Sinking fast

[Anonymous]

Hello Everyone,

Just Joined FICO and looking for some help/guidance form those of you that have been in the same situation I find myself currently in, and were successful at turning ti around.

My wife and I are falling behind fast with our bills and our credit scores. When we look at how far behind we are with monthly credit card bills and utility bills, we just feel like running away. I recently started a new position at my company, and it pays well. I just can't seem to make a dent in getting caught up with the past dues, so I can then move to paying off some of the debt.

My score right now is 564. The lowest it has ever been.

I was thinking about borrowing agaisnt my truck (I own it free and clear) to pay off all the past dues and get back to normal monthly payments. But I am not sure if this is a smart thing to do and if any bank would lend me the money given my credit score.

If I don't borrow any money, I feel it will take 4 to 5 months to get caught up on the past dues, if no emergencies arise. That is 4/5 months of our score getting worse.

Open to advice.

Thanks

[Anonymous]

The sooner you get current and stay current - the faster you will recover- 

Do you have any other options besides risking this asset?

Have you spoken with your creditors?

You can ask them to re-age to bring the accounts current adding payments to the end of the loans?

Ask to suspend charging privileges to cut interest rates and late fees

You may be able to ask for a payroll advance from your employer?

Savings? Borrow from 401K/IRA?

Do whatever it takes to stop the bleeding, start the breathing and treat for shock.

[Anonymous]

I wouldn't put your truck up if I were you. Try to see if your bank will do a consolidations loan if non of the above helps you. Also, I wouldn't recommend borrowing from your 401k... you'll pay double taxes. (when you take the money out and when you get ready to withdraw it when you retire. good luck. it takes time

[Anonymous]

43 - have you considered prosper.com?Your score is low, but others with scores lower than yours have been funded. I would NOTborrow against my 401(k).

Your first step should be contact your creditors and discuss options with them. It is in their interest to work with you. Call your utility Co., and ask about a payment plan.

You might think you are in dire straights, but you're not. You and your wife's scores might continue to take some hits, but if you can see that in 4 or 5 months, you'll be caught up, you are ok. Scores are not the most important thing in the world.

The only time I would borrow against my 401 would be to buy a house. Otherwise, NEVER touch it.

[Anonymous]

I was going to suggest Prosper too. They go off of Experian Vantage scores so that may be different from your FICO. Definitely call your creditors. Every single one. Most lenders are begging their customers to call them and let them know if they're in trouble. See how many of them will help you with interest, fees or payments, and then use any savings from that to pay down the jerks that won't help. You'll make it! Same thing happened to me. Got in way over my head, got a new job with a big raise, but it still took me months to get everything straightened out. Just keep swimming!

[kiki2]

Make a list of all your monthly debt.  Be sure to identify the neccessaties (House, utilites, groceries, gas, car, etc) these items get deducted first.  Now you have a budget amount to work with.   Take the remaining debt and prioritize it, for example if you have a credit card with a high interest rate consider being more aggressive in paying that debt and making just above the minimums on the others.  The object is to get out of debt, every month that you carry a balance on a high interest card you are actually increasing your debt. 

Now you have a plan of action, call your creditors.  Explain your situation and based upon your budget, this is what you can afford to pay them each month.  Mention the past due fees being accessed ask if they can offer some type of good will gesture.  Be sure to mention how sincere you are in wanting to repay your debt and that this is only a temporary situation.  Chances are they will be willing to work with you.  Also, if at all possible try to avoid taking out a loan, based on your current scores you could be looking at a limited amount with a high interest rate and would only add to your overall obligations.  Remember, the object is to get out of debt.

 Look around the house, in the garage, in storage, is there something that you can sell?  List items on Craigslist or another free site.  Obviously you would not want to sell something you need but if it is an item that you can live without for 6 months to a year (an extra TV maybe) then sell it and plan on purchasing a new one, once you get current on your debt.  Depending on where you live and the weather you could have a garage sale (I live in Atlanta and it is 68 degrees today, AWESOME!).  If weather prohibits that then consider a furniture consignment shop.  This would be a last resort since you usually have to pay them 50% of the sales price.

Most important, Keep your chin up!  Take pride in the fact that you are taking on this challenge rather than running from it.  It won't be easy but with a plan and a some hard work you will reap the rewards.

[fishbjc]

Taking a LOAN from your 401K usually does not incur fees other than interest.  A Withdrawal will cost you taxes PLUS a 10% penalty.  If that's your only option, then it's way better than letting all these accounts age as baddies.

How about a LOAN from a life-insurance policy?