topic Re: 14 credit cards and 2 personal loans. in Rebuilding Your Credit

14 credit cards and 2 personal loans.

Nolander99 — Mon, 08 Apr 2024 15:04:28 GMT

Hello all first post here.

I need some advice on what to do on my credit card situation. I currently have between 6 credit cards with a total current balance of $70,000 on a debt management plan with Money Management International (non-profit) started last year 4/2023. Monthly payments are $2035.

I also have 8 more credit cards and 2 personal loans which I have listed here with their balances and interest rates.

Capital One $1335 / $36 / 24.24%

US bank loan $18794 / 521.88 / 9.24%

Chase $2035/ $72 / 21%

Citibank $3769 / $104 / 21%

Alliant $19477 / $457 / 14.24%

BlockFi $14072 / $ 299.78 / 21%

Chase $4731/ $109 / 11%

BofA $23742 / $426 / 9.9%

Travis CU loan $17768 / $405.57 / 7.9%

Apple $11402 / $ 332 / 21.24%

Total balance is $99,265 ($2,749/mo )

I also have 2 cars, monthly payments are $1034 at 2.9%

Travis CU auto $34838 /$579.03 / 2.9%

Travis CU auto $27362 /$454.77 / 2.9%

My current income monthly net is $12,000.

My rent is $4250.

Misc bills are $3846.

Credit card debt monthly due between my 16 credit cards and 2 personal loans is $4784.

I was thinking of doing Ch 13 but I do have some savings and wanted to try negotiating a settlement with the credit cards first.

Please advise.

current Fico 8 is

719 Equifax / 694 TransUn / 696 Experian

Re: 14 credit cards and 2 personal loans.

CreditPoor — Mon, 08 Apr 2024 15:35:14 GMT

It's actually simple. First cut up your credit cards because you're not a credit card person and that's okay. Many Americans aren't, in fact most aren't. Use a debit card from here on out. Next work more, there are always side hustles you can do to earn more money to pay off debt. Finally, if you aren't upside down in the car loans sell one of them.

If you have savings use it to pay off the debt. Also, I have found that when people say their "Misc Bills" add up to a high amount, there is always more fat that can be trimmed. Luxuries need to be cut out entirely, this includes Netflix, Hulu...etc. Eating out is a thing of the past until you get some debt paid off. It's gonna take discipline and work but it can be done

Re: 14 credit cards and 2 personal loans.

CYBERSAM — Mon, 08 Apr 2024 16:31:51 GMT

Without going to details much, every CC statement has a payment plan that you can pay your balance in 3 years. This is normally more than your minimum monthly balance, now if you can pay that number every month you'll have CCs paid off in 3 years.

I would recommend to do this immediately till you figure out what to do or get another loan etc. This way even if it takes you few months to decided which way to go, at least you are on a path to pay off your CCs in 3 years.

Re: 14 credit cards and 2 personal loans.

Nolander99 — Mon, 08 Apr 2024 16:35:45 GMT

Thank you for your comment. I wish it were more simple. I’m 42 and I have a wife with 2 kids and even after cutting all my kids activities including swimming, jiu jitsu, etc. my budget for misc bills drops from $3846 down to $3374.

This includes groceries for a family of 4, gas, utilities, internet, wireless , insurance. Basically the necessities with the only addition being my kids tuition.

Both of my cars values are worth less than the loans so I would need to pay thousands for the balance owed. I’ve stopped using my credit cards for the past year so I haven’t accumulated extra debt. The only subscriptions I have are what’s included for free with my T-Mobile wireless account. And the only times we eat out is if someone else is treating us (family, friends) but it’s not often. The side hustles I’ve researched have always included an upfront cost with no guarantees of course and it takes away from the time I spend with my kids after working a FT job sometimes with OT. If I were single it would be very simple but once wife and kids are involved it gets complicated.

This past year I’ve been trying to improve my credit score (originally mid 600) to what it is today.

A year ago my revolving utilization has been in the 90% . First I got all my cards with balances down to 87%. I just crossed the 78% threshold. It’s currently an average of 77%. My next goal is 68% or less, and so on.

Re: 14 credit cards and 2 personal loans.

captainsensation — Mon, 08 Apr 2024 16:36:08 GMT

I would drop one or both of the cars. Get a cheaper used car if you can. Use that money to pay off the smaller balances. From there i would switch to the bigger balances and try to set up a repayment plan with those to avoid lates/charge offs. If that happens then you at least did as much damage control as possible. Try to pay for delete/settle on what you can once the dust clears. Good luck

Re: 14 credit cards and 2 personal loans.

CreditPoor — Mon, 08 Apr 2024 16:57:43 GMT

Set your credit score a side. It's unfortunate that this happened in your 40s but it's not impossible to overcome. Laziness and giving up is not an option, you must be an example to your kids and use this as a teaching opportunity.

Being 100K in credit and loan debt is a personal choice. There were many points in this journey that should have thrown up red flags, ie 30k looking for more credit, 40k looking for more credit, 50k seeking more credit and two cars. The fact that none of that phased you is a huge red flag.

Now unfortunately the harsh reality has set in, though further in the hole than you should have been. The reality is you're going to have to buckle down and make sacrifices

Contact your creditors to negotiate lower interest rates on your debts. Lower interest rates mean more of your payment goes towards reducing the principal balance.

Stay Motivated. Paying off debt requires discipline and perseverance. Celebrate small victories along the way and remind yourself of the financial freedom you’ll gain once the debt is paid off.

Lastly, remember the struggles along the way. These will be reminders for the future of what not to do with credit and debt.

Re: 14 credit cards and 2 personal loans.

NoMoreE46 — Mon, 08 Apr 2024 17:45:13 GMT

Welcome to MyFico @Nolander99 .

Looks like you are in a tough situation. You are taking the right direction by seeking some advice.

I know you detailed all

lot of info.

Would you confirm that everything now totals up as about $231,000 - viewed at a high level as:

$70,000 in a debt mgmt plan,

$99,000 in cards / loans and

$62,000 for two vehicles?

Re: 14 credit cards and 2 personal loans.

Nolander99 — Mon, 08 Apr 2024 17:49:53 GMT

The most recent balances according to my calculations are roughly $218,00 including the DMP, all the credit cards and the 2 vehicles.

Re: 14 credit cards and 2 personal loans.

NoMoreE46 — Mon, 08 Apr 2024 17:57:36 GMT

Ok so about $218,000.

You are free to speak with a BK attorney and I think you should.

Gather six months of paper work (card, loan and bank statements).

There are two types of BKs; the attorney should be able to guide you through which one

Ch 7 vs Ch 13 would be granted.

Re: 14 credit cards and 2 personal loans.

NoMoreE46 — Mon, 08 Apr 2024 18:02:18 GMT

Also, try reading up on the process at

Bouncing Back from Credit Problems

area.

Re: 14 credit cards and 2 personal loans.

Nolander99 — Mon, 08 Apr 2024 21:19:34 GMT

I did speak with a BK attorney last year and he gave me some basic info for Ch 13 because my income is too high.

"Chapter 13 bankruptcy for both wife and husband

length 3-6 months

cost $5000,

just one payment plan

reduce debt 50 cents on the dollar $2-3k/ mo

5 year plan

Wife’s credit will not be impacted"

I need to do more research in terms of what exemptions I would qualify for like keeping my vehicles, my rental lease, my whole life insurance policies. Very little assets right now other than the cash surrender value in my policies.

Re: 14 credit cards and 2 personal loans.

CreditPoor — Mon, 08 Apr 2024 21:48:42 GMT

Bankruptcy isn't cheap and considering you are a high earner it's not a guarantee that you'd be granted it. Whatever you choose to do I would not ignore the debt and hope it goes away or depend on bankruptcy. Have a solid plan in place and as previously suggested I would call the creditors and try and negotiate interest reduction to stop some of the bleeding.

If the wife isn't working maybe she can consider taking a part time to help out with the basics, so you can chip away at the debt

Re: 14 credit cards and 2 personal loans.

NoMoreE46 — Wed, 10 Apr 2024 17:42:44 GMT

So Ch 7 is not an option due to income.

You can probably reaffirm the two auto loans.

Generally, any retirement type accounts and life insurance policies are protected from the creditors but this varies by state.

Are the debts in both of your names?

Re: 14 credit cards and 2 personal loans.

Nolander99 — Thu, 11 Apr 2024 15:17:43 GMT

My wife's business & personal debt adds to the total an additional $40K.

What my credit report doesn't see is that I pay a family members rent which is $1650+ utilities. I also am paying back a family loan which is an additional $1000.

From what I understand about Ch 7 is that there are two parts to the means test. 1st part is based solely on income. But the 2nd part takes into account all my debts and calculates if I have enough disposable income that would be enough for family expenses like food, gas, utilities, insurance, etc.

Including all the debt from above my disposable income is $863.

If the number is negative after taking account basic essential living expenses for a family of 4 then I should qualify for Ch 7.

I have meetings scheduled with lawyers in my area.

Re: 14 credit cards and 2 personal loans.

CorpCrMgr1 — Thu, 11 Apr 2024 15:13:27 GMT

@Nolander99 I suspect you are living in an UMC area. The cars, the rent, and private tuition basically indicate the life you are living. I'm all for sacrificing for the children. I lived that life for my child. It worked. Yes, my credit was a mess. Not today.

Check with their school for any tuition relief. Many private schools offer assistance. Pay off the smallest open balance first. Then work on the second smallest. Then the third, etc.

Keep your cars until they are costing you more than a better vehicle.

Draw up a budget and stick to it. Grocery shop at the Costco type places. Regular daily clothing also.

Put the children back in Judo if it's through you community programs. They are a lot less expensive. My daughter was number 1 in our state at one point. Just don't do the overnight travel contests.

Set aside an evening or two each week fir the children. On the weekends take them to the free places. Museums, parades, fly a kite in the park type of stuff. Go bicycle riding. Watch a high school sporting event. Swimming at the beach. Farmers market. Good luck!

Re: 14 credit cards and 2 personal loans.

ForwardLooking — Thu, 11 Apr 2024 20:16:19 GMT

@Nolander99 wrote:
...
What my credit report doesn't see is that I pay a family members rent which is $1650+ utilities. I also am paying back a family loan which is an additional $1000.
...

Why are you paying somone else's rent of $1650+ while you are struggling to pay your own obligations? A Bankruptcy judge and a trustee would more than likely frown on this. You really need to have a talk with that family member and say "I love you, I enjoyed helping you, but it is time for me to start taking care of myself and I cannot continue this support." It would not be allowed to be included in your means test because it is not your personal obligation or living expense.

Re: 14 credit cards and 2 personal loans.

Nolander99 — Thu, 11 Apr 2024 21:26:58 GMT

That is a great question and I wonder that myself, but it is a complicated answer as it usually is with family dynamics specifically, my father who got evicted from his home last year.

I had two weeks remaining from my family bonding leave with my newborn son and I was planning on spending it up in Lake Tahoe with my family when I got a call from my father saying that he’s getting evicted and he needs me to find him an apartment ASAP. Being the only son that is available to help originally I wanted to put him in an elderly home but in San Francisco Bay area full service senior housing cost between five to $10,000 a month.

So I found him the next best thing which is a 400 square-foot 1BR apartment and I signed up to be his caregiver. He also needs dialysis 3x /week and is on Medi-Cal.

This event is what really pushed things over the edge.

I am a co-signer and guarantor for his lease so I Am legally obligated to include this as one of my monthly expenses as well as include it in my income means test.

Re: 14 credit cards and 2 personal loans.

ForwardLooking — Thu, 11 Apr 2024 21:12:54 GMT

@Nolander99 wrote:
That is a great question and I wonder that myself, but it is a complicated answer as it usually is with family dynamics specifically, my father who got evicted from his home last year.

I had two weeks remaining from my family bonding leave with my newborn son and I was planning on spending it up in Lake Tahoe with my family when I got a call from my father saying that he’s getting evicted and he needs me to find him an apartment ASAP. Being the only son that is available to help originally I wanted to put him in an elderly home but in San Francisco Bay area full service senior housing cost between five to $10,000 a month.

So I found him the next best thing which is a 400 square-foot 1BR apartment and I signed up to be his caregiver. He also needs dialysis 3x /week and is on Medi-Cal.

This event is what really pushed things over the edge.

I am sorry to hear that. Definately don't want to put dad on the street. Hopefully the lawyer you are working with can find a way to spin it as a legitimate expense. I will be thinking of you and your family as you go through this.