High CC debt on SSD - settlement on payoff possible?

[RowenMyBoat]

Hi, I am on Social Security Disability and have gotten myself over my head in credit card debt. 

     ~$15K debt about 10 accounts that include Visa's, MC's and several store cards. 

I called to discuss bankruptcy options with several attorneys. I have memory issues and this was several months back so can't remember specifics, but as I have equity in my home, bankruptcy really wasn't an option. Something about they can't garnish wages on Social Security so the creditors option, if they so choose would be to put a lien against my home. I don't care about that as I wouldn't be here and my children, at this point in time, would still get something. 

My husband receives Veterans Disability pay (he chose not to file for SSD too) and wants to take out a personal loan to pay off the credit cards. The credit cards were opened in my name only. Due to his PTSD, we have separate homes about 20 minutes apart. Those last two things might not matter. 

What I am wondering is before my husband gets a loan to pay them off, should I call each creditor and ask if they would be willing to lower the balance I owe and settle for a lesser amount if I were to pay them off?  Any experience appreciated. 

[ptatohed]

Your question is a good one and I always recommend that the first course of action is to work directly with the creditor.  Call, tell them your situation, ask if they have a hardship program, if they can lower your rate, put you on a payment plan, or any other programs to help you catch up.  Many times they won't take you seriously until you are defaulting though (I wouldn't expect any balance reductions if you are current, but a rate reduction can certainly help).  But, yeah, start with your current creditors.  Stop using the cards (the creditor may even require you to close your card).  $15k isn't that bad, you can do it.  In the meantime, send bigger payments to the highest %s, while meeting all minimum payments.  Good luck!

[GZG]

are the cards delinquent? 

I would not expect to be able to ask for a settlement unless you choose to let the cards charge off or go seriously delinquent 

[ptatohed]

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@GZG wrote:

are the cards delinquent? 

I would not expect to be able to ask for a settlement unless you choose to let the cards charge off or go seriously delinquent 

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Lol, I was editing my post to add this, while you were posting this one. 

[RowenMyBoat]

I am current on all the cards or may have been missing a due date by a day or two over the last few months.

So most likely I have to screw my credit score even more by getting behind in order for even a chance of a settlement? My credit score has slowly tanked as my utilization increased. My husband gives me money every month, but two years ago he was diagnosed with Stage IV NPC due to the toxins from the burn pits in Iraq. He was stressing over saving as much as he could, so I used my cards more, rather than asking him for additional money when I needed it, which is what got me here.

He is doing better than we ever hoped but if something happens to him, I might like to move to a condo closer to my daughter, so I don’t want all the negative info on my credit report.

Sounds like the best thing for my credit is to simply pay them off with a personal loan, then my utilization issue won’t be an issue and my score should increase again. I don’t think any of the CC’s are less than 26% but we will shop around on the rate for a personal loan.

I guess the ultimate question is do I let them all fall behind and try to settle them all for less, and do I have any idea what they would settle for? 50%, so I’d be saving $7K on the balances, and I really have no clue but don’t think they would settle that low, so I’d be creating all the bad stuff on my credit for $3-4K? I don’t think it’s worth it to let everything fall behind to save $3-4K.

If I’m not behind, should I still call CC’s and ask for a reduction on the total if I pay it in full? If so, I don’t even know how to begin that conversation.

I appreciate both of your replies! Thank you!

[RowenMyBoat]

No, they are not delinquent, although I have had a couple payments a day or two late over the last several months.

I replied also above, but I thank you for your reply also. Much appreciated!

[ptatohed]

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@RowenMyBoat wrote:
I am current on all the cards or may have been missing a due date by a day or two over the last few months.

So most likely I have to screw my credit score even more by getting behind in order for even a chance of a settlement? My credit score has slowly tanked as my utilization increased. My husband gives me money every month, but two years ago he was diagnosed with Stage IV NPC due to the toxins from the burn pits in Iraq. He was stressing over saving as much as he could, so I used my cards more, rather than asking him for additional money when I needed it, which is what got me here.

He is doing better than we ever hoped but if something happens to him, I might like to move to a condo closer to my daughter, so I don’t want all the negative info on my credit report.

Sounds like the best thing for my credit is to simply pay them off with a personal loan, then my utilization issue won’t be an issue and my score should increase again. I don’t think any of the CC’s are less than 26% but we will shop around on the rate for a personal loan.

I guess the ultimate question is do I let them all fall behind and try to settle them all for less, and do I have any idea what they would settle for? 50%, so I’d be saving $7K on the balances, and I really have no clue but don’t think they would settle that low, so I’d be creating all the bad stuff on my credit for $3-4K? I don’t think it’s worth it to let everything fall behind to save $3-4K.

If I’m not behind, should I still call CC’s and ask for a reduction on the total if I pay it in full? If so, I don’t even know how to begin that conversation.

I appreciate both of your replies! Thank you!

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I don't think anyone would ever recommend purposely falling behind (well, those debt consolidation companies do - but don't use those!).  So, no, don't do that.

Yes, give them a call.  Tell them your situation.  Explain that you are not behind at the moment but you very well could be soon without some help.  You can ask for a balance reduction but I doubt you'll get that.  But they may give you a lower rate for a certain period of time.  Some hardship programs will lower the rate if you agree to fixed monthly payments for a fixed amount of time, until paid off.  Just call and ask what relief programs, if any, they have for struggling card holders.  Be prepared to provide them with your income and expenses, if asked.    

Depending on the results of your phone calls, you can then start looking into personal loans.  Any interest in a HELOC?  

Good luck!!!

[RowenMyBoat]

HELOC?  

This is a post I made back in July so not sure I needed to start a new thread or keep this one because it has the history. If recommended I can make a new one as I would love to hear more opinions on a HELOC or whatever kind of loan the would use my home as collateral as I only have a paid off 2015 Nissan SUV in my name. 

Due to my ADHD procrastinations, and some family health issues, I'm still where I was.  I did apply for a personal loan in my name only yesterday through my credit union, but was expecting a no because I used my income only. Kinda laughable to ask for $12K credit card consolidation loan on a less than $40K income, right? But I did indeed get a "denied". 

My husband would love NOT to have to be on the loan or co-sign. I don't know anything about a HELOC or anything else using me home as collateral? I have between $100-115K equity. 

OR again, being on Social Security Disability, the credit card companies can only put a lien on my house. Just checked my credit rating via Credit Karma and it was 587, whoever they pulled it through. It used to hover around 650-670, but now that my utilization is above 90%, plus one 30 day late payment I completely missed somehow, my score has tanked. I haven't had any lates in over 8-10 years, so my mistake on that one really hurt and was frustrating. 

I'm not even sure of approval with my home equity as collateral because of my income. Outside of these credit cards ($15K), my mortgage is about $600 and then I have basic utilities. Income of about $3100 a month, including what my husband gives me monthly. I am away from home for a week and would like to be face to face before talking about invoking him to get a loan. But I would love opinions on if I could get a home equity loan on my own. 

Or again, let the cards fall delinquent and try to settle. On balances ranging from $500-$2700K, could anyone guess on if they'd place a lien on my home or not? Sheesh, just realized if I defaulted and they wrote them off, then I have 7 years of dealing with debt collectors.  I'd rather pay on them for 4 years then deal with that, especially when they are then sold to another debt collection company and the process starts again.  

[ptatohed]

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@ptatohed wrote:

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@RowenMyBoat wrote:
I am current on all the cards or may have been missing a due date by a day or two over the last few months.

So most likely I have to screw my credit score even more by getting behind in order for even a chance of a settlement? My credit score has slowly tanked as my utilization increased. My husband gives me money every month, but two years ago he was diagnosed with Stage IV NPC due to the toxins from the burn pits in Iraq. He was stressing over saving as much as he could, so I used my cards more, rather than asking him for additional money when I needed it, which is what got me here.

He is doing better than we ever hoped but if something happens to him, I might like to move to a condo closer to my daughter, so I don’t want all the negative info on my credit report.

Sounds like the best thing for my credit is to simply pay them off with a personal loan, then my utilization issue won’t be an issue and my score should increase again. I don’t think any of the CC’s are less than 26% but we will shop around on the rate for a personal loan.

I guess the ultimate question is do I let them all fall behind and try to settle them all for less, and do I have any idea what they would settle for? 50%, so I’d be saving $7K on the balances, and I really have no clue but don’t think they would settle that low, so I’d be creating all the bad stuff on my credit for $3-4K? I don’t think it’s worth it to let everything fall behind to save $3-4K.

If I’m not behind, should I still call CC’s and ask for a reduction on the total if I pay it in full? If so, I don’t even know how to begin that conversation.

I appreciate both of your replies! Thank you!

---

I don't think anyone would ever recommend purposely falling behind (well, those debt consolidation companies do - but don't use those!).  So, no, don't do that.

Yes, give them a call.  Tell them your situation.  Explain that you are not behind at the moment but you very well could be soon without some help.  You can ask for a balance reduction but I doubt you'll get that.  But they may give you a lower rate for a certain period of time.  Some hardship programs will lower the rate if you agree to fixed monthly payments for a fixed amount of time, until paid off.  Just call and ask what relief programs, if any, they have for struggling card holders.  Be prepared to provide them with your income and expenses, if asked.    

Depending on the results of your phone calls, you can then start looking into personal loans.  Any interest in a HELOC?  

Good luck!!!

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Yup, good advice.  To be clear, I was not recommending that anyone, ever, purposely fall behind.  

[FicoMike0]

Ditto @ptatohed 

Call the creditors, tell them a sad story, including the part that you don't want to default, but it looks bad. Ask about any hardship programs they have. Some have been known to offer very large interest rate reduction in return for fixed payments and suspend\ close the account. If you are making min payments, most of the payment goes to interest. A large interest rate drop could easily reduce your total to payoff in half.