Messed up my awesome credit

[mooshi]

Last year I had finally fixed my credit and had and Equifax score of 780. I applied for some cards and maxed them out. Now I am over $25,000 in debt and the APR on the cards are killing me. What do I do? The APR was 29% on a Sam's Club Discover and a Wal-mart Discover card. Please no flaming. I know I messed up and just want advice on how to fix this and not a public bashing.

Thanks in advance.

[Anonymous]

The good news is that you are neither the first or last - I was in exactly the same predicament.  It's difficult to give accurate advice as I don't know the full story but here's what I did.

First I stopped paying all of them - sure it messes up the credit score but so what (more of that later). I wrote a personal budget prioritized like so

Housing

utilities (gas/electric/water)

food

transport

phone

and finally credit cards......  believe me, unsecured debt is so far down the list of priorities.  Yes, they could sue but if you have no money or assets what would that achieve?  In reality such action is also a few years away. 

Second I telephoned and wrote to all of my creditors telling them the situation and what I could pay.  In some cases I told them I had a small sum to settle the account in full (50c on the $1 kind of thing).  Of course, at first they refused then the phone calls got more aggresive but that's what call ID is for.

I then took some extra jobs (pizza del. etc) and sent in as much as I could afford (remember the budget list above).  Eventually, and this amazes me to this day, the primary creditor actually offered me a deal where they wanted less than I offered!!!!!

Anyway, with a little more hard work I got it all cleared away.  My credit score took a big hit BUT I learnt the hard way that credit - or better word DEBT is not the way to live.  I couldn't care less what my credit score is as now I use cash... or rather real credit.  I still have a couple of cards for hotels, car rental but they are paid in full every month and the credit lines on them are rediculous.

The good news is that $25K is not a huge amount (I was in for 4 times that amount).. With some hard work you should get it sorted within a year AND NEVER USE CREDIT AGAIN

Message Edited by htc on 04-18-2007 06:59 AM

[martin20]

Please try to find any new credit card to make a balance transfer. Best deals you can find in the internet on the pages like www.cardratings.com , www.creditcards.com etc. Look for "balance transfer cards". Some banks offer fixed rate for the life of the balance. This is what you may need. Of course there is no guarantee what will be your credit limit, but any amount of your debt you bring from over 20% interest to lets say 4.99% is fine. But, if you get any of these good deals please be carefull, because you may loose this rate at anytime if you pay late on any card you have. If you find somethig interesting please read carefull the offer details. Please look for balance transfer fees, because some  banks have no cap. In general acceptable fees are 3-4% but no more than $75.00. Very important is this "no more". Lately,  while shopping for transfer I've found very good offer, but ... in fine print I've found balance transfer fee $ 999.99 for $5000.00 transfer!!!  Rip off!!!  I myself did some transfers in the past, and currently have rates 2.99% and 1.99% for the life of the balance on two cards (total balance about $15000. Good luck. I hope my remarks will help you. By the way, I'm not any proffesional financial adviser, but I read a lot and treat banks like enemies not friends, I have to deal with. 

[mooshi]

Can you do a balance transfer on a maxed out cards though? I was told you can't. My major maxed out cards are as follows:

USAA Visa card-$8000-8.5% APR

Sam's Club-$6000-29% APR(Discover Card)

Wal-mart-$5000-29% APR(Discover Card)

[martin20]

I think yes, because banks are stealing customers one from another and they love customers with blances (those without don't need to transfer anything). OK let me give you my most current example (6 weeks old). I have had Citibank card with limit $11000, balance on it $10800 (offer 0% financing for 6 months ) expireing now. From now I would have about 15% interest. I've applied for credit card from First National Bank Omaha (0% for 15 months, maximum fee I guess $75) asking them to pay $10.000 to my Citibank card. They gave me card with limit of $5300 and I finally transfered $4800 (you need to leave some limit for fees). Another $5000 I'm transfering now to an existing card, where I have offer 2.99% for the life of the balance with no transaction fee. What you may get from them depends on your credit score. My FICO credit score lately was 777. If you didn't apply for any credit card in last 6 months you should get any good deal. Important is also your total credit utilization (ratio: debt to total credit line). In my case its about 12% (national average about 25%). If you don't get very good deal at once you may get it later. Let me give you my own example. I've had balnce on credit card from bank "A" - 4.99%, but for me was still to much. I've got new offer to transfer the balance (ca $7000) to bank "B". Bank "B" sent me such offer: 2.99% for 12 months with no transfer fee, and after that "so you do not have to transfer again" 1.99% for the life of the balance. After paying just minimum for period of about 6 months, I've got some extra money, and payed down at once $2000. Bank "B" didn't wait even a while but lowered the interest rate to 1.99% right away. My friend,  they need  us more then we need them, belive me. I'm playing with them for years. Actually I'm rather resposible borrower, but sometimes you fell into debt (in my case we borrowed $20.000 from our daughter, while refinancing the house, to pay down a balance, but we had to return very soon, when she decided to buy her own - that the reason we carry credit card debt) and then we have to enter that game. 

[Anonymous]

Message Edited by LAX on 09-14-2008 10:37 PM

[Anonymous]

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@mooshi wrote:

Last year I had finally fixed my credit and had and Equifax score of 780. I applied for some cards and maxed them out. Now I am over $25,000 in debt and the APR on the cards are killing me. What do I do? The APR was 29% on a Sam's Club Discover and a Wal-mart Discover card. Please no flaming. I know I messed up and just want advice on how to fix this and not a public bashing.

Thanks in advance.

---

First, you need to address the underlying causes of this situation: you spending more than you earn. Until that is addressed, no further fix can succeed in the long term.

Cases like this are why I wince when I read how people are trying to get their credit limits jacked up over $10K. It's like handing brand-new Ferrari keys to teenagers.

And so you don't think this is a flame, I've been where you are now. My debt was only $8000 or so, but I was still charged way beyond what was responsible and what I could reasonably handle, so I was no less guilty of poor money management decisions.

Someone already gave you good advice on balance-transferring to avoid interest. Do this while you still have a high enough credit rating to get balance-transfer cards. DO NOT USE YOUR CREDIT CARDS FOR ANY PURPOSE, not even buying a cup of java at Starbucks. See if you can pull some overtime at your current job, or get a second job, as someone already said, and get those balances paid down. See if you can return or sell some of what you bought...put any proceeds aside to ensure that you can at least pay the minimum due and not get your credit dinged.

[mooshi]

I made some dumb purchases for one to try to make more money. I study Real Estate investing on the side and made a sizable purchase with one of my cards.

I used one of my Discover cards to make a $3100.00 purchase for the Carleton Sheets Coaching Program.  I have yet to see my "guaranteed" $10,000 or more profit I was promised. I basically wasted $3100.00 and that is partly why I am in debt now. They only look for people with awesome credit. As far as the "coaching" part goes, you get thirty minutes a week with your coach just to get another assignment for the next week. My coach knew his stuff but all I got was an access line I can use with hours based while I was at work!

Did I learn my lesson? Yes! Did I lose $3100.00 out of the deal? Yes! I honestly built my credit up so I could make more money and on this deal it backfired. Like the others say, be careful on your purchases!

[Anonymous]

This won't help your credit, but you may want to consider reporting Carleton Sheets to (1) the Federal Trade Commission (see online complaint form at http://www.ftc.gov); (2) Attorney General (in the state where they are located) and (3) Better Business Bureau (where they are located). 

[Anonymous]

If you own a home, and you have equity of any substance, then I would with reluctance and hesitation mention a HELOC--Home Equity Line Of Credit--to pay off your cards.

Some folks truly do learn their lesson, and go on to clean things up with a HELOC. Others, who claim they have learned yet truly have not, get the HELOC and go right back into debt.

No one here has any idea which camp you're in. Only you do and only if you're truly honest with yourself.