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Look time lurker, first time poster. Looking for some advice/help.
Have 4 Credit Card accounts (AMEX, BofA, PayPal, Local credit union) . Total debt between all four is 18k (6k/6k/6k/600). I have ten years of timely payments (690 FICO) but recently went through separation and now don't have a spouse to split bils with; couple that with being financially overextended (used CC to live beyond my means , stupid I know) and now I am faced with a situation where I cannot meet my minimum financial obligations.
I make $2350 Net, $950 mortgage , $300 car note, $140 student loan + other living expenses (cut down to bare bones) which basically put me at zero discretionary income with no money to save (scary to be a parent with no savings). Things have been bad for past few months but I've managed to stay afloat by selling clothes, shoes, household items, anything I have lying around. But I am tapped out. I cannot get a 2nd job due to my visitation agreement with my 2year old daughter (have a flexible schedule due to her mom's job); don't feel comfortable with stranger roommate. I'm about 15 days past due on three of my credit cards. I don't have any prior lates/charge-offs/collections.
My priority is to maintain my home , my car ( don't have cash to buy one straight out/ owe 12k on current car with 4.5% APR).
I tried calling one of the credit cards and they told me to they can't do anything since I have paid timely in the past. I am considering trying to do a pre-charge off settlement with 2 of the cards cards, paying the $600 down ($40 a month) and keeping my credit union credit card (6k balance). My logic is I will have 3k saved by March (through income tax return and additional paycheck that month). The reason I will keep my CU credit card is because I wouldn't have money to settle with them and that is lowest APR of the bunch.
Any advice on how to handle my situation? I feel horrible about this but I feel I need to be able to have food on the table + provide basic necessities for my daughter. I don't foresee needing credit in the next 2-3 years but I don't want to deal with a lawsuit or harassing collection agencies and the ongoing FICO deterioration of different collection agencies/debt buyers reporting the same debt over and over again (I will never be able to rebound if that happened)
Thank you in advance for your advice. I'm at wits end about this
Look time lurker, first time poster. Looking for some advice/help.
Have 4 Credit Card accounts (AMEX, BofA, PayPal, Local credit union) . Total debt between all four is 18k (6k/6k/6k/600). I have ten years of timely payments (690 FICO) but recently went through separation and now don't have a spouse to split bils with; couple that with being financially overextended (used CC to live beyond my means , stupid I know) and now I am faced with a situation where I cannot meet my minimum financial obligations.
I make $2350 Net, $950 mortgage , $300 car note, $140 student loan + other living expenses (cut down to bare bones) which basically put me at zero discretionary income with no money to save (scary to be a parent with no savings). Things have been bad for past few months but I've managed to stay afloat by selling clothes, shoes, household items, anything I have lying around. But I am tapped out. I cannot get a 2nd job due to my visitation agreement with my 2year old daughter (have a flexible schedule due to her mom's job); don't feel comfortable with stranger roommate. I'm about 15 days past due on three of my credit cards. I don't have any prior lates/charge-offs/collections.
My priority is to maintain my home , my car ( don't have cash to buy one straight out/ owe 12k on current car with 4.5% APR).
I tried calling one of the credit cards and they told me to they can't do anything since I have paid timely in the past. I am considering trying to do a pre-charge off settlement with 2 of the cards cards, paying the $600 down ($40 a month) and keeping my credit union credit card (6k balance). My logic is I will have 3k saved by March (through income tax return and additional paycheck that month). The reason I will keep my CU credit card is because I wouldn't have money to settle with them and that is lowest APR of the bunch.
Any advice on how to handle my situation? I feel horrible about this but I feel I need to be able to have food on the table + provide basic necessities for my daughter. I don't foresee needing credit in the next 2-3 years but I don't want to deal with a lawsuit or harassing collection agencies and the ongoing FICO deterioration of different collection agencies/debt buyers reporting the same debt over and over again (I will never be able to rebound if that happened)
Thank you in advance for your advice. I'm at wits end about this
Sounds like it's time to get over having a roommate. I don't know what else to tell you. Depending on where you live, you could probably get that entire 950 taken care: that frees up ~$11,000/year after cash flow into your own hands. Then you're looking at paying off all your credit cards in 2 years if you're diligent enough.
Is any of the CC debt "hers" / Join ?? If so as part of your divorse SHE should be giving your dollars towards, Maybe offetting some of the child support you are going to pay.
I work as a compliance auditor for private company. The debt is all under my name (but I think my decision making was clouded being with my ex but that's another story). I don't have child support because we have 60/40 custody (I have child most of the time).
The mortgage is killing you as a percentage of your income, can you sell and down size? What is the car worth, can you sell that and get something cheaper that you can pay off? I know you said what your priorities are (house and car), but those priorities don't really leave any breathing room in your budget. Even if you pay off your cards, I don't think you have the wiggle room for the unexpected and that will put you back where you started.
I would call all of your cards companies and your student loan company and try to work out a payment plan. Explain to them that you are trying to do the right thing and want to continue paying. Explain that if you can not get help, you have no option but to stop paying.
I would also find out from your student loan company if there are ways you can defer payment. Sometimes all you have to do is take one class.
I would also look into rolling all of your debt into one loan with the credit union at the low interest. At least find out if that is an option that will get your payment down. You might pay more in the long run, but it will save your credit if you can keep up with that payment.
If all else fails, stop payment, save your cash, and payoff in a settlement down the road when they finally want to work with you.
You owe $18k on your credit cards and you net about $30k a year right?. Spend up the other card to $6k and you will be bankrupt. Or just declare now saving your card issuers $6k worth of debt as you are close enough and start working out a plan. It will take you many years to pay that off without doing so. You should be able to keep your house and car in bankruptcy. Go talk to a financial planner and a lawyer.
You can try to pay it down by adding a roommate, a 2nd job and that will also work and would be the honest thing to do, but you say familal obligations keep you from adding a 2nd job. I understand that. I also understand not wanting a roommate, but if your house is large enough and at all setup for it, I'd give it a try.
If you try just cutting back without adding income, the first bump (minor home, health, or car problem) will put you back where you started.
Declare bankruptcy, and then don't use credit cards to live beyond your means.
I appreciate everyone's advice and ideas I will talk to a certified financial counselor and Bk lawyer. I'm upside down at the moment for approximately 15k on my mortgage. The car in its current condition is probably worth less than the loan (I need to have a $1k repair ). If i somehow got rid of the house I could downsize to 1bedroom apartment for $200 less a month (plus slightly cheaper utilities). That is something I need to explore thank you for bringing it up.
I guess I never thought about things in the long term picture but rather looked at things in the short term. I give credit to those that are living within their means and don't have to worry about stuff like this.
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