What should I do?

[Anonymous]

I have 59K in Credit Card debt, all unsecured.  Some of the debt is on promotional interest rates, and some of it isn't.  I know I can't pay them off, but I can still make the minimums for a while.  I have a 690 FICO score.  I am drowning in this debt and want to try to stop the downfall.  Is there a way to negotiate off some of the debt without ruining my credit score?  Should I consultant with a credit specialist?  Should I file bankrupcy? 

Any suggestions would be gladly appreciated.

[Anonymous]

Cn you not afford the minimums ay all?

What is your income level compared to debt repayments?

(Edited).  Please keep posts friendly, respectful and supportive!

Message Edited by Scamp on 01-18-2009 06:19 AM

[Scamp]

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Weightlossman wrote:

I have 59K in Credit Card debt, all unsecured.  Some of the debt is on promotional interest rates, and some of it isn't.  I know I can't pay them off, but I can still make the minimums for a while.  I have a 690 FICO score.  I am drowning in this debt and want to try to stop the downfall.  Is there a way to negotiate off some of the debt without ruining my credit score?  Should I consultant with a credit specialist?  Should I file bankrupcy? 

Any suggestions would be gladly appreciated.

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Welcome to the Forums, Weightlossman!  Sorry it's in such disheartening circumstances for you, but you've come to the right place.

There are several possibilities for dealing with your situation, from debt management programs to credit counseling to finding a way to bring in extra income to pay down the debt to bankruptcy.  Which one (or combination of more than one) is your best bet is something you'll have to decide.

Can you post more details on exactly what accounts you have, their limits, APR's and current balances?  That would allow us to make more informed suggestions.

A major first step, if you've not already done it, would be to write down exactly what you're spending each month, and what you're spending it on, and then going through those expenses and finding every single way available to you to cut down on unnecessary costs.  It's amazing what $$$ can be freed up when you look hard at where your money's going.  I nearly fainted when I did that last Spring for a similar purpose and discovered I was spending nearly $300/month just at my local sandwich shop for lunch every day!!  Redirecting that $300 to my cc debt put a good dent in it.

Also, is a second or even third job an option, with that income going directly to paying down your debt?  I know $59K seems impossible, but folks HAVE managed to pay similar sums off over time and avoided bankruptcy.

Hope the above helps give you a start on tackling your situation constructively.  Welcome again!

[Anonymous]

What you do, is a very personal decision. 

My story: September 2007 I had $28,300.86 in CC debt.  I got myself on a budget which allowed me to pay the minimums on all my CC's and pay more than the minimum on the 1 CC with the highest interest rate so I could begin paying my debt off.  

In Dec 2007 I got a part time job and in April 2008 I got a promotion at my full time job.  Today I have $4,196.68 in CC debt and $2,908.73 is sitting in my checking account earning interest waiting to pay that last CC off.  In 2 weeks and 5 days I will be CC debt free.  I did this all on my own, by doing BT's when I could and without an outside agency negotiating anything. 

I personally did not feel comfortable not paying my CC debt, negotiating it down or filing bankruptcy because my personal opinion was, I made the purchases, I should pay it off.  

However, what I did is not for everyone and that's why I say it's a personal decision.  Make a budget see what you can cut out, cable/seeing movies/going out to eat, etc and see how much income you can free up.  Can you get a second job?  Or a higher paying first job.  I know the economy is horrible right now and it's hard to get work, but there are still places that are higher.  Speak with a lawyer to learn about bankruptcy and talk with others who have gone through it so you can determine what it would involve.  I think you should be able to get a free consultation with a lawyer, I think.  See if there's a DMP that you can talk wtih and find out about that, talk with some people who have gone through it.  

The biggest thing is get as much information as you can, and then make the decision that's right for you.  No two people's situations are the same and so no one else can tell you what's the right decision for you.  

Do know, that whatever decision you make, it's going to take time.  For me, I spent 7 years racking up credit card debt, there was no way I could pay it off in 2 months, it will be 17 months for me in total to get out of CC debt.  And sacrifices on my personal time and energy and health in all actuality.  Working 65 hours a week at two different jobs is not fun.  And if you choose a DMP or Bankruptcy, you're going to have to rebuild your credit as well, you may even without it depending on how your credit is, so it's going to take time.  Don't get frustrated and celebrate meeting little goals, even if it's getting your debt from 59K down to 58.9K.  That's still progress and you should still be hapy with yourself for going down.

[Anonymous]

Thanks for the reply.  The interest rates etc. I can post, but what I am really interested in is if I can

negotiate with the credit card companies and if anyone else has done that.  Great suggestions.  (edited to remove comment referencing personal business venture)   

Thanks for the response

Message Edited by Scamp on 01-22-2009 05:28 PM

[Creditaddict]

most likely you are not going to be able to negotiate without first going delinquent on the account... which will result in late payments hitting your report, then if you do come to some sort of settlement that includes paying less than full balance, you will probably end up with the account being closed by grantor on credit reports and then settled for less than balance... it will tank your score.

going with most credit counseling companies are going to be even worse than if you do it yourself 

[Anonymous]

thanks for the thoughts

[marty56]

I had 70k of CC debt so I used a debt managment program (DMP) which took about 4.5 years.  The cornerstone in being able to do that was making a budget to see where the money was going.  I still use the Excel spreadsheet today 1 year after being out of DMP. 

I would not to a debt settlement since that will trash your credit and also you might get ripped off in the processs.

When I started DMP, it seemed that I would be in debt forever but when I look back, it was the best thing I ever did to get out of debt.  If you ae interested in DMP, PM me and I will send you the link to company I used.

[Anonymous]

Yeah I would love more info.  Thanks

[Anonymous]

Only read this if you have decided no on the Bankruptcy  

I have helped others personally with this type of problem as well - you need to concentrate on 3 things if you intend to get out of this without bankruptcy: 

- 1- Control the interest.  If all you are doing is making minimums, you will still be having this same conversation in 10 years.  Detail out all your cards - balance and interest rate.  Do you have any 0% or super low rates?  If so, those are your keepers for now.  Do not miss any payments anywhere and risk letting those interest rates go up.  You will be paying the minimums on those for as long as possible. 

You must get rid of your high rates.  They are high because as you mentioned, its unsecured debt.  What can you securitize to get a better loan to pay off these cards?  If you have any home equity, HELOC it.  Do you drive a nice car with payments?  Get rid of it.  Do you have friends or family that will loan you money?  If they know your payment/history/that you will kill yourself to pay them back, it’s worth a shot.  Get ride of as much of the high rate debt as possible.  You may be able to BT some more away to give yourself some breathing room.  Again do not miss payments as that will take the BT option out of play for a long time. 

- 2 - Reduce expenses.  This is much faster than increasing your income.  Get rid of your cable, expensive internet/cell/phone plans.  Quit the gym.  Slash any recurring monthly charges you can.  No more eating out.  No more video rental.  For the love of everything holy do a budget.  Be real and honest.  What can you do without?  What do you need to spend money on?  If the budget says you can't recover to the point that you cannot pay at least the minimums and a little principle - then forget 1, 2 and 3, and starting talking to a bankruptcy lawyer. 

If your budget says you can pay your living expenses, minimum payments and have a little left over, then you can do this.  Take the left over each month and get ride of as much high rate debt.  Rinse, cycle, repeat.  Note - you got here by spending your income + the pleasure of 59K unearned.  Your only way out is the pain of spending only your income less 59K plus interest.  Get in that mindset 

- 3- Increase income.  Harder to do.  Can you get a raise?  Can you do more at your job?  Overtime?  Extra shifts?  If not you need to consider a second job.  Remember - its all about reducing interest expense and the only way to do that is to be able to pay principle.  Think of it his way.  Even if you only earn $10 an hour working job 2 - if you apply all that money toward that card with the higher rate, you will be earning $10 plus saving all that interest, which effectively raised your hourly rate.   Also, if you decide to do this you still need some fun, Make money with your hobbies.  Play the free poker tournaments if that is your thing.  If you like crafts, can you sell them?  Do you like shopping - see if you can get into mystery shopping and get paid a little for it.  Have a little less enjoyment, but try to make a buck or two at whatever you enjoy.  I have seen it done.  Base on your budget you either can do it or you cannot.  If it is mathematically possible, then decide if you are going to do it.  If the answer is yes be committed and good luck.