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Need advise from the experts, should I file or try to pay off 42K in debt.

earena
Contributor

Need advise from the experts, should I file or try to pay off 42K in debt.

In the last year and a half I have aquired $42,000 in credit card debit. I became a single mom and the debt just piled on trying to maintain our lifestyle, lots of extra medical expenses,daycare,etc. I have 5 children and work full time with an income of 54,000K ( I got a raise a couple months ago so that helps with my monthly expenses) a year. My credit cards are listed below. Add to this $1485 a month in mortgage, $637 for my car, and about $1000 in extra expenses, food, gas, utilities. All of my bills leave me with about $1000K extra a month to pay off the cards. My utilization is at 97%. I am not late on anything. I am also in school and have about $30K in student loans. One of my biggest concern is my relationship with navy federal as I have a credit card, CLOC, and my car loan through them. Any advise would be appreciated. I have read and read about it, but would really like to hear from people who have actually been through it. I worked very hard to build my credit and hate to just give up. Thank you.

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Message 1 of 7
6 REPLIES 6
luxeprw9
Frequent Contributor

Re: Need advise from the experts, should I file or try to pay off 42K in debt.

Is there any way to lower or eliminate the car payment?  It is extemely high.

Is it possible to bring in additional income? Or is there anything you could sell and apply to the debt?

Have you taken to your budget with a fine tooth comb?  Are there any expenses you could free up and apply to the debt? 

Are you getting child support?

 

On the surface, $42k is not a lot but with 5 children and a $54k salary, I understand that it may be a little tough.  Personally, I would first put myself on the tightest budget possible and see if I could eliminate the debt before filing.  I did file CH13 on an amount less than yours and I do have regrets.  I wish I would have done things differently.  But it's not the worse thing in the world, especially if you are feeling alot of pressure to hold it all together.

 

Being on a strict budget until you pay off the debt is temporary, so don't be afraid to live bare bones for a while.  It will be worth it in the end!

FICO Score 8 as of 07/23/18
EQ - 770
EX - 757
TU - 741
Goal: 800
Message 2 of 7
earena
Contributor

Re: Need advise from the experts, should I file or try to pay off 42K in debt.

I have applied for child support, but as of now, no. I have a decent rate on my car with Navy Federal, it's a 2015 suburban (to carry all the kids). My credit was better when I financed it, so there is no way to refinance and get a better rate. I can make a pretty big dent in the debt when I get my income tax refund (again, 5 kids to claim so around 9K) as long as nothing major comes up. I think I can do it, but it will take a couple years of really scraping by. Thank you for sharing that you regret filing. Some people claim it was the best thing in the world and talk about how easy and how relieved they felt afterwards.

Message 3 of 7
luxeprw9
Frequent Contributor

Re: Need advise from the experts, should I file or try to pay off 42K in debt.


@earena wrote:

I have applied for child support, but as of now, no. I have a decent rate on my car with Navy Federal, it's a 2015 suburban (to carry all the kids). My credit was better when I financed it, so there is no way to refinance and get a better rate. I can make a pretty big dent in the debt when I get my income tax refund (again, 5 kids to claim so around 9K) as long as nothing major comes up. I think I can do it, but it will take a couple years of really scraping by. Thank you for sharing that you regret filing. Some people claim it was the best thing in the world and talk about how easy and how relieved they felt afterwards.


Make sure you put some of your tax refund aside if you don't already have an emergency fund. That way if/when something comes up you don't have to rely on credit.

I do believe that filing can be a relief for those who feel overwhelmed and at their wits end.  Every situation is different.  But in my personal situation, I did it without thinking it through fully. I panicked at the first sign of trouble. That's where my regret comes from.  Shortly after filing, I got another job and was back on track. 

Just work really hard on your budget and make some sacrifices. It's temporary!  I know a lot of people here do not like Dave Ramsey but I feel that his methods for debt elimination are great.  Even though I'm back on track and doing well financially, because of him, I will never be overwhelmed with debt again. 

PM me if you just need any budgeting ideas or just want to release some frustration!  I am a master at budgeting and don't mind helping at all.  Just hang in there!  You really can do it!     

FICO Score 8 as of 07/23/18
EQ - 770
EX - 757
TU - 741
Goal: 800
Message 4 of 7
SteelerNYC
Valued Contributor

Re: Need advise from the experts, should I file or try to pay off 42K in debt.


@earena wrote:

I have applied for child support, but as of now, no. I have a decent rate on my car with Navy Federal, it's a 2015 suburban (to carry all the kids). My credit was better when I financed it, so there is no way to refinance and get a better rate. I can make a pretty big dent in the debt when I get my income tax refund (again, 5 kids to claim so around 9K) as long as nothing major comes up. I think I can do it, but it will take a couple years of really scraping by. Thank you for sharing that you regret filing. Some people claim it was the best thing in the world and talk about how easy and how relieved they felt afterwards.


You're car poor. It's way too much car for your income. You can get a used van for a few thousand bucks that will haul everyone around. I'd buy one cash with your income tax return, ditch that crazy payment, and hammer away at your debt. 

 

I wouldn't have more than a $200 car payment on your income when it was time to have one again. (And even then, life without car payments is great!)

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU More Rewards Amex/NFCU Platinum/PenFed Power Cash Rewards/PenFed Pathfinder Visa/Citi Costco Visa/CapitalOne SavorOne/Apple Card - $139,100 total revolving, 21% utilization
3.25% mortgage July 2020, $20k used Auto Loan October 2020, $20k PenFed Personal Loan Dec 2020
687/683/673 EX/EQ/TU w/ 5/6/6 INQs as of Jan 2021
Spending 2021 in the Garden
Message 5 of 7
jlitnns
Established Contributor

Re: Need advise from the experts, should I file or try to pay off 42K in debt.


@SteelerNYC wrote:

@earena wrote:

I have applied for child support, but as of now, no. I have a decent rate on my car with Navy Federal, it's a 2015 suburban (to carry all the kids). My credit was better when I financed it, so there is no way to refinance and get a better rate. I can make a pretty big dent in the debt when I get my income tax refund (again, 5 kids to claim so around 9K) as long as nothing major comes up. I think I can do it, but it will take a couple years of really scraping by. Thank you for sharing that you regret filing. Some people claim it was the best thing in the world and talk about how easy and how relieved they felt afterwards.


You're car poor. It's way too much car for your income. You can get a used van for a few thousand bucks that will haul everyone around. I'd buy one cash with your income tax return, ditch that crazy payment, and hammer away at your debt. 

 

I wouldn't have more than a $200 car payment on your income when it was time to have one again. (And even then, life without car payments is great!)


I'm with Steeler, I'm about to have 4 kids and although I don't want to drive a van my wife and I bought one, a used 2017 Dodge Caravan and my payment is $300. It is our first car payment in years and I hate it (the payment) but we decided to go with 4k miles so we could drive it for 10 years to haul the kids and it's ugly as hell but it was okay for us. I would love to have a suburban but it is waaaaay outside of our budget. We are living off of $42k/yr gross right now and are not swamped to make our rent or car pmt.

 

You need to eliminate all of the extra spending. You don't have to maintain a lifestyle, you have to maintain your lifestyle. If you have $1k extra use Dave Ramsey's method of the debt snowball. Pay off some of those smaller cc's and put them away, once you have paid those off you can use the extra you have been using to pay those monthly payments and start paying more towards the larger debts. You can get through this, stay positive. You're obviously a SUPERmom!


Message 6 of 7
wa3more
Established Contributor

Re: Need advise from the experts, should I file or try to pay off 42K in debt.

I agree with others. Car is first place to cut 

 

credit unions are aggressive in collecting past due debt if you fall behind 

 

hang in there 

Message 7 of 7
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