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My friend and her husband have a huge credit card debt (42,000) and she recently had to stop working due to a difficult pregnancy. They cannot make their payments any longer. The debt is in her name only and they are considering a credit card debt consolidation company but she is wondering would it affect her husbands credit if she filed it in her name only. Anyone been through this or have advice? Serious answers only please...they are having a really rough time right now.

2007-01-22 14:15:39 · 5 answers · asked by SHOP GIRL 3 in Business & Finance Credit

5 answers

Okay... here's what's up... you are using the term "debt consolidation" but a consolidation is simply taking the debts you owe and combining into one loan. Unless they can drastically reduce the interest rates to a manageable monthly bill that they can pay off on time, it's no different to owe $42K to one creditor or 15 creditors... the reality is they owe $42K. With that said, I believe you are asking about a debt management company like Consumer Credit Counseling. Yes, she can file her own bills with them but she's going to end up not having the income to repay the debts since she has no income. That's not going to work. There's no reason for hubby to go into a CCCS type of plan if he has no debts. You may be thinking of the kind of company that settles debts with creditors for pennies on the dollar. The problem there is that it's one step shy of bankruptcy according to the credit reports and scores so it's really not going to be of much advantage to owe $20K of the $42K that she cannot pay either. That leaves bankruptcy. That's a last resort option but sometimes people have to do what they have to do and at least they can get a fresh start. The problem with bankruptcy is that being married, it doesn't matter whose name is on a debt because in many states, his bills are hers and her bills are his and even if he doesn't want to file bankrutpcy, he may have no choice is he's pulled in. Also bankruptcy puts your finances in the hands of the court. You do not choose who you pay and not pay. Some people are forced to sell homes and cars and other assets while others can keep such possessions depending on what the court deems to be the best route for the consumer. The real answer to the question isn't really the debt. For some people $42K is 50% of their income and to others $42K is only 10% of income. What's alot to you and I might not really be alot depending on equity in the home or a variety of factors. The debt settlement companies turn you into a deadbeat with the creditors and then THEY make the money that you would have paid to the creditors anyway. What's the advantage there??? The first step might be to call the credit card companies directly and ask what kind of hardship programs they may qualify for. Perhaps they can suspend credit priviledges and payments until she returns to work. They may suggest a program like CCCS. The thing is if her income is zero, that's all she can pay. Give your friends the website or phone #s on the "take the first step" link below to the NFCC.ORG consumer credit agency below and ask what options, pros and cons, are available to your friends. It'll be the best phone call they can make.

2007-01-22 14:40:21 · answer #1 · answered by Anonymous · 1 0

If they are in a community property state it is his debt too. Most married couples have a joint credit file so it could already be hitting his credit. Why would she pay someone money to do what she can do herself? She can contact her credit card companies, explain the situation (having proof of the medical issue may help), ask to have late fees and interest stopped and begin making payments. True consolidation rolls the credit cards into a single loan (like a home equity loan) and pays them all off making only one payment on the consolidation. Done this way, most credit card companies will discount the balance too. Many debt consolidation companies make claims they can't live up to, many are being invesitgated too so she needs to be careful.

2007-01-22 14:48:55 · answer #2 · answered by Scott C 2 · 1 0

If the debt is in her name only It should not affect her husband's credit at all. The consolidation company may hurt her somewhat because the credit card companies hate charging a lower interest rate. If one of those is Capitol One tell her to be very careful.

2007-01-22 14:24:50 · answer #3 · answered by ? 2 · 0 0

Dave Ramsey.

Seriously.

He deals w/ credit card issues in his show all the time. Best advice anywhere.

The consolidation companies are either rip offs (bad credit loan specialists) or want to re-finance their mortgage.

Obviously, they're at a spot where bankruptcy looms large.

2007-01-22 14:24:55 · answer #4 · answered by geek49203 6 · 0 0

They should consider refinancing and settling out the debt for 50 cents on the dollar if it is delinquent. Check out the free evaluation form at

www.totaldebtsolutionsllc.com

2007-01-23 06:04:20 · answer #5 · answered by CALIFORNIA GOLD 3 · 0 1

I have included two resources in my resource box that might help answering your questions. Hopefully it helps. Good luck!

2007-01-24 05:28:01 · answer #6 · answered by Anonymous · 0 0

fedest.com, questions and answers