WHERE DO WE BEGIN???

[Anonymous]

We have $31k in credit card debt.  We have taken a $40k a year hit in income and can't pay all of these credit cards.  Short of filing for BK, where should we begin in trying to pay stuff off? 

[homerunstacy]

Do you own your own home? If so, what about applying for HAMP and doing a loan modification? Long and painful process. I am going through it myself right now. 

Have you done your taxes yet? Do you have any tax return money that can be used? 

When you say you lost 40k is someone unemployed or was it just a reduction in income?

Maybe list out your cards with the balances, rates, etc.  Might help others be able to give more specific advice.

Many options before BK.  

[Anonymous]

Our cards are as follows~

BOA               $13k   on debt mgmt with BOA @ $270 a month

Union Plus      $6300   @ 24.9%    payment approx $230 a month

Home Depot    $3900   @23%  payment of $100 a month 

Citi                 $3300  on debt mgmt with Citi @ $40 a month

Numerica        $2700  @ 10%  payment approx $70 a month

Discover         $2200   on debt mgmt with Disc @ $70 a month

Futrure Trust   $1600   @ 19% (I think) payment $50 a month

Chase            $940     @24% payment of $40 a month

QVC              $700     @22%  payment of $11 a month

Cap 1             $420     @22%  payment of $20 a month

Kohls              $300    @22%  payment of $10 a month

Do you want to throw up now?  LOL  Yes we own our home but we now owe what it is worth.  We are working on getting a loan modification on it but it is going very slow.  We can't afford anything.  I feel that we are robbing Peter to pay Paul.  I pay everything late anymore. 

The reduction in income is from hubby getting pay cuts at work and now loss of hours.  I lost my job in July.  No unemployment either.  I work from home as an esthetician but not bringing in a lot. 

We have $6k coming back from taxes and we are going to pay some of these cards off and catch up on what we can with utilities.

[Anonymous]

Well, I'm not a big contibutor here, but I suggest using the 6K as follows:

Pay off Chase, QVC, Cap 1, Kohls, and Future Trust ($3960)

I would use the remaining $2K to pay down your utilities, and if possible, keep some cash as an emergency fund.  I would then use the payment for the now paid cards to snowball down the Home Depot and then Union Plus balances.  Everything else seems to have a reasonable rate or you already have a payment plan.

[Anonymous]

Sorry to hear about your troubles..

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@Anonymous wrote:

Well, I'm not a big contibutor here, but I suggest using the 6K as follows:

Pay off Chase, QVC, Cap 1, Kohls, and Future Trust ($3960)

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+1 Same thing I came up with.

[Anonymous]

Yeah... I would do what they said and then use the remaining 2k to stay afloat for the next few months.

[homerunstacy]

Shoot.. had this long response to you but lost it.  The mix the others suggested sounds good to me too.  Just keep in mind if this would impact your modification process.   I also took into consideration the min payments on the cards since they use that as part of the calculation to modify you. My biggest bang for my buck was actually paying off my Home Depot first since it had the highest min payment along with one of the higher interest rates.

I decided not to put any cash into savings because I believe they like to see we have depleted all our cash reserves first prior to modification. Right now awaiting my FHA-HAMP packet. Originally was given this awful special forbearance in house program..told I had pre-qualified for HAMP, then someone made a mistake, sent me this other inhouse program which would cause me to go further into debt, got re-pre-qualified....... anyway whole process has been a mess. I think.. I HOPE.. we are on track now. 

I am in the same boat as you .. almost same mix of cards... other half had a reduction in income.. using my tax return $$$ to pay off cc debt.

We live week to week.  Trying to get use to going from a Wegman's lifestyle to a Walmart lifestyle... eating out at 5 star places to creative cooking at home, traded Dish Network for Netflix, etc. Most importantly I've cut up all the cards and I am not going to add another cent on them  until they are paid off. After that they will only be used if I have the cash on hand to pay for the purchase before the next statement drops. 

GOOD LUCK!!!

Message Edited by homerunstacy on 02-13-2010 12:23 AM