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3 Bumps

In Credit Card Trouble

Help can anyone give me some direction as to what I can or should do. I owe about $60,000 in credit card debit. I am a stay at home mom and have hit bottom. I don't know what to do or where to turn.
Do I try credit consolidation, Bankruptcy, Debt reduction??
I am loosing sleep, weight - it is making me crazy.
Also if anyone can suggest a job opportunity for a stay at home mom that would be great.

Answer Question
 
IrishMomoftwo

Asked by IrishMomoftwo at 1:47 AM on Jul. 6, 2010 in Money & Work

Level 2 (5 Credits)
Answers (10)
  • I would get with a credit counselor first. They can usually help you figure out an action plan to get things under control and they might even work with the credit card companies to come to an agreement that you both can live with. Do not stop paying them because they will go off into collections and that is no good. We are currently under a payment plan that I came up with to get out of debt and it has been great but if you do not have the income coming in that it makes it hard. Good Luck and I hope you find the answers you need!
    vickwu

    Answer by vickwu at 1:51 AM on Jul. 6, 2010

  • Years ago when we had medical bills a two credit cards less than $1500 we went to consumer credit counseling serives and they really helped us out, it was much easier to have someone help navigate getting our debt under control. You will have to promise not to get another credit card while on the program. Even when we finished the program we have only gotten one credit card since then and that is for home depot to cover emergency home repairs and that is all it is used for. Other than that one card i refuse to get any others, I never want to back in that situation again.
    3_ring_circus_

    Answer by 3_ring_circus_ at 1:53 AM on Jul. 6, 2010

  • if at this point you are at your minimums, aren't buying anything other than basic necessities, and can't cut cost anywhere, bankruptcy may be your only option. but there also is consolidation and just not paying.

    pros and cons
    Bankruptcy looks bad only if you don't get better. a chapter 7 will allow you to clear all debt and not pay it back if you make a low enough amount. That being said you can still pay on a car and what not but it's extra, worth while, paper work. This remains on your credit history up to 10 years. Long time I know, but so does a consolidation, a late payment, or many late payments, etc.

    The reason I state bankruptcy if you are down to nothing and missing payments is because if you consolidate, will you be able to progress, stuck or regress? Talk to a financial counselor first though and look at your money and bills honestly?
    DomoniqueWS

    Answer by DomoniqueWS at 2:03 AM on Jul. 6, 2010

  • Sorry you are loosing sleep and it's affecting your health. For one thing cut up the credit cards and close there accounts so you can't go into deeper debt. Do try try credit consolidation as a start.

    musicmom08

    Answer by musicmom08 at 11:36 AM on Jul. 6, 2010

  • First of all it is going to be okay. The absolute worst thing that could happen is that you file for bankruptcy and your credit report gets a huge ding on it. Really, you'll be fine.

    Let's start with the basics though- you can take control of your money. You don't need someone else to do it, though it is okay to seek advice from other people. Keep in mind though, if you go to a bankruptcy lawyer, they will recommend bankruptcy, if you go to a debt settlement company, they will recommend settling the debt.

    I would recommend that you first cut up the credit cards and get on a written budget. Everything that you want to spend money on needs to be on that piece of paper before you actually spend the money. You and your husband will need to agree to it. At this stage in the game you can't afford to spend even a single dollar on anything that is unnecessary.

    Then prioritize your budget.
    Continue:
    Erica_Smerica

    Answer by Erica_Smerica at 1:32 PM on Jul. 6, 2010

  • When your husband gets paid start at the top of your list and make your way down. Things like food, mortgage/rent, utilities, car payment, fuel and insurance are always first. At the bottom list it’s things like credit card payments, eating out, and entertainment.

    If you can’t pay your credit card bills, they are going to call you. They will be rude, they’ll probably lie. They’ll say things like, “you’re going to go to prison for not paying,” there is no debtors prison and they can’t put you in prison. They’ll threaten to garnish your husband’s wages- which they can do, but NOT until they have a court order. And while they can sue you the moment you are late on a bill, 99% of the time, it will take them 6 months or more to get around to it- and it will probably take them a year.
    Continue:
    Erica_Smerica

    Answer by Erica_Smerica at 1:32 PM on Jul. 6, 2010


  • Meanwhile you can start having garage sales and working extra jobs. See if your husband can deliver pizzas, or if you can babysit for a friend or neighbor. I put an ad on the internet offering to clean homes and offices and my phone has been ringing off the hook. The schedule is very flexible too. But if you can’t babysit, or clean, then find something else to do. Mow a lawn, type up some documents. Edit assignments for college students.

    Also note that it is okay for you to change your phone number if the credit card companies start harassing you. And they very well might. They will ask you to pay them, and if you can’t, you can’t. Just be honest. Feed your family first. Set the terms for the conversations with them- like they can only call once a week, or every other week. If you want send them a copy of your budget and your income-
    Continue:
    Erica_Smerica

    Answer by Erica_Smerica at 1:33 PM on Jul. 6, 2010

  • Continue:
    A few months later- say your husband gets a raise, or you start working- or say that the simple act of taking control of your money, has allowed you to pay them- then by all means pay them. You can start by piling up cash to settle with them. Order them from smallest to largest and call the smallest credit card company first. Offer them say 50 cents on the dollar- and ask them to settle with you in writing. If they say no, that’s fine. Just pile up some more cash and call them the next month. Don’t call them all at once though, unless you have the money to settle with them.

    Your credit score will get dinged. You will rack up late fees and interest. But all of that can be settled later.
    Erica_Smerica

    Answer by Erica_Smerica at 1:33 PM on Jul. 6, 2010

  • Now, if they do sue you and you can’t pay- and you can’t afford to have them garnish your husband’s wages. Then at that point you can file for bankruptcy. But today, you probably aren’t bankrupt. A lot can change in 6 to 12 months.

    Also check out Dave Ramsey’s, My Total Money Makeover from the library. And seriously consider selling a car or two and getting a cheaper car for the time being.

    Good luck! Sorry you are going through this.

    And sorry that I wrote a novel :)
    Erica_Smerica

    Answer by Erica_Smerica at 1:34 PM on Jul. 6, 2010

  • Erica_Smerica has an awesome answer. I agree with her 100%
    Pudge_Pie20

    Answer by Pudge_Pie20 at 10:32 PM on Jul. 6, 2010

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