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I have a large credit card debt of $26000+ on a single card, and a few debts of $900-$1450 on three other cards. I am on a student fellowship, so I don't get very much money each month, but I really need to get out from under this debt - this month the interest rate seems to have drastically increased.
I have been reading a lot of information online about how to get out of credit card debt, and every bit advice seems to conflict with every other bit of advice.
A lot of people seem to advise negotiating directly with the credit card companies (for instance, http://www.creditinfocenter.com/debt/ and the e-book I purchased from this site ). But then there is difference in opinion about whether one should stop making payments for a few months and then negotiate or try to negotiate while making at least minimum payments each month.
Others seems to advise one to use a CCCS, but then there doesn't seem to be any reduction of the debt, which I would like.
Only a few people seem to advise using a 'debt negotiator', and they mostly seem to be people connected with the 'debt negotiation' industry.
I really just need to get out from under the $26000+ credit card - the others I can pay off over a few months, and I would like to keep them operational. But I don't really have cash right now to offer to make a settlement for the $26000 one.
I don't really feel like trying to negotiate with the credit card companies myself, which is way a debt-negotiator seems like an attractive option. But lots of people advise against them and it seems like they cost a lot of money.
Gosh lots of things to consider, but based on what you're saying about your debt vs. income I think you should consider bankruptcy. Even if you spent every available dime on repayment that would barely cover the interest.
Go to CCCS and see what they tell you. They'll lay it all out, show you what they can and cannot do...then you can go from there. They're good at getting creditors to stop the interest, but there's no guarantees. Even if they are able to, you'd still have one heck of a row to hoe.
My guess is that they may very well tell you that your debt to income ratio is so low that they can't help you at all...so it's back to bankruptcy.
First why a student could get 26 thousand dollars of credit on a credit card is beyond me. And why you would charge that much without having a way to pay it is beyond me also.
But yes you get a part time job, pay on it, till you finish school, you then work two jobs if possible and pay it off as you can.
Depending on who the creditor is, you may have a good chance of negotiating the balance (either you or a negotiation company) or negotiating the interest rate (again, either you or a company). Some creditors have great relationships with certain debt management companies, others do not. BK is alway san answer, but realistically, if you can avoid it, do so. If you filed BK and didnt handle it right, it could be quite messy in the future.
you put yourself in this place. you need to work your way out. not because you owe society, but because you owe yourself. you need to try to work through this... make the calls, see what they'll say. i fell behind on a debt once and was able to wiggle myself back out of it one month at a time, and i'm glad i did. would've been TERRIBLE if i'd filed. it wasn't pleasant or comfortable, but you need to find a way to be more financially responsible. you're obviously trying to do the right thing.
how much longer are you in school? chances are its not a long term thing and you'll be earning more soon. what major/field of study?
i HATE such loose talk about bankruptcy, rickj! even if the debt balance doesn't diminish w monthly payments, if you can hold on a little longer you might be in a better place financially to start to knock this down and not get burdened with that terrible mark on the credit report.
sure, the report might show a high balance for some time, but i just think its a mistake to file and forget it when there's work to be done.
you may not feel like trying to negotiate with the companies, but you were willing to take their money. suck it up. try your hardest, if you really mean to do this.
if you work and work and it all falls through, well i guess paying the price through filing is an option.
i know it can be sometimes the only option. my cousin had to file after her child had terrible med expenses. husband was working 3 jobs. they just couldnt get a break. but they, in my opinion, did all the dirty work to try to get out of that option.
make the phone calls first. you owe it to yourself.
I definitely agree.... this is what I do for a living. We help people find the right options to handle their debt (note: I have not and will not pots our link here lol). But still, BK is a last resort. Aside from that, with the new laws that went into place last october, it is difficult to even qualify.
You may be able to negotiate... or you may want to pay someone to do it for you... unless this creditor is Citi, MBNA, or Discover. if it IS one of those three, good luck trying to negotiate without $10,000 - $15,000 on hand. No matter what a settlement company might say, you will be sued long before you can save enough money to negotiate that debt.
And as for negotiating the balance while you are still making your payments... what makes you think a creditor will ever agree to that??? Thats just not realistic.
mjrBAY agrees: Really? Citi and MBNA are really that tough? Are you saying that most of the time someone will get sued from them before they do any negotiating???
I wouldnt say that... it all depends on how the company handles it. the problem is that these companies usually wont wait that long for settlement money. A good settlement company wont approve you unless you are on a fast enough pay schedule to deal with this.
I have secret shopped some settlement companies, created a pretty rocky siutation for myself. These guys were ready to sign me up on 4-5 year settlement programs with a bad creditor mix... absolutely no concern for my wellbeing... if I was a real client, I would have gotten my pants sued off!
Lets say Citi is your only account... $10,000. Average settlement with Citi might be 50% plus the typical 15% fees... so i am looking at a total cost of $6500. That stretched out over 2 years is $270/mo. But Citi wont get paid for 2 years! Not gonna happen.
Now lets say I have Citi for $2,000; Household for $4,000; Chase for $3,000 and Wells Fargo for $1,000. In this case, the total needed would be more like 55% or $5500 (becuase these other creditors arent as aggressive and will settle for less than Citi). So a 2 year program would be about $230/mo.
Same time frame but since Citi's balance is only 20% of the total, instead of 100%, they will get paid in a lot less time... this would probably be a doable prgram.
Good settlement companies will take all this into account in ordeer to devise a "successful" program. Anyone who doesnt, is looking to collect fees until you get sued and drop out (file BK or whatever happens). That money is usually non-refundable.. so your out $$$ plus your credit is hurting and now you have to file BK.
I was not a student at the time, but I've been there done that. By all means go to a credit counseling service and lay it out. DO NOT, repeat, DO NOT go to a credit counseling service that is not a member of the Better Business Bureau. Some of the more advertised services are lawyer based negotiation firms and will reduce your debt but in the process totally ruin any credit rating that you have left. They do not care about you or your credit rating. In my case,I used Clearpoint and it worked in my situation. They will work with the the credit card companies to reduce, or in some cases eliminate, the interest on the debt. It may not work for your situation but checking it out certainly can't hurt.....
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