How can I pay off a huge sum of credit card debt without ruining my future??

Question

I am a 20-yr old student, halfway through college. When I began college, I recieved all of those "college" credit card offers mailed to my house. I made the mistake of not cutting up the cards and just threw them away and now someone in my family has used the cards to rack up between $15,000-$20,000 of debt in my name. I do not wish to press charges on them since they are in my family, and my creditors have told me that is the only way I can claim "fraud" on the accounts.

Now I have 4 credit cards in my name that are 6 months or more overdue in payments and I only work part-time at a daycare since I am in school. My parents/relatives will not loan me the money, nor can I drop out of school to work full-time. Creditors are calling me day and night and I just do not have the money to pay off this huge debt. What is my best option? Credit counseling? Debt Management? Bancruptcy? I know there is no "ideal" option but what can I do that would cause the least harm to my credit & future?

I can only afford to pay my creditors about $400 a month total. I would like to avoid bancruptcy at all costs because my fiance and I would like to get married and have kids in the next 7 years and even though he has good credit, mine will prevent that if I declare bancruptcy.

The family member who accumulated the debt will be paying me back eventually but this might not happen for awhile.

Also, I have already spoken with my creditors, they cannot come to an affordable agreement with me.

Answer 1

Credit counseling and debt management courses are really only of use if you've got real income. You don't. So you're going to need to try something else.

Dropping out of school to work full-time is not a realistic option. If you really do have $15,000-$20,000 in credit card debt then you're in pretty big trouble. At an average credit card interest rate, even just paying the minimum would take about $300 a month for 20 years and cost north of $70,000 dollars by the time you've paid it all off. As any job you're likely to be able to get without a college degree isn't going to pay much more than $20,000 a year, you'd wind up having to spend $3600 a year just on debt management, and you'd have to do that for 20 years. You can't afford that. No one can.

Bankruptcy might be an option, but not a particularly attractive one should you want to keep going to school. I assume that you've got student loans and will need more to stay in school. Lenders will be extremely reluctant to loan money to anyone who as declared bankruptcy, especially someone as young as you are. So while that could conceivably eliminate a lot of your debt, it would almost certainly permenantly damage your credit.

It's also not a given that you could even declare bankruptcty. The rules for doing so were recently tightened by Congress. I don't know the exact details of your situation or if you'd be affected, but it's harder than it used to be.

As unpleasant as it sounds, I believe that declaring fraudulant use of your cards may be your best and, in fact, only option. You yourself did not run up the charges on the cards. Your family used the cards without your knowledge, knowing they were screwing you over, and are now unwilling to help you get out of the mess they put you in. Any loyalty to the person who did this to you is entirely misplaced. While it's true that you don't generally want to level fraud charges against your family, it's also true that you don't generally want to defraud your family.

You need to get in touch with your credit card companies and tell them that your cards have been used fraudulently. If you can tell them who did it, they'll go after the fraudster themselves, more than likely. You may need to get in touch with a lawyer to prove that it really wasn't you who ran up these debts. Either way, this sounds like the only way that you're going to ever be able to get out of this mess.

Answer 2

I think that you should enter into some kind of payback agreement with the person who used your card without your permission. You're being very generous by not turning them in and assuming the debt they should be remorseful and do whatever they got to do to pay you back.

This REALLY sucks for you because it will reflect poorly on you and come back to haunt you for the next 7 years minimum and it's not your fault.

Call the credit card companies, show them that you want to and are willing to pay them back and ask them if you can work out a payment plan with them because you have very limited resources and are in school, if that doesn't work call one of those debt consolidation places, they charge a fee every month but with a debt that high you'll save money with the lowered interest rate and more favorable payment schedule.

Good luck with that though and try to get as much back from the culprit, this may be a situation where you can get thier parents involved and see if they'll help you with the payments if the offending relative doesn't.

Answer 3

Seems like your "family" didn't think about you as "family" when they fraudulently applied for credit cards. Why do you feel you have to be nice to them when they certainly were not nice to you?

Politely ask these people to give you significant money up front (sell a car, home line of credit, cash advances on their own credit card) so you can recover from your debt. Politely inform them that you may have to file with police reluctantly but that is the only way you can pay your bills.

This "family" has screwed you over once, they'll do it again.

Answer 4

You need to tackle this really methodically and without taking out more debt. Have a look at this for some sane, free advice
http://www.quazen.com/Home/Personal-Finance/Managing-your-Debts,-a-common-sense-approach.525

Answer 5

I would no pay a dime on these cards and i would call the police. your 'family' has really crossed the line and overstepped teir boundaries. they need to lean responsibility. call the cops and file a report.

Answer 6

personally if someone in my family was so stupid to ammass this kind of debt on my name I'd have no problm at reporting him/her as a fraudster but hey I wish I was able to forgive total ignorance like you seem to be able to do... anyway , check these out, see the FAQ on the first link down but really there's plenty of advice if you have time to read:
http://credit-cards.ebookorama.com
http://finance.ebookorama.com
http://credit.ebookorama.com
http://credit-repair.ebookorama.com
good luck!
if it helps please remember me cheers

Answer 7

Ithink you are going to laid charges agianst your familey member and make that familey paid or go to jail for fraud mean it

Answer 8

consolidate your debts:

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