, perhaps due to the new regulations.

 

1. The 2/12 CapOne Statement showed the interest rate changed from 5.99% to 15.9%. I called and they said they had sent me a letter. I actually believe them since they mailed it to my home address instead of my correct mailing address, which is secure mail delivery at work.  With the help of an understanding landlord (business building), I diverted a large amount of business cash flow to that, paying it down to $7150 by the time the next statement closed 3/12. Paying 15.9% interest does ugly things to finances and that has to go ASAP.

 

2. BofA did a product change on the $56K limit business account that I was trying not to use and keep for emergencies. They state that the new account will not be active until I send them requested information and the account is approved. They quoted new key derogatory information on a credit report. There is NO derogatory info on mine, new or old. I pulled up the original application and my ex.'s SSN is on there. I am assuming it is something on hers, not mine. Since that business has been losing money for 4 years, I can't imagine I would pass any review. I just finally unloaded enough overhead for that business to break even. With the last big change of eliminating some rent as of 2/28/2010, that won't show on financial reports for a few months.

 

I managed to get the CapOne Bus paid to $0 by the statement for 2/13. Since that now shows on my personal reports, that would have boosted my score a bit with one less account showing a balance. Unfortunately, I was distracted with the effort of moving out of the extra commercial building and didn't PIF the BMW card before statement date, so it reported $328. My score stayed the same.

 

I gained some time with the last minute attempts by my ex to better her position. She lied to her own attorney in a meeting and I had the documents to prove it. At least this way I can get the accounts in their best position to report and pay with a CC that has just reported $0 to the CRAs. I should have her name off the deed to my house so can look for some private money as a third or increase the amount of the second.

 

The big advantage to this is that I now know I have reached the bottom of the hole. Unfortunately, it is a big hole.

 

It looks like Prosper, etc. wouldn't be enough money to matter and would result in inquiries and a new account on my CRs.