@Anonymous wrote:Dear All,
I have close to 99K in credit card debt. No I did not go on a spending spree, I had some issues in my personal life over the past two years, with divorce litigtion fees and such. I have dealt with that part of my life. I currently make $180k (with the covid, everything that was safe is no longer safe), but I am still making the cut. I would have been in much better shape, but for two unfortunate incidents. LAFCU was my credit union in LA when I lived in LA. I moved, and there was $10 in the account. They decided to charge $2.5 for reporting letters. I did not receive any communication relating to this because I no longer had access to my mail at the old address and this was not a priority because I did not think I would have to worry about a checking account. They let the account checking account goto -$5. Then they reported this to all three credit bereaus. I was able to pay the $5 and have this remove as soon as I knew what was going on. But it is still weird for a checking account to show up on my credit report with a perfect payment history. At that time, the dominos started collapsing around me. This was December 2018. Barcley, Discover and Bank of America started balance chasing me, closing my cards left right and center. This lead to U.S. Bank following suit. And this keeps happening in waves. And in April 2019, an educational lendor sent an account into collection, after I had dropped a class. This was an error, again I did not receive any notices, until it showed up on my report. Since it was a state university, they took their own sweet time to get this removed from my record. Approximately 2 months. My Fico Score took a tumble from 730 to 580. I am not in financial stress or never was but for these events. Amex hiked my interest rates to 25.75% four months ago. So the actions of these banks is making it difficult for me to pay down quickly. And since almost all creditors have done a balance chace or account close, my utilization never goes does. It went from 40% to 90%. So debt consolidation loan is out of the question. I don't want to do a debt management plan, because, I can still pay it off, and I do not have much in terms of expenses other than rent and insurance. However, I do not have any assets to borrow against and the like. I feel like, I am paying through the nose for events that I did not control or could not control. My payment history is perfect. Average credit age is low at 2 years because I never used credit cards and always paid in full until my personal issues and divorce litigation fees became a factor I could not avoid. I owe 25k on Amex(all open), I owe 13k to BOA (all closed accounts), I owe 13k to chase (all closed accounts), I owe $5k to Discover (all open), I owe $0 to Barcleys (2 accounts open), I owe $5k to citi, $9k to fidelity and $10k in paypal credit, 8k to US bank. So what is my best option? I am usually good with sticking to paying more than the minimums, and keeping a lid on these accounts and have done so for 1.5 years now. After the litigation expenses went down, I have paid off $20k or more, but my fico score is stuck around 620 to 605. And if I occassionally have to carry business expenses before reimbursement, I end up with drops in my fico. My goal is to get rid of these loans as soon as possible. Thank you.
I would advise you to rewrite this post in a more organized fashion, with paragraphs, and leaving out any information which is unnecessary.
@Anonymous wrote:Cliff notes version:
Disposable income per month: $7000 (minimum), usually $7500.
CC debt: 99k.
Due to non-existant default/distress. Some of my cards are closed and a few other lenders chasing the balance on my credit cards whenever I pay off a significant chunk for non-existant default/distress.
Due to wrong information posting to my credit reports twice, and a checking account posting a $-5.00 default, and a university posting a non-existent tution default, which took a couple of months to resolve, my credit utilization went from 40% to 90% and
my score dropped from 730 to 580. Now, when I pay down, the algorithms continue to chase me. So my fico score does not improve. Also paying closed cards more than the minimums does not improve my fico score. Always paid on time, paid more than the minimums. Usually double the minimum of each card with the rest going to the highest interest card. I cannot get a debt consoliation loan, beause of the algorithms feeding off each other. So the distress is created by my lendors and benefits my lenders.
The bolded signalled financial stress. If you had complete control of your finances/ accounts (no financial stress) you would have caught the checking account before it went negative (at minimum before it reported).
YOU are required to update your address with student loan lenders and college's WHEN you move so you receive needed information and billing changes in a timely fashion.
If you had your financial house in order as you continue to point out... you would have corrected these issues before they reported. It's time to stop playing the victim and handle the outcome of getting lazy with your finances.
Your scores aren't likely to improve while you owe a balance on the closed accounts. Most (not all) creditors report a Zero credit limit on closed accounts. This reporting creates the appearance of being over your limit which hurts your scores and continues to signal financial distress.
You basically have two options:
#1: Avalanche- make minimum payments on all card's, use the remaining of your claimed $7,000 of disposable income to make a larger payment your card with the highest interest. When that card is paid off, move on to your next card. Rinse and repeat until you are debt free. <- this method will result in the least amount of interest paid.
#2: Snow ball method.
Normally you'd start with your smallest debt and work your way up to the largest while making minimum payments on all other cards.
In your case, I personally would start with closed accounts if using this method once they are zeroed continue up the ladder until everything is paid off or switch to method #1.
Either method you choose could result in further balance chasing and/or account closures.
Like @Remedios mentioned, reach out to your creditors and see if they will lower your apr. See if any of them offer a hardship program (American Express and Chase both do BTW, both suspended charging and/or close your account during repayment plan). Make sure whatever arrangements you make you can stick to, most lenders aren't willing to extend the "help" if "life happens" while already in a repayment plan.
Best of luck.
@Anonymous wrote:Cliff notes version:
Disposable income per month: $7000 (minimum), usually $7500.
CC debt: 99k.
Due to non-existant default/distress. Some of my cards are closed and a few other lenders chasing the balance on my credit cards whenever I pay off a significant chunk for non-existant default/distress. Due to wrong information posting to my credit reports twice, and a checking account posting a $-5.00 default, and a university posting a non-existent tution default, which took a couple of months to resolve, my credit utilization went from 40% to 90% and my score dropped from 730 to 580. Now, when I pay down, the algorithms continue to chase me. So my fico score does not improve. Also paying closed cards more than the minimums does not improve my fico score. Always paid on time, paid more than the minimums. Usually double the minimum of each card with the rest going to the highest interest card. I cannot get a debt consoliation loan, beause of the algorithms feeding off each other. So the distress is created by my lendors and benefits my lenders.
I agree with @AverageJoesCredit that you should just start using the snowball method:
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.
As far as the negatives in your report are concerned, I would keep sending verification letters to the bureaus. That will sometimes accelerate a negative being removed from your report.