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20K in CC Debt and trying to be Proactive

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Anonymous
Not applicable

20K in CC Debt and trying to be Proactive

Long story short, Covid, some devastating personal life events, and other obstacles have helped me rack up around $20,000 in credit card debt between 3 cards. I know I will eventually default on this amount and paying the minimum with interest is unsustainable as well. So my question is what should I do?

I've put about 15 hours of research into this which has landed me on this forum. I started off calling non-profit debt consolidation firms that negotiate with creditors and you pay a monthly fee for their services. However, I've read mixed reviews/opinions on these companies and if they actually really do anything.

 

I have also just recently talked to a company **Mod Cut - Removed per myFICO TOS** that was helpful and coached me on how they could help me with the default process with an attorney and negotiate a better settlement. They were actually very nice and helpful explaining everything. For me, it seems like a good option for a relatively small upfront fee of $400 and a back end charge of the percentage they save me in the settlement. Using them would have me grant one of their lawyers power of attorney to act on behalf in negotiations with credit agencies/collectors. I'm unsure if this is a good idea.

 

As with anything nowadays, I did some research on them and they have an A rating with BBB but I read a few negative reviews on Trustpilot stating that getting a local attorney might be better (in much harsher words) and recommended checking out this forum to get advice about debt situations.

 

So here I am. And in the age of this internet it's hard to know who's legit and if they're telling the truth about their experience.  In conclusion, any advice is appreciated on how to deal with this debt. I haven't missed a payment ever yet and am merely trying to be proactive and prepare myself for the inevitable default or a way to avoid it completely without drowning in interest. My credit score is not my main concern now and it's the debt itself. Thanks in advance for any help. 

Message 1 of 23
22 REPLIES 22
pizzadude
Credit Mentor

Re: 20K in CC Debt and trying to be Proactive

Hi @Anonymous, welcome to the forums - I removed your duplicate post in the Bankruptcy forum, please do not post the same message across different forums.  Also I've removed your reference to the credit repair company you mentioned in your post.

 

Regarding your situation, can you share your approximate interest rates / balances / creditors ?   I understand that your main concern is the outstanding amount but any settlements will have a significant negative impact on your credit for years to come.   Have you looked at any options to consolidate / refinance into a personal loan or similar? 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 2 of 23
Anonymous
Not applicable

Re: 20K in CC Debt and trying to be Proactive

No problem. I'm new here so my apologies for any minor rule violations.

 

My approximate interest rate and balances are currently:

 

$4500 at 20% interest

$6500 at 10% interest

$9000 at 12% interest 

 

I have looked at some options to consolidate/refinance but my general conclusion was I wasn't going to be getting a good rate on the loan or would even be loaned the total amount to pay everything off. Where would a good place to look into this be? 

I understand defaulting would effect my credit score. I have reached out to one credit card company to discuss hardship services but their automated system is bringing up anything for me to pursue in order to get the card shutdown and pay something per month.

 

Quite simply, I have been proactive and trying to manage this I would assume much better than the average person but it's getting to the point where I'm trying to prepare for a default since paying all of this back isn't feasible for me. Thus, I'm being proactive and trying to understand the whole process and work with a company that can help me with a settlement with my creditors when that time comes so I don't become the average person who defaults, gets a judgment against them a year or so later, and then is in a precarious position.

 

Finally, I haven't missed a payment yet on any of my cards but the debt load and interest charges are really making it impossible. I'm not looking for sympathy and obviously it's not the best financial situation so I'm mostly just trying to make the best out of bd situation and make sure it doesn't turn into a nightmare down the line. As stated before, the debt amount is more of headache to me than my credit score since I have no plans on moving, financing a vehicle or anything major, etc. for years. 

Thanks for your response and I look forward to more information from you and/or the rest of the board here. I appreciate your time.

Message 3 of 23
FireMedic1
Community Leader
Mega Contributor

Re: 20K in CC Debt and trying to be Proactive

Can you place who the Creditors are next to the accounts listed?

Creditor name/Credit Line/ Balance/APR


Message 4 of 23
moto4man
Regular Contributor

Re: 20K in CC Debt and trying to be Proactive


@Anonymous wrote:

Long story short, Covid, some devastating personal life events, and other obstacles have helped me rack up around $20,000 in credit card debt between 3 cards. I know I will eventually default on this amount and paying the minimum with interest is unsustainable as well. So my question is what should I do?

I've put about 15 hours of research into this which has landed me on this forum. I started off calling non-profit debt consolidation firms that negotiate with creditors and you pay a monthly fee for their services. However, I've read mixed reviews/opinions on these companies and if they actually really do anything.

 

I have also just recently talked to a company **Mod Cut - Removed per myFICO TOS** that was helpful and coached me on how they could help me with the default process with an attorney and negotiate a better settlement. They were actually very nice and helpful explaining everything. For me, it seems like a good option for a relatively small upfront fee of $400 and a back end charge of the percentage they save me in the settlement. Using them would have me grant one of their lawyers power of attorney to act on behalf in negotiations with credit agencies/collectors. I'm unsure if this is a good idea.

 

As with anything nowadays, I did some research on them and they have an A rating with BBB but I read a few negative reviews on Trustpilot stating that getting a local attorney might be better (in much harsher words) and recommended checking out this forum to get advice about debt situations.

 

So here I am. And in the age of this internet it's hard to know who's legit and if they're telling the truth about their experience.  In conclusion, any advice is appreciated on how to deal with this debt. I haven't missed a payment ever yet and am merely trying to be proactive and prepare myself for the inevitable default or a way to avoid it completely without drowning in interest. My credit score is not my main concern now and it's the debt itself. Thanks in advance for any help. 


Without knowing your financial situation as a whole, 20k isn't that bad in this day and age.  Sure it's a daunting number when things are in a dark place in the present time.  However, There are ways of attacking this that will ease the pain.  The first thing I would recommend is... save your money with the debt consolidation con artists, and invest several more hours into forums/threads such as these.  There are many, many, people around here that are more than willing to help for no other reason that they like to.  Take advantage of it, you will learn more and save yourself thousands if you listen intently.  At the end of the day, your answer still may be to "default".  But there are things that can be done to put a band aid on it and head yourself in the direction of repair sooner rather than later.  Take heed my fellow FICO member.

Starting Score: 547EX
Current Score: 694EX 689EQ 696TU
Goal Score: 750


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Message 5 of 23
Anonymous
Not applicable

Re: 20K in CC Debt and trying to be Proactive

Sure.

 

$4500 at 20% is MasterCard through CitiBank

$6500 at 10% is Visa through a Credit Union 

$9000 at 12% is MasterCard through a Credit Union 

Message 6 of 23
Anonymous
Not applicable

Re: 20K in CC Debt and trying to be Proactive

Thanks for the reply. Do you have any recommended threads I should read on here? 

I understand a lot of debt consolidation is a scam and they don't even do anything but is literally all of it a scam? Are there really no outside groups that can help you better than you can help yourself? 

Message 7 of 23
SouthJamaica
Mega Contributor

Re: 20K in CC Debt and trying to be Proactive


@Anonymous wrote:

Long story short, Covid, some devastating personal life events, and other obstacles have helped me rack up around $20,000 in credit card debt between 3 cards. I know I will eventually default on this amount and paying the minimum with interest is unsustainable as well. So my question is what should I do?

I've put about 15 hours of research into this which has landed me on this forum. I started off calling non-profit debt consolidation firms that negotiate with creditors and you pay a monthly fee for their services. However, I've read mixed reviews/opinions on these companies and if they actually really do anything.

 

I have also just recently talked to a company **Mod Cut - Removed per myFICO TOS** that was helpful and coached me on how they could help me with the default process with an attorney and negotiate a better settlement. They were actually very nice and helpful explaining everything. For me, it seems like a good option for a relatively small upfront fee of $400 and a back end charge of the percentage they save me in the settlement. Using them would have me grant one of their lawyers power of attorney to act on behalf in negotiations with credit agencies/collectors. I'm unsure if this is a good idea.

 

As with anything nowadays, I did some research on them and they have an A rating with BBB but I read a few negative reviews on Trustpilot stating that getting a local attorney might be better (in much harsher words) and recommended checking out this forum to get advice about debt situations.

 

So here I am. And in the age of this internet it's hard to know who's legit and if they're telling the truth about their experience.  In conclusion, any advice is appreciated on how to deal with this debt. I haven't missed a payment ever yet and am merely trying to be proactive and prepare myself for the inevitable default or a way to avoid it completely without drowning in interest. My credit score is not my main concern now and it's the debt itself. Thanks in advance for any help. 


1. You should not use that company and should not give anyone a power of attorney.

2. Your situation is not bad enough yet to warrant drastic measures.

3. IMHO you should get a second job, and use the snowball method towards your existing credit card debt:

Snowball method is:
1. Stop using cards.
2. Pay off smallest balance first, then next smallest, and so on.
3. On other cards pay minimum + something each month.
As each balance turns to zero, that will free up your remaining monthly cash to apply to the next smallest balance.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 703 TU 704 EX 687

Message 8 of 23
Anonymous
Not applicable

Re: 20K in CC Debt and trying to be Proactive


@SouthJamaica wrote:

@Anonymous wrote:

Long story short, Covid, some devastating personal life events, and other obstacles have helped me rack up around $20,000 in credit card debt between 3 cards. I know I will eventually default on this amount and paying the minimum with interest is unsustainable as well. So my question is what should I do?

I've put about 15 hours of research into this which has landed me on this forum. I started off calling non-profit debt consolidation firms that negotiate with creditors and you pay a monthly fee for their services. However, I've read mixed reviews/opinions on these companies and if they actually really do anything.

 

I have also just recently talked to a company **Mod Cut - Removed per myFICO TOS** that was helpful and coached me on how they could help me with the default process with an attorney and negotiate a better settlement. They were actually very nice and helpful explaining everything. For me, it seems like a good option for a relatively small upfront fee of $400 and a back end charge of the percentage they save me in the settlement. Using them would have me grant one of their lawyers power of attorney to act on behalf in negotiations with credit agencies/collectors. I'm unsure if this is a good idea.

 

As with anything nowadays, I did some research on them and they have an A rating with BBB but I read a few negative reviews on Trustpilot stating that getting a local attorney might be better (in much harsher words) and recommended checking out this forum to get advice about debt situations.

 

So here I am. And in the age of this internet it's hard to know who's legit and if they're telling the truth about their experience.  In conclusion, any advice is appreciated on how to deal with this debt. I haven't missed a payment ever yet and am merely trying to be proactive and prepare myself for the inevitable default or a way to avoid it completely without drowning in interest. My credit score is not my main concern now and it's the debt itself. Thanks in advance for any help. 


1. You should not use that company and should not give anyone a power of attorney.

2. Your situation is not bad enough yet to warrant drastic measures.

3. IMHO you should get a second job, and use the snowball method towards your existing credit card debt:

Snowball method is:
1. Stop using cards.
2. Pay off smallest balance first, then next smallest, and so on.
3. On other cards pay minimum + something each month.
As each balance turns to zero, that will free up your remaining monthly cash to apply to the next smallest balance.


At this moment, the methods you mentioned aren't feasible for me. 6 months from now could be a very different story but for now I can't contribute to paying off these debts. Thus, I'm wondering if it's best to default, file bankruptcy, or if there is a more nuanced method to take a hit to my credit score but end up paying a lot less in total.

Message 9 of 23
SouthJamaica
Mega Contributor

Re: 20K in CC Debt and trying to be Proactive


@Anonymous wrote:

At this moment, the methods you mentioned aren't feasible for me. 6 months from now could be a very different story but for now I can't contribute to paying off these debts. Thus, I'm wondering if it's best to default, file bankruptcy, or if there is a more nuanced method to take a hit to my credit score but end up paying a lot less in total.


1. Defaulting is not an option.  It is an option to call each lender, and try to work out a hardship plan for their card. This will probably wind up being a more nuanced method of taking a hit to your credit score, but paying less in total, and doing less damage than defaults would do.

2. Bankruptcy usually costs money, money you could apply to the payments instead. Bankruptcy is great, but has a long term effect. Since things might be better in 6 months you might want to think twice about that.

3. I'm sorry getting a 2nd job to supplement your income is not an option.

 


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 703 TU 704 EX 687

Message 10 of 23
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