Need advice on my plan to possibly settle CC debt (BK not an option)

[Anonymous]

Not sure if this is the appropriate forum. Please move, if not.

To make a long story short, we have about $100k in CC debt that was mostly accumulated in the past 2-3 years due to my spouse having a major medical issue (w/o insurance) and being unable to work. We are both working now, but even if we pay the minimum payments on all the cards AND live below our means and as frugally as possible, we are still in the red by about $1,000 every month. Unfortunately, bankruptcy is not an option due to our high income. However, if we keep current on everything we'll obviously be out of cash in a matter of months, so I guess what I'm doing is just speeding up the process and getting to the inevitable point of not paying on the cards.

My plan is to stop paying on all the credit cards (we initend to stay current on mortgage, student loans and car notes) while saving as much as possible, and hope to settle on most of the cards before the 180-day chargeoff. I'm not even 100% sure about that being an option since I doubt we could save enough to settle them all in 6 months unless we can settle for 20-25%. Our minimum CC payments total about $2500 per month, so if we stop paying we can save at least $1500 per month while trying to settle.

Obviously, our credit scores are going to take major hits from all of this, but I was just looking for suggestions on minimizing the impact as much as possible.

Are we better off settling (for less than full) with the original creditor, rather than dealing with the eventual CA? 

Is the OC going to wait until the 180 day mark to sell the debt to a CA? Is it even going to matter if we settle with the CA once the balance is charged off by the OC? I haven't been able to clarify whether or not settling with a CA will change the status of the OC's debt on my credit report.

While we are OK with and have accepted the fact that we will have bad credit for some time, we really don't want to be dealing with harassing CAs and lawsuits for years to come. I do not want to be running and hiding from creditors. We would like to settle and get rid of as much as we can in the next year or so. 

I've been reading and searching forums for a few weeks now and am very overwhelmed and stressed about the situation. Prior to this, neither one of us has ever even been late on a payment in our lives!

If anyone has any suggestions or advice, please post. We are so ashamed that we've put ourselves in this situation, but have finally accepted it and realize the long road that is ahead of us.

Thanks

[Rain77]

Sorry to hear about your situation.  I get you want to be done with this debt, but they may not even offer a good settlement amount or be willing to settle, or the creditor may just sue.  Have you tried contacting the creditors to see if they offer a debt management plan?  Some will offer a low interest rate with fixed monthly payments, and prob will close the accounts. Is it possible to get a personal loan to pay off/consolidate the debt so the payments are lower?  If you own a home would you be willing to take out an equity line of credit? 

It seems your spouse is doing better, and that's great.  I wish you luck in trying to figure out a plan of attack.

ETA: And don't be ashamed.  Life happens. 

[Anonymous]

I have attempted to contact several of the creditors. As I am current on all of them, they don't have anything to offer. It seems the only way I'm going to get their attention is to stop paying them. I've also looked into consolidation loans, but no one wants to touch anything over ~30k, much less 100k. I am upside down on my home, so there's no equity to take out a loan there. I have no other assets other than the cash I'll be saving up when I stop paying. While I expect to get sued by some of the creditors, I think it's in their best interests to settle - they can either settle and get something... or get nothing.

[Anonymous]

Just wondering if anyone else has any comments/ideas/opinions. Thanks in advance.

[LShawn08]

You might consider (if applicable) selling one of your cars. Start considering things that have material value and sell them off to get some cash flow. Think of creative ways to get cash flow. You absolutely need to call your credit card providers and inquire about debt repayment plans, don't default on your credit cards if its a option, you may need those credit card providers in the future and you don't want to leave a bad taste in anyone's mouth. Its time to bite that bullet and start minimizing now. Cut out the, out on the town dinners, cable, Mani and Pedi's (if applicable), all that stuff. I had to put a friend of mine on a budget because of all of his financial woes. He's doing really well now, try a weekly/monthly budget.