Hello....Please help

[Anonymous]

Hi, I am a new poster but I have been reading this forum for years now off and on. I have had some rough patches in the last year but now have everything current. I need to reduce my monthly payments and eliminate some credit cards. I am not sure what to do first. I have a few lates but no charge offs or collections. Currently my scores are right around 580-600. My ultimate goal is to reduce my cards down to 3. I have 20 credit cards, 3 installment loans, 2 auto and Snap On Tools. I currently have about 13K to put toward my debt. My intial plan is to pay off the 1 auto loan for $5600 and Snap On for $3400 which would leave me with 1 installment loan and reduce my monthly payments by $740 a month. Should I then start paying off cards and closing them or pay them off and leave them open? Also start with the lowest balance and work up or highest insterest rate? Goal is to reduce monthly payments as much as possible as quickly as possible which then would allow me to pay off more things quicker. I will also have another 20K in December to put towrad debt reduction.

As far as my lates go, I sent a Goodwill letter to Credit One for 3 lates and I received a letter back stating that they are required to report accurately. I also have lates with Select Portfolio Servies, Loancare, Navy Federal. I also completely screwed up my Lowes account which they closed and when I called and to talk to them they offered me a repayment plan with no interest and a set amount until it is paid off. They assured me that as long as I made the payments that it would not affect my credit report, but now I am showing multiple 120 day lates even though I have been making the payments. Will I be able to Goodwill any of these lates or just let time handle it? I don't know what to do about Lowes as I feel they lied to me. Should I contact them?

I have learned alot from the people on this forum and I look forward to your responses. Thank you very much.

	Credit Limit	Balance	Current Payment
Barclay Apple	$    1,500.00	$ 1,454.34	$  100.00
Credit One	$     500.00	$     -
Huntington Voice	$    1,450.00	$ 1,180.86	$   40.00
Barclay	$    1,700.00	$ 1,692.04	$  100.00
Capital One 7559	$    1,900.00	$ 1,728.53	$   75.00
American Express	$    2,000.00	$ 1,916.15	$   55.00
Capital One 7301	$    2,000.00	$ 1,847.74	$   55.00
Home Depot	$    2,000.00	$ 1,933.29	$   63.00
Wells Fargo	$    2,000.00	$ 1,853.48	$   59.00
Navy Federal	15,000.00	14,830.00	299.00
Capital One 5098	$    2,500.00	$ 2,229.76	$  100.00
Cabelas	$    4,000.00	$ 3,958.69	$  105.00
Chase	$    4,000.00	$ 3,912.88	$  114.00
Amazon	$    4,000.00	$ 3,969.08	$  126.00
Paypal	$    4,300.00	$ 4,200.00	$  120.00
HH Gregg	$        -	$ 1,700.00	$   71.00
Walmart	$    5,000.00	$ 4,895.11	$  142.00
JCPenney's	$    5,450.00	$ 4,907.00	$  163.00
Discover	$    7,000.00	$ 6,964.16	$  153.00
Sam's Club	$    8,000.00	$ 7,707.63	$  229.00
SnapOn	$    3,433.00	$ 3,433.00	$  300.00
Lowes	$        -	$16,500.00	$  322.00
Wells Fargo Auto		$ 5,618.96	$  483.81
Navy Fed Auto		$20,647.40	$  551.00

[Anonymous]

First off, doing a rough mental add, you're over $115,000 in debt. What income do you have vs living expenses to deal with this? Basically, what amount per month can you put toward the debts? This is the key factor - the $33k you mention this year is great but it still leaves $82k of debt plus interest to handle.

This is where our saying here of "finances over FICOs" comes in. If you can pay off $33,000 with the two lump sums and can afford $2000/month toward the debts, it's probably worth going for it. But you should definitely speak to a few bankruptcy lawyers about your situation. Your income will decide if you pass the means test for a BK7 and if so, it would wipe the slate clean and save you some years of hardship and heartache.

I'm not advocating that you file, as that's a personal decision only you can make, but you have to look at the time and money you'll invest in paying it all off and contrast that with the stress and strain on you and your life, and decide if it's worth it. If you could pay $500/month against it all, that would be over 13 years to pay off the $82k residual without even thinking of interest, vs wiping the slate clean and having a clean file in ten years.

So to start it off, you are current on all payments which is good, but how much per month can you put toward the debts?

[Anonymous]

Your debt is astronomical and even if you pay over minimums on each card, you will never dig out.

My view is the following:

Use that 13k to start paying off cards, not the car loan OR consider BK7. That is not a bad idea and although your credit would be screwed for a few years, you can get a fresh start AND save that 13k. BK will cost around $1k-2k to file and you should be able to keep your car (if it is worth under a certain amount).

My advice is to consult a BK lawyer. Initial consult should be free. You will not get out from under that amount of debt unless you make $100k a year. 

[FireMedic1]

Whats your annual income? Check your states means test amount. If your over that. Chapt 13 will be the only way to clear things up. Cut the cards up or give them to a family member to hold. You cant afford 1 more swipe for a long while.

[Anonymous]

Annual income is $160,000

[Anonymous]

Excellent income, but I suspect you would not qualify for BK7.

With that income, you should be paying WAY more on your cards. Can you substantially increase your payments to each card and start working from smalled to largest to get them down to $0?

[Anonymous]

Pay the cards off and leave them open for now to help with utilization and increase your score. Since your goal is to reduce your monthly payments, begin with the highest interest rate cards (avalanche method) and work your way down. Take the extra money you get in December and continue to knock out as many as you can. 

Don't incur any more debt or you'll never get out of this hole. 

Not much you can do about Lowes reporting the lates unless you had the agreement in writing beforehand. You may be able to send a goodwill letter after it's paid and get them removed. 

[Anonymous]

Income is excellent but it doesn't mean it's doable. Someone making $160k woth a $140k mortgage would likely be able to tackle it. With a $300k mortgage, maybe not so much.

@Anonymous , again, when you subtract monthly living expenses (home, cars, gas, food, insurance, internet, phone, etc), how much is left that can go at the debts? That will give you your answer on whether this can be paid off or not.

[MI-Aviator]

I was at a similar crossroads (94k in debt) after a rough patch a few years back and swore off the credit cards and just worked at settling them for the past 3.5 years as opposed to a bankruptcy route. I was able to get mine down by more than half going that route and while it drops a bomb on your credit score it's not the nuclear bomb of bankruptcy. Especially with some delinquencies on the file already.

Not counting the auto loans those payments you have would be almost 2800 towards building a war chest to settle these. With that amount you could come pretty close to settling those within 2 years. 

[righthererightnow]

On credit cards:

Pay them off and leave them open. Open credit cards will help with your debt utilization and your score. Keep them until you absolutely have to close them. Just make sure not to use them (or use them minimally think $5.00-$10 max) once you've paid them down.

If you have to close cards:

Close the not so good ones, Credit One, and the Retail cards.

On Payments:

Make sure you are making payments and in good standing (stay in good standing) with Capital One, Chase, and American Express (Chase and American Express have long memories, Capital One is good to have). You want those accounts solid.