Can you help me get out of my massive credit card debt?

Question

I have about 7500 in credit card debt. I know this may not seem like a lot to some people, but I'm only 24 and I bought a truck that I probably shouldn't have and the payments on that are what's killing me. I've decided that the last thing I want to do is get rid of the truck. I have fallen behind on some of my payments and am acquiring late fees and higher interest rates, and my credit is being shot to hell in a hurry. I have applied for several personal loans to pay off my credit cards and get one lower monthly payment, but I've been denied every time because of my poor credit. I don't really want to go through a credit counseling service yet, because that shows up on my credit report and will further reduce my score. I have worked thorugh my budget with a fine tooth comb and I've done calcualting with differnt loan terms/interest rates/etc. and I know I can afford one, but how do I get one? Any advice you can give would be greatly appreciated.

I would appreciate worthwhile answers only, please. I've only had the truck since March, so my loan would be way upside down, and with my credit what it is now, I wouldn't get anything reliable for the loan I'd get.

Answer 1

Hi Nick:

Obviously you don't want to get rid of the truck. This appears to be your priority. However, you've already experienced difficulty getting a consolidation loan. Having said that I would suggest:

1. Figure out how much you can send realistically to your credit cards.

2. Call your creditors and explain that you've overextended yourself. You know that you've got to pay your bills and want to do the responsible thing. Work out a payment arrangement. Get names, and dates of each person you speak to.

3. Cover every conversation with a letter outlining the payment arrangements and the person you've spoken to. Send it via certified, registered or overnight mail.

4. Cover your assets by keeping copies of the letters and confirmation of receipt in a safe place.

5. Get a part-time job. This will help you earn extra money and keep out of spending trouble.

6. Cut up or shred all your credit cards. You won't need them to keep your credit active because you'll be making payments on your truck.

7. Follow your payment plan exactly.

It is very important that you clean up your credit now. A poor credit score can cost you thousands in higher interest charges. It also affects how much you pay for car insurance, whether you can get utilities without a deposit and possibly your ability to get a job.

Good Luck!

Anne

Answer 2

Pretty late to ask for advice now. But since you asked. #1. Get rid of the credit card. Get rid of ALL of them. You clearly are not responsible enough to have one so get rid of them. #2. Pay the minimum amount each month. #3. See if you can either get them to lower the interest rate or get a new credit card that offers a "0" percent interest on transfers. If you can swing one of those for the entire amount, at least you will not have interest to deal with. However, even if you can lower the interest rate 1-2 percent that will help. #4. Cut expenses elsewhere and put the savings on the debt. If you are sitting at home with a computer and have internet service, cut the service and use the computer at the library. Even if you have a $10 internet access, that is money you can put on the debt. If you have a cell phone and a home phone, get rid of one or the other, you do not need both. If you have a cell phone, do not use text or photo messaging. Do not use any of the additional services as they cost money. #5. Get a room mate. Get the room agreement in writing and whatever money they pay you, put it on the debt. #6. Drop out of college a year, get a job and pay off the debt. Considering how dumb you were racking up that kind of debt, your grades probably are not that hot anyway. #7. Forget trying to stick the credit card company for responsibility cause they "knew it was a gambling site." YOU knew it was a gambling site. If anyone "cheated" it was you. #8. Forget declaring bankruptcy. It got harder to do for exactly this kind of thing, people racking up debts then trying to get out of them. #9. Your credit rating is going to be OK if you pay off the debt, by paying at least the minimum each month. If you do not make payments, each time you miss one, your credit rating will drop 10 points. When you hit 500, the credit card company may just turn the entire debt over to collections and then you will really be in trouble. #10. Sell some stuff. If you are like most kids, you got some junk laying around you do not need. CDs, DVDs, quality bike, IPOD. etc. Even if you only get a few hundred and put it on the debt, it will help. And go forth and sin no more.

Answer 3

To stopccdebt: I would be interested in looking at the source of your information regarding how credit counseling (debt repair?) does not effect your credit score. Everything I have read is quite the opposite.

And the fact that you own a credit counseling company makes this comment suspecious and self-serving. So if I'm wrong, kindly point me to the source of your information.

amkornele's answer is the best. All I can add is that you may be able to survive if you could get a consolidation loan of some sort.

When you apply, talk to the loan officer and ask them not to run a credit check unless they are seriously considering offering you the loan. Take a copy of your current credit report with you, along with all of your financial data. Demonstrate to the officer that you do have a plan for payment. If you have a job, consider having payments sent directly from your paycheck. I've had cases where the loan officer was on the fence, and knowing that the money was going to be directly taken convinced him to accept.

Good luck

Answer 4

Credit counseling no longer causes your score to drop further. That practice ended around 1999 after a study done by Fair Isaac Corp. They found that people who are on a debt management plan are no more likely to default than those who are not.

If your accounts are past due, then you will have to double up on payments to bring them current. This means increasing your income through overtime or a second job.

Applying for more loans is what will reduce your credit score. I do not recommend applying for any more loans.

It would make good sense for you to meet with a credit counselor. This does not mean that you have to enroll in a debt management plan. They can frequently give you ideas and strategies to help you get back on track on your own. However, based on the limited information you provided, it sounds like a debt management plan may be the only alternative you have to defaulting on your debt.

You seem to recognize what the pressures are on your budget. You know your situation better than anyone, so whatever you decide, make sure it is in your best interests. Good luck.

Answer 5

The first answer does not make sense. You have a truck with a license plate. If you changed your name and address, you would have to change your motor vehicle registration, and that is a public record.
I am sure you have heard of the expression: "You cannot have your cake and eat it, too." That's where you are right now. Your best course of action is to sell the truck, pay off the debt, and if any money is left, use it to buy a cheaper truck.
The credit card company can sue you, get a judgment, and take your truck. If they take the truck, they will sell it at auction and may end up selling it for a lot less than it is worth. You are still responsible for the debt remaining if the sales price is less than what you owe.

Answer 6

Even if it's the last thing you want to do, get rid of the truck anyway - you can't afford it. It doesn't matter if you are upside down on the loan, you are always upside down on car loans. Keeping it will just force you into more debt faster.

Second, until you pay off your debts, anytime you even think about spending money on a nonessential item (and in this case, nonessential is anything beyond basic survival), put you hands in your pockets and keep them there until the thought of spending money goes away. Do not carry cash, do not carry a check book, do not carry credit cards. Get serious about your money NOW.

Yes, it's no fun. You can't afford fun right now. So, put your head down, work, eat, sleep, and pay your bills. Period. Time to be a man, not a boy.

Answer 7

Increase your assets and reduce your liabilities.

It appears that the truck is one that you cannot afford in the first place. Don't drown in debt. That's the last thing anyone would want. Sell it and use public transport for the time being. That should make life a lot easier.

You may have to take up another part time job to increase your earnings to pay off the debt. Its no fun but you must do it.

After your debt is cleared you may consider going in for a previously owned vehicle. They are cheap too.

Always bite off how much you can chew. That's the lesson many people in debt have to learn.

Answer 8

If you own yor own home you can refinance and pull cash out to pay off your credit card bill and raise your credit score dramatically. I work for United Lenders Group and I work with over 45 different banking companies so I could get you a mortgage loan no matter how bad your credit is or how much in debt you may be
916-860-0804
keyon

Answer 9

Online Debt Consolidation
http://www.complete-debt-info.com/category/Online-Debt-Consolidation.html

Strategies to Reduce Debt Quickly
http://www.complete-debt-info.com/category/Strategies-to-Reduce-Debt-Quickly.html

Answer 10

Personal loans aren't the answer. The APRs will be too high.

You need to get a second or third job, get a few roommates, sell your belongings, and raise some cash.