need some advice?

[mgs2010]

I have been considering a number or different things to solve my credit card debt issue....I've considered bankruptcy, consumer credit counseling, settlement, and just sucking it up and paying each card forever until they are paid off.

I'll be turning 23 next month and have just about 40k in credit card debt. Yes, thats right, 40k.....I have no valid reason for any of this debt nor do I have anything to show for it. Just irresponsible spending. I have stayed current on everything. There are no lates on my credit and no collections etc. My score peaked at about 705 back in november of last year and is at 620 right now due to utilization. I got hit with some cld's and account closures due to outstanding debt. No account is in bad standing. Anyways, I make roughly 40k per year and have a car and student loans to pay for which amount to about 800 to 900 a month between the two, plus rent and living expenses. I'm not sure what to do. I can afford the payments for the credit cards (technically...) but have little-to-no breathing room after everythings paid. I really want to avoid bankruptcy and consumer counseling, I dont want to ruin my credit because I know if I somehow pay this off that my score will be really high...utilization and inqs are the only things bad about my credit. Should I call my credit card companies and negotiate a different payment term? smaller minimums, lower interest? I don't want all of my accounts to close or have a bad record. I'd honestly rather file bk than do settlements because if the settlement trashes my credit then why bother paying? I just dont know what to do...I feel the walls closing in on me and I'm a little scared. I've thought about bankruptcy in the past but have been told that I will regret it and to avoid it at all costs....so i just kept paying, and charging

Any advice for a young irresponsible adult looking to make the right decision?

[mgs2010]

some details on my balances...

citi cards I owe about 12,600 to and its got a good rate (7.24% and the account is closed because they hiked my interest to 29.99 so i opted out)

chase 6,200 @ 6.25% I closed this one on my own to prevent charging on it

Chase 874.00 @7.24%

Capital One 9200 @17.9% ----this is my oldest account. and the highest interest

discover 4700 @ 12.24

HSBC 4400 @ 15.9%

theres more, but i honestly dont remember them all anymore..only a few more at pretty average rates between 12-15%

[guiness56]

I would call each CCC and see what they can do for you.  If they can lower your interest or make your payments smaller for a while that might help.  I would make sure that it would not be reported negatively on your CR before agreeing to their terms.

You didn't list the balances on each card but, another way would be to continue to make your minimum payments on every card except the one with the lowest balance.  Pay more on that until it is paid off.  Then take that money and put it on the next higher balance card until that one is paid off.  So on until they are paid.

Another way would be to pay the ones with the higher interest rates first.

Utilization counts as 30% of your FICO score.  The higher the utilization, the lower your score will be.

None of it will work unless you stop charging on them.

Others may feel differently but, would only file BK as a last resort.

[Anonymous]

wow ...  that high debt ..

IF I am in your position, I will call all the credit card company to close the account and try to make payment arrangement, But I will keep 2 credit card account open (the 2 oldest) and 1 store account open, try to pay off the lowest balance first, and close it. Because you have problem with your spending habbit

[laz98]

how much are your minimum monthly payments?  is it really expensive where you live?  i only ask because we make about the same amount, but my monthly expenses are much higher than yours (you said 800-900), so i was just curious if it was because you spend more than we do, or your minimum monthly payments are just that much higher than ours.

my only real advice is to get control of your spending.  stop spending, & just pay down one card at a time, like the others suggested.  in our case, we started with the card that had the highest apr, which coincidentally also had the highest balance.

[mgs2010]

I live in Ohio, fairly low cost of living here..

my citi card min payment is about 190

capital one is about 220

discover 98

hsbc 90

chase 120

other chase 18

my car is 256

student loans about 500/month starting in november. I have noooo idea what to do. I really don't want to file bankruptcy or miss payments on anything. I think I will just pay minimum payments on all my cards and try to pay off the smallest one first.

[laz98]

just keep doing what you are doing, staying on top of your payments.  don't miss anything, because it might start a snowball of death.  we were once very near your position, about 30k of debt.  i thought we would never, ever get out of that.  now we have less than 10k, which is still a lot, but the interest is no longer out of control, & our scores are much better.  so it seems like a neverending hill, but i promise, you CAN get to the top

[mgs2010]

This sure will be the ultimate test for myself. I feel like such an idiot! my major in college is FAMILY FINANCIAL MANAGEMENT! I can't even take my own advice! Well, at least I have no negatives and no missed payments....there is definitely light at the end of the tunnel...once my util is down then my scores will definitely be excellent..I just pulled my experian report and it has 43 accounts in good standings, most of them closed and paid car loans, credit cards, student loans....so I think my mix of credit is good...my debt is just out of control. Thanks for all the advice...I'll keep posting my results and am going to do everything I can to fight it out to the end. I already cut up my credit cards so the balances can't go anywhere but down.

[Anonymous]

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@mgs2010 wrote:

I live in Ohio, fairly low cost of living here..

my citi card min payment is about 190

capital one is about 220

discover 98

hsbc 90

chase 120

other chase 18

my car is 256

student loans about 500/month starting in november. I have noooo idea what to do. I really don't want to file bankruptcy or miss payments on anything. I think I will just pay minimum payments on all my cards and try to pay off the smallest one first.

---

Kudos to you not missing any payments, with debt like that it is hard. At my highest I had about 9k in cc debt which is lower the most in 2010.

Keep making those payments, but do keep in mind, watch for statements be it online or paper statements. In those statements could be a rate increase, that will kill you! To be honest, your payment history is excellent and you must have had great credit at one point with high limits like that.

I would suggest closing all cards except for one, your longest card that is still open. If one of your credit card companies soft you and see the high balance and debt they could raise your apr. making your 190 citi card payment about 360 bucks! Will you lose those cards? Yes, but you will keep the rate where it is right now and your AAoA for a good while, and you will see it being paid down. To me that is better then having a card open you cannot use anyway! When your credit score goes up when you get those closed balances paid off, just open credit when you need it.

You sound like me. You got in trouble with the swipe, and now you have to pay it off, and live at the same time. It takes time, and you can do it without hurting your history. But then again, this is the only time I would recommend you closing a card, because if those rates increase, you will cry foreal!

You can certainly do what you like, just advice from the myFICO family, and keep us posted here, especially your plans. I am sure we would all like to see you make it out, and not have a scratch on your report!

[laz98]

don't feel bad!  my gf's parents are accountants & are totally behind on all of their bills....i'm like WTF!!!  it's kind of funny, in their case, but it just goes to show that none of us are immune to ignoring our own advice!  sometimes it's hard to practice what we preach.