80,000 in debt. What's the best to do?

amother

Natural

Wed, Mar 29 2017, 11:20 am

We have about $80.000 in debt. Mainly credit cards. Every month were only able to pay the minimum but it's hardly anything because of all the interest. What are my options? What's the best thing to do?

amother

Natural

Wed, Mar 29 2017, 12:24 pm

amother wrote:

stop using the credit cards! cut them up! You're accruing crazy interest!
do you own your home?

Our credit cards are all maxed out so can't use it anymore. No we rent

zaq

Wed, Mar 29 2017, 12:35 pm

Find a free credit counseling service. NOT a "credit adjustor" or "credit eraser" but credit COUNSELING which is usually staffed by retired accountants and financial planner types. They can help you get a handle on your spending and develop a financial management plan. It may not be much fun. You'll probably have to cut your spending to the bone, nix any and all little luxuries, maybe take on second or third jobs, but eventually you should be able to get out from under. Keyword is "eventually". There are no quick fixes unless you declare bankruptcy, which has its own problems.

amother

Natural

Wed, Mar 29 2017, 3:30 pm

I would prefer not to declare bankruptcy because I heard it's not good for you. Just wondering if there are any options for all our credit cards since they charge so much interest so it goes down so little every month and it's crazy

amother

Natural

Wed, Mar 29 2017, 9:31 pm

Thanks all. We're very careful how we spend. We don't really have much to spend anyway. It's basically all going to bills. It happened because over the past two- three years my hUsband's been in and out of jobs so used credit cards for basics since didn't have any money. Now hopefully he has a stable job but taxes are insane so it didn't leave us with much and it's all going to tuition and paying the minimum fur the credit cards but with the interest I don't see an end in sight.

amother

Lawngreen

Wed, Mar 29 2017, 9:37 pm

amother wrote:

If there's no end in site, I think you should seriously consider playing hardball with them. This would mean stopping all payments and negotiating a settlement with them. They won't consider making a deal with you until you stop making payments for at least a few months. Right now you are a great customer. You pay them tons of interest each month and will likely continue for a long time. They have no reason to make a deal with you right now. If you stop all payments they will take what they can get even if its 25 or 30 cents on the dollar. The downside is that hout will ruin your credit for a few years and also be aware that forgiven debt is considered taxable income.
Good luck!

notshanarishona

Wed, Mar 29 2017, 9:50 pm

- Are you on benefits?
- Better to get a loan than put money on credit cards and not pay. You will ruin your credit history and make it even harder to get past it
-Negotiate with the collections company

amother

Lawngreen

Wed, Mar 29 2017, 9:56 pm

notshanarishona wrote:

I just want to point out that "negotiating with collection company" is tricky in terms of maintaining good credit. If the settlement involves paying back the full amount, (in this case 80k) her credit won't get hurt that much. If the settlement involves an agreement to pay back less than the amount owed, her credit will be effected.

Goldie613

Thu, Mar 30 2017, 10:59 am

Can you get a loan from a gemach or Hebrew free loan Society to pay off at least one of the cards? You'd still have to pay the gemach/loan society back, but at least they wouldn't charge interest.

Also, if your credit numbers are ok, you may be able to get a no interest or low interest credit card (some banks and companies will offer reduced or no interest for a year-ish), and then transfer the highest interest cards' balances to that new card. At least that way the money you are paying back will actually knock down the balance, and not just the interest.

SixOfWands

Thu, Mar 30 2017, 11:09 am

zaq wrote:

THIS.

You need someone to help you figure out how to put your financial lives back together, and ensure your future financial security.

You also need someone to help you figure out the best way, under these circumstances, to eliminate your debt. It could be consumer bankruptcy. It could be debt consolidation. I don't know. But it should be someone with some knowledge and experience in this area, and someone who has all of the relevant information, which you obviously cannot provide here.

Good luck.

FranticFrummie

Thu, Mar 30 2017, 12:22 pm

If you don't own your house, then bankruptcy might be a good alternative. Your credit history will be lousy for about 7 years. After that, you can get a new card and slowly start rebuilding your numbers. Your cards are maxed out anyway, so just live within your means while your numbers recover, and then continue to live within your means.

Consider moving your kids to a less expensive school like Chabad, that will work with you. Get money management counseling no matter what you do. Consider moving to a cheaper area, as long as there are jobs available. You didn't mention what type of work DH does.

Once you have a plan and start getting the debt addressed, think about making Aliyah. Schools cost next to nothing, healthcare is cheap, and depending on where you move to, rent can be super affordable.

Just be aware that on your application for Aliyah, they will ask you about your debt. As long as you can show them that you are taking steps to fix it, things will be OK. The Jewish Agency doesn't like people skipping out on debt by leaving their country to move here. I know, because I have a home foreclosure on my record. embarrassed

amother

Natural

Thu, Mar 30 2017, 9:06 pm

Thank you all for all your help. I'm really just wondering if there's any way anything could be done so I'm not paying so much interest on each credit card. That's basically where all our money is going to when we pay the minimum amount.
We're very tight now and just spending on what we really need and that's it.

amother

Lawngreen

Thu, Mar 30 2017, 9:16 pm

amother wrote:

You have nothing to lose by calling the credit card companies tomorrow morning and telling them that unfortunately you can't survive under this mountain of interest. Explain that you would like to make good on the debt but the interest is overwhelming you. Ask for a better rate. The worst that'll happen is they will say no, and you won't be any worse off than you are now. Just try it!

Good luck!

MagentaYenta

Thu, Mar 30 2017, 9:21 pm

Please remember that even with bankruptcy, a large amt. of what you owe on credit cards will have to be repaid.

Please see an atny and consult with an accountant so that you can make an informed choice.

amother

Cerise

Thu, Mar 30 2017, 9:25 pm

I have paid back about half of about $20,000 of credit card debt and have paid almost no interest. I transfer the balances to other cards that have offers of 0% APR on balance transfers for 12-18 months. Then I transfer the remaining balance onto other cards when that time frame is up. Of course, I have had to pay balance transfer fees, but it comes to much less than paying interest. It is slow going, but I at least see progress. I am able to do this because it was not a huge amount of debt (relatively speaking), and I have good credit because I never miss a payment, so my cards are not maxed out and I am eligible for balance transfer offers.

I think talking to someone who knows the ins and outs of dealing with credit card debt is a good idea for you. Hopefully someone with experience and knowledge can give you good ideas/advice.

amother

Coral

Fri, Mar 31 2017, 6:42 am

We have been using Money Management INternational to pay down our $20k in credit card debt. They were wonderful. This was not a debt consolidation. This was not one of those companies who tells you to stop paying and then they will negotiate with the credit card company. You could get sued going that route. Ofcourse whoever you speak to will say that the chance of getting sued is very slim and they help you deal with that that was too risky for me. So we went with money management international. You spend a while on the phone with them at first going through you income and bills. Then they get an extremely low interest rate from the credit card company. And we make monthly payments now.

I recommend whoever you use ask many tough and direct questions. This was the only company that when I asked questions they had answers and were not some slick company trying to sell me something.

Good luck! You can do it!