Choices, choices. These are the scenarios I love, not because of those being in the situation, but because you can really pick yourself up and find a way out. It's paper shuffling. Numbers on a ledger. Making numbers dance by taking educated and calculated risks.
How is your FICO score? Which action means more to you - to preserve that score, or getting out of debt? You aren't likely to do both without cuts and bruises. You earn $2800 per month after taxes. You pay over $2200 per month on debt. Your debt total is closer to $50k. You are about as red lined as it gets, paying the way you are paying.
Rule 1: Going in you have to be dedicated and focused on what comes next.
Option 1: See if the consolidation loan comes through with family. Then pay it down as quickly as possible/reasonable. You are already red-lined, so up to 24k/yr of your income is being paid towards debt currently. Knock it out, and stay out of debt.
Option 2: Debt consolidation company. They will negotiate a lessor interest rate with these credit cards. They will take a fee. This is something you can do yourself if you choose, but I say, why give these lenders a heads up if you want to go with option 4. Eventually, you may be asked to willfully disregard payment on some or many of these debts, to save up enough money to pay in full, or settle in full on one debt at a time. Meanwhile your score will suffer, but this is to be expected. It will drag on a long time, and you will eventually come to find out there will be at least one debtor that will never settle with anyone other than the account owner directly. There is nothing more the debt consolidation company can do for this specific lender. Which means you are forced to do it yourself, and ask why are you paying a debt consolidation company anyways.
Option 3: Declare Bankruptcy again, if that's a possibility. I don't know this answer given prior bankruptcy.
Option 4: Do it all yourself. Understand the risks and the benefits. You are willfully choosing to rake your FICO score through the mud for 1-2 years while maintaining discipline, but you should come out the other end with a solid score, and a clean slate. You willfully understand by choosing this method, there is unlikely no possibility that you will ever emerge from your debt, paying as you are today.
Willfully choose to stop paying on all cards, with exception to the following in this order. You are on a timeframe now to achieve as much ground as possible, as quickly as possible.
*** Keep paying your IRS taxes always. Big hammer if you don't pay these guys.
1. Pay off credit one 1000, payment 50, merrick bank 1000 payment 65. This frees up $115 per month.
2. Pay off as many of the miscellaneous small credit cards 3000, payment 300 as possible. To free up as much of the $300 as possible. Let's say you free up $200 of that $300.
3. Pay off the balance of miscellaneous small credit cards 3000, payment 300 and jared 1599, payment 75. This should free up another $100 + $75.
4. Month four, some of these companies are starting to notice non-payment. Your score is going to decline. You might get some calls. You might get some penalties. You've paid off all the low hanging fruit to see immediate benefits. Your next option is to either delay payment two months, and pay off the next lowest hanging fruit, (business loan 4000, payment 300) to free up $300, or, to keep saving your monthly income towards debt for three months. This should give you $6600 to work with by the end of month six (6).
By month six, the lenders, or the debt collectors will be all over you and well aware of non-payment. The debts will probably have grown some due to penalties. As expected, the FICO score will decline. This is the part where your voice now carries weight. They won't negotiate with you until that six month point of non-payment has passed, but now they will listen. You call up each one, starting with whichever gives you the biggest bang for the buck, and offer to settle in full, or settle to delete. Offer them what you feel comfortable with, maybe it's 50%, maybe less. If they accept, get it in writting. $6600 can settle the following at 50%, freeing up an additional $750 per month:
business loan 5000, payment 300
business loan 4000, payment 300
citibank card 4000, payment 150
At this point around seven months, you will still have:
personal loan 3000, payment 120
amex 9000, payment 300
macys 3500, payment 150
enmo 2800, payment 100
paypal 2800, payment 85
paypal 1500, payment 50
irs taxes past business related, 5000 and i pay 100 per month (this one doesn't count. Pay this guy in full)
At this point, keep saving that monthly income in attempt to settle in full/delete. You want to frontrun as quickly as possible, so it doesn't push to the courts. As you approach the 50% mark, or whatever you determine, call them up and ask if you can settle. Knock one off the list. Amex might be good to go after, but these are all your choice. You want to eliminate all reasons for them to seek deficiency judgements, and the greater the loan amount, the more likely to pursue.
After this is all done and over with, you will still owe in taxes on the amounts you have settled. Your FICO score will be bruised with settle remarks for seven years, but due to the weight of the settled and deleted amount, your FICO score will remain about the same as when you held the weight of this debt. Extinguishing the debt, weighs just as heavily in the scoring model, as the negative settle remarks. Additionally, for the cards you do pay in full as low hanging fruits, they will still remain open and availabe to you, as you have successfully satisfied payment on these, even if some did apply a penalty for late payment. For those that you have settled with in full/delete, they may choose to close, or some may choose to keep open. It won't matter either way, you will still have open credit lines, and the beginnings of establishing a new credit profile.
This is the time of discipline and fortitude, to do things you couldn't do when times were good. Maybe you had stumbled, but who hasn't. If you stay disciplined, I see no reason you can't climb out of this. Always, find the silver lining. I see it as a realistic possibility that you can climb out of this in 18-24 months if you remain dedicated.
Not investment advice. Not promotion towards what you should do for your situation. Yada Yada.
Good luck.
$XXX,XXX in credit lines.
Multiple months in free credit reward vacations.
$X,XXX in bank rewards in only 12 months.
I like FREE...
800+ FICO.
Making all numbers dance on a financial ledger.
Abuse that score responsibility.
Take nothing I say as financial advice. DYODD.
