Credit Card debt

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LisaH

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We are in some major credit card debt. I was wondering if anyone else has faced this situation and knows of a good way to get out of it. Bankruptcy? Debt consolidation services? Sell everything to pay it off? We don’t have anything fancy or expensive that would bring in much money. Right now I can only afford the minimum payments on the cards.
I was a single mother of three for 9 years without any child support (ex in prison) so I got myself into this mess. Now that I’m remarried and expecting a child in January, I want to get this straightened out.
Please help with any ideas/solutions that worked for you.
 
Please…only as an absolute last resort consider bankrupcy!! I work in the financial services industry and I have seen the devestation that bankrupcy can cause. It seems to be the perfect quick fix and the people make it so EASY to do!! Dont get me wrong, sometimes it is the only option left for some folks, just make it your last option. My wife and I also purchased the Catholic Answers Guide to Family Finances and are currently working through it!! Good advise from Cephas… Pray, Pray, and Pray some more and make certain that your husband is also on the same page with you with regard to your goals . Good luck…

P.S. St. Joseph is a strong advocate for the family… involve him in your plans too 👍
 
Another vote for the Catholic Family Guide to Finances. I have the tapes and the book and it’s helped alot. I’m still far from where I want to be but it really brought God into my finances.
 
LisaH,

If you consult a “credit counsulor” please be very careful, make sure they are working for a nonprofit agency. I would advise getting a referal from Catholic Social Services, they might even have someone there who is qualified in this area. To many unforunate people in need of help have been scammed by con-artist, and the last thing you need at this point is to have one of them get a hold on your finacial infro.
I agree with decon2b, filing for bankrupcy should be your last choice if at all possible. I will pray for you.
LindaH
 
What about exchanging the high interest cards for low interest cards? Bankruptcy can mess things up for years afterwards, even when its the only way out. I know from experience 😦
 
Credit counseling would be a good start-- to help you make a plan to repay the debt and to become educated on how not to repeat the pattern and get back into debt once you get out. There have been some other good suggestions here too. Reputable credit counseling agencies will be affiliated with the National Foundation for Credit Counseling. One national agency is www.moneymanagement.org.

Bankruptcy is not a quick fix, it has long term consequences. A credit counselor can help you assess the situation and determine if a debt repayment plan can work for you or if you should look at the option of bankruptcy.
 
To be blunt, watch every penny. Don’t spend any money unless absolutely necessary. This means no luxuries until at least the debt is paid off.

Take all your debts and put them in order of interest rate - highest to lowest. Pay off the highest interest rate card first, then the next one and the next one.

I recommend a newsgroup called misc.consumers.frugal-living for tips on living cheap. Use Google Groups and lurk there for a while, you’ll find lots of great tips.
 
Please consider listening to Dave Ramsey in your area. You can hear him from 12 to 3 on 1300 AM KKOL. I have to give the disclaimer that he is an evangelical Christian, but I have never once heard him say anything remotely untoward about Catholics, and on the bright side, we have paid off almost $165,000 in debt (one student loan to go!) since we started to listen to him and read his books, adn we did it within a year. His plan is simple (many would say too simple, but I say, hey, look how much we have paid off). He prides himself on his common sense approach–pay off debts smallest to largest, get on a written budget you redo each month, and quit spending money you don’t have.
I am not familiar with what others have recommended, but since he is free and as easy as turning on your radio this afternoon, why not give it a try? If nothing else, you will find people talking about much worse circumstances than you are in who have changed their financial lives without bankruptcy or some debt consolidation program equivalent to bankruptcy. They will inspire you to change your way of life.
 
Go to www.creditboards.com and check out the discussion forums. You will find excellent help over there to find a solution to your situation from people who have been there. Post your situation over there and they will help you. They will also help you protect your credit and ultimately raise your credit score. I am a member there and that site has been a tremendous help to me.

I just want to warn you about credit counseling. Run from it! It will make your credit worse. It will be notated on your credit report, which is frowned upon by creditors. Many creditors view it just like bankruptcy. You’ll also end up with a series of late payments because these companies will pay your bills late even if you pay them on time. Do a search on creditboards for credit counseling and you’ll see what I mean. MANY bad experiences. You can negotiate with your creditors on your own, you don’t need to pay someone to do it. Many over there have found out after the fact that they would have been better off filing for bankruptcy because they get instant relief, and can immediately start rebuilding their credit. I’m not saying bankruptcy is the solution, but credit counseling is definitely not better than bankruptcy.
Good Luck!
 
Check your local library for “The Tightwad Gazette” by Amy Dacyzyn. This woman is a tightwad genius. There are many, many ways to cut corners and come up with extra money to apply towards the bills.

God bless,
oremus
 
If you own a home and have some equity, you may be able to refinance and pay off your credit cards. It’s not the greatest financial solution, but it’s a lot better than bankrupcy.
 
Lisa
First I want to encourage you to NOT lose hope. My wife and I having faced a similar mountain of debt several years ago know that the biggest challenge is not succumbing to feelings of being overwhelmed. With patience, discipline, time and most importanly prayer, you CAN overcome this.

I want to echo the comments by another post recommending that you avail yourself of the advice of Dave Ramsey. While not Catholic, I can also confirm that I have never heard of anything even remotely anti-Catholic he has ever said. He has awesome advice on money from a very Christian perspective. First, pick up his book ‘Financial Peace’ right away. It is easy and fun to read and gives great SPECIFIC steps on how to start getting your finances in order and how to start digging out from debt. No gimmicks, no tricks, just common sense advice that holds your hand throught every step of the process. You can also check out his website at www.daveramsey.com.

In the meantime, while not a professional, just having been through this (and now beting totally debt free), I would be happy to give you some specific steps he details to get started.

God Bless

Steve
 
Why don’t you try, if you are able, a home equity loan. Basically, you’d be making smaller payments with a lower interest rate. That is what we are trying…
Peace
 
One general rule to follow in solving debt problems…

You don’t fix debt with debt. This includes Home Equity Loans, Consumer Credit Services, transferring from higher interest to lower interest cards, etc.

You solve credit by 1) changing the habits and choices made that got you into debt and 2) Paying off the debt you have.

…It’s not rocket science, but it takes discipline and sacrifice-as does anything worthwhile.

Steve
 
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Monicathree:
Why don’t you try, if you are able, a home equity loan. Basically, you’d be making smaller payments with a lower interest rate. That is what we are trying…
Peace
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If you are at all considering the possibility of filing bankruptcy, transferring unsecured debt (a credit card) to a secured debt (a home equity loan) is a huge mistake. If you take that step, you had better be darned sure that you will be able to pay off that loan. It is not something to “try”. You had better be reasonably certain it will work. Otherwise, not even a bankruptcy may save your home.

I am not as down on bankruptcy as some of the others are. At some point, people get so deep in credit card debt that they will never get out of it. The interest and charges on those cards are so high that they bury people.

You just need to ask yourself the question, is there a reasonable chance that I can ever pay all of this back?

If not, then Bankruptcy may be your answer. Chapter 7 is a pretty simple process. Bankruptcy does stay on your credit report for up to 10 years, but you can rebuild your credit. In PA, car dealers are lining up to give people who filed bankruptcy car loans (usually at a high interest rate though.) You can walk away from all that credit card debt with a Chapter 7 for probably about a thousand dollars in courtcosts and fees. www.nolo.com has good information on bankruptcy and dealing with credit card debt.

If you think there is a reasonable chance at paying off those cards, then I would contact the lenders on your own and see if you can negotiate a settlement with them. Tell them you are considering filing bankruptcy, but you want to avoid that option and see if they will lower your balance or your rate.

The most important thing to do is to tear up your credit cards. They are a death trap.

God be with you.

Jeff, Esq.
 
We are in some major credit card debt. I was wondering if anyone else has faced this situation and knows of a good way to get out of it. Bankruptcy? Debt consolidation services? Sell everything to pay it off?

I am concerned about your wording, although I don’t want to extropolate too much. Why do you want to “get out” of paying your credit card debt?

Well, anyway. . .

All of the “gurus” of financial management pretty much say the same thing - take what little extra make and apply it towards the small debts first (don’t worry so much about the interest rate) because you start to see results quicker as each one gets paid off. And work your way to larger debts.

At the end, keep one credit card. I have 2 - one for my business and one for my personal. I assume you don’t have a business.

Suze Orman is a good person to listen to - I like her mantra - “People first, money second, things last.” Of course, we would all put God first but her priorities are pretty on target. Her 7 Laws of Financial Success is a good starter on financial management.

Another good book is “Uncommon Cents” by Hyrum Smith.

These are non-denominational (although Hyrum Smith is a very devout Christian) and not sure if that’s what you are looking for or something with more of a Catholic theme to it.

Good luck.
 
Thank you for the good advice. I will look into all these things.

Poor choice of words on my part. I mean to say get out of credit card debt, not get out of paying the cards off.
 
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masondoggy:
I just want to warn you about credit counseling. Run from it! It will make your credit worse. It will be notated on your credit report, which is frowned upon by creditors. Many creditors view it just like bankruptcy. You’ll also end up with a series of late payments because these companies will pay your bills late even if you pay them on time. I’m not saying bankruptcy is the solution, but credit counseling is definitely not better than bankruptcy.
Good Luck!
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This is completely untrue and misleading. I am sure that there are people who have had bad experiences with counseling, but there are many others that have had great experiences-- several of my friends have gone through a counseling program and have come through it without any of the negative things you state here.

You make blanket statements about how credit counseling affects your credit report and they are untrue. Check with Fair Isaac’s-- credit counseling is not a factor in computing the FICO score at all. It is completely ignored. And, if any specific creditor views it negatively, well there are 100s of others who do not.

Secondly, to state that the companies will pay bills late even if she pays on time is certainly misleading. I am sure there are examples of this happening, but the vast majority of organizations are very reputable-- such as those affiliated with the National Foundation for Credit Counseling. That organization can refer to many local agencies with solid reputations of helping people in their community.

There are certainly good and bad players in any business-- that’s why it’s a good idea to check out any company before doing business with them. The government is currently investigating a couple that have been in the news such as Ameridebt and Cambridge. Certainly those should be avoided.

However, to make such statements flies in the face of the experience of literally hundreds of thousands of people who have been helped.

Credit counseling and bankruptcy are NOT equivalent. Credit counseling notations are only on the credit report while on a program IF at all-- many times it is not even on there at all. Bankruptcy is on for 7-10 years.
 
1ke, I disagree with you. Like I said, do a search on credit counseling at www.creditboards.com and you will see why I feel the way I do and why I feel it necessary to warn someone about it. Every consumer can call there own creditors and make their own arrangements when they are having trouble. Usually credit card companies have hardship programs for that. Credit counseling companies lead consumers to believe that they are out for their best interest and care about them, well it’s a lie. Those companies are all supported in one way or another by the credit card industry, and they ARE NOT looking out for the consumer! TOO MANY people have been mislead and had their credit trashed with late payments from these companies. And no, the credit counseling notation does not factor into FICO, but when creditors do a manual review of an app, they look at it the same as bankruptcy. Only in a way worse, because their credit has issues ALONG with the debt.

Look, I’ve been there, I’ve dealt with this stuff for years and have found that the only person who will look out for my consumer rights is me, not any creditor or credit counseling company. That’s why I referred the op to that site, so she can learn how to protect her consumer rights. And I feel that the damage these companies have done to people is serious enough to warn her about it. The last thing a person needs in that situation is more unneccessary abuse.
 
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