I owe $37.000 in credit cards. I can not pay my credit cards anymore. Bankruptcy?

Question

I owe $37.000 in credit cards. I paid on time until this month. I can not pay my credit cards anymore. I have two houses, one is rented. I am trying to sell that one. If it is sold I could get $30.000. The other one is the house in which I am living. It is not likely that the house will be sold any time soon. I decided to continue paying both mortgages and keep the houses but I can't pay my credit cards if I do so.

I have no idea about what can I do.
What could happen if I sell the house, pocket the money and not pay my credit cards never? I tried debt consolidation. Didn't work.
Maybe I will need to file for bankruptcy and lose both the debt and the house.

Answer 1

If you own property which has equity, then it is quite possible for you to work this out with the Credit card companies. If you have intention of paying your debt off, that is. If you plan to stiff them, then you are asking for trouble in the long run.

The way to sort out the situation with your Credit cards is as follows:

1. STOP using them totally. Accept the fact that they are not your friends and that it is now time to start living without them.

2. Sit down on the phone and call each and every one of your creditors. Explain your situation that you are trying to sell your property and that you have full intention to pay them back as soon as it is feasable. Some of them will threaten to sue, etc. etc. BUT in the end they all know that they have better chance of getting paid if they allow you the time. Eventually you will reach agreements with everyone of them to pay back with easier monthly installments, and full payment when you have the money from the sale of your property. Some of them may even consider to let you off the hook by not charging you interest. Some of them, of course, will become bastards about it and will threaten law suits, legal expenses, etc. I would say to you to ingnore the initial threats and make whatever payments you are able to make during these discussion. Each payment which you make, however small it may be, will get deducted from your overall balance. In the end, even the stricktest of judges will note this willingness on your part, and will rule in your favour, if any of your creditors were silly enough to take it to the legal limits.

It works. Trust me. I know.
Good luck!

Answer 2

That is a problem. Now paying someone money to help you get out of debt does not make sense. Consolidation of a sum that big just amounts to shuffling it all around.

Open up every credit card offer you get. You know the ones with the introductory offer to transfer your debt to them for the temporary rate of 0.09% or some such low figure. This enables you to pay principal for the most part. You will have to save 1/10 of your income and put it in savings. Pay yourself religiously. Even if it is a small amount, never fail to pay yourself 1/10 of your net. This savings will grow slowly and steadily. That is your emergency fund for that tire or whatever you suddenly need. You will need this instead of using the credit card. It can be done; I have done it successfully. Pay off your smallest credit card first. Once that is done, cut it up. If they charge an annual fee, notify them and cancel the account. Then work on your next smallest. Keep paying minimum on the others. If you can't lower the asking price on your rental, then you will have to upgrade it somehow for curb appeal. Paint, simple landscaping, whatever you can afford without using a credit card. You have to recognize that not only circumstances put you into this debt but your behavior did too. Unless you have the will to get out of debt and the will to do what is suggested, it ain't going to happen. Bankruptcy is only a temporary sort of fix. If the behavior doesn't change, then the problem can resurface. What I have suggested above was the way I got out of credit card debt. It works. It will take longer because of the sum involved, but with all these credit card offers and their introductory rates, it makes it easier than when I did it. Stop using your credit cards. If you don't it won't work. Save 1/10 of your net. That is your emergency fund. This is what you do if you want to avoid bankruptcy. However debt can overwhelm you. Overwhelming debt can crush you and rob you of will. Bankruptcy is an escape from a crushing load. You have to decide if bad credit for at least seven years is worth the feeling of peace that you will feel when that debt is gone.

By the way Chandru M gives you some great advice.

Answer 3

Sell both houses. Move into an apartment. Pay off the mortgages and credit cards. Once you have your affairs in order, consider buying another house.

Contact your creditors and negotiate lower payments. Pay cash for what you need. Evidently you have some good income in order to get this far. YOU want to sell the properties on your schedule, not a fire sale where you get less money.

You need to sell one of the houses first. The one that is most marketable. Presumably your rental property is producing sufficient income so that you are able to meet that mortgage and maybe a little profit.

If you want to sell the rent house, you will need to give the tenants indication that they will have to find another place. Work out an arrangement so they have time to move.

The sale of one house could reduce to only $7000 credit debt, which is not so much. Use the "balance transfer - zero interest" offers to reduce the interest that you are paying.

The loss of the rental house is the consequence of uncontrolled spending. I assume that the $37000 was spent on items that cannot be converted back to cash (trips, lodging, gifts, etc.)

If you can get to $7000 credit debt, there's no need for bankruptcy.

Answer 4

Pay your bills, even if it's a minimum payment, but you are legally responsible for the entire outstanding balance, no doubt about it. If you don't pay off your debt or fail to make timely payments, you will have collections agencies chasing after you and your credit will be destroyed for 7 years and you may end up having personal property confiscated or repossessed. Filing for chapter 7 won't get you out of the mess either, because the bankruptcy laws have changed and the courts will force you to repay your debt. Stop being a deadbeat and start legally paying your bills any which way you can.

Answer 5

Unbelievable! Hope you had a good time on that 37k!! It's time to take responsibility for your actions and get rid of the rental. Take the profits from the sale and immediately apply the amount towards your credit card. You will be amazed how good you will feel and then promise yourself that you will never spend foolishly again!!! I can tel already the kind of person you are. You're already thinking about what goodies you could by with the profits from your home sale. Stop this thinking!! That's what got you into debt to begin with!! If you were to die tomorrow do you want this debt passed on to your family?!?! Wake the fu?k up!!!!

Answer 6

Sell everything you can (extra house, cars, tools, boat, ATV, etc.). Write up a monthly budget with the bare essentials and put every extra dollar to credit card debt. No eating out, movies, drinking, etc.
You are legally and morally responsible for this borrowed money and need to pay it.
Go to www.daveramsey.com and sign up for the next Financial Peace University at a local church. My wife and I took this 13 week class and totally changed our financial life.

Answer 7

I can suggest you to check this debt settlement company which helped me a lot..
they can reduce your principal debt amount of $37,000 to $22,200.00 and you can be out of credit card debt in 3 years with a monthly payment of $616.67
I was having the same debt issues and everybody said to cut my expenses,save nd use that money for paying bills on time..but at the moment of crisis all i wanted was to get out of debt..i could follow their advice once i am off all these tensions..
then i found this debt settlement company which was my life savior
check their website
good luck
please don't even think abt filing bankruptcy


http://www.debtfreeafterall.com

Answer 8

hello dont sell ur house ...............
Do You Have Bad Credit? Don't give up!! Guaranteed Bad Credit Financing. Receive a loan or credit card even with bankruptcy!
its easy any one can get it
any type of credit cards ok ,...........

Answer 9

If you sell the house and run, hide the money; don't leave it in a garnisheeable bank account. Check out this site, maybe they can provide an answer.

Answer 10

get into credit counsiling program and let them come to an agreement with your creditors and you can make one lump sum payment per month. it may take a few years but it won't burn your credit rating.