CCCS OR BK? 110K in credit card debt

[how did it get this far?]

After the loss of my husband's job and some very poor choices, we have found ourselves in a mountain of debt. Thankfully, he has a new job but at a slight pay cut for now. I do not know if we should file BK to rid the debt? We want to keep our house. Is there a way to file BK on everything except the house? If I were to try to pay off the debt (which we want to do), is CCCS better than doing it myself? We pay over $2600 per month in minimum payments. We feel like we are drowning. So far, nothing has been paid late but our credit scores are not that good because of the very high balances on the cards. I don't know how much longer we can juggle. We have extensive equity in our home, but no one wants to refinance it for us because out DTI is too high at this very moment and the scores hovering around 620-670. Does anyone have any advice?

[squirrelgirl]

110K? I'd consult a BK attorney.

 

My sister filed BK and was able to keep her house (although she lost it a year later in foreclosure).

[how did it get this far?]

Thanks Squirrel girl - after reading another post where someone was bashed really bad for lifestyle choices, I may have to re-think the entire idea of "asking for opinions". We are willing to make changes and have already started doing so. We have 123K in income (gross) so I am grateful to have a large shovel. Just trying to weigh the pros and cons at this point.

[Jen23514]

have you plugged the numbers into one of the "snowball" spreadsheets pinned up top?

 

btw, CCCS can not do anything for you that you can't do yourself

 

Have you called your creditors to ask about lowering interest rates?

[powers64]

Thanks Squirrel girl - after reading another post where someone was bashed really bad for lifestyle choices, I may have to re-think the entire idea of "asking for opinions". We are willing to make changes and have already started doing so. We have 123K in income (gross) so I am grateful to have a large shovel. Just trying to weigh the pros and cons at this point.

 

Hi HDIGTF:

 

Don't be afraid! We don't normally bite. Many here have been where you are and we all have made our own lifestyle choices for better or worse. I for one, will never let go of highlights and a good cut. I won't go to students, i won't go to supercuts. I will eat rice and beans if i have to just to make sure i have good hair I did let my eyelash extensions go...and i miss them terribly!

 

It sounds like you are very open to ideas which is all that matters. Many people here will spend a lot of time going running through your numbers and giving you suggestions. I think you will find people here are blunt, but generally kind and supportive.

 

Having said that, if you make a decision to do something that members here don't think is in your best interest (ie - i am walking out on all my debt, but i have decided to keep my yacht), no one will be shy about telling you they don't like it. If your children aren't eating and you have cable, someone will tell you to cut the cable. Things will only get ugly if you tell us your children don't need to eat as much as you need to watch Bravo.

 

Here is a thread that you might find more helpful:

http://creditboards.com/forums/index.php?showtopic=332455

 

Keep in mind, that is the second thread klesko posted. The first one, he was weighing the option of a 'passive bk' ie: not declaring bankruptcy but just stopping his payments. Most people here felt that he was very likely to get sued because of his income and because of the amount he owed. So, in the beginning people are kind of hard on him, but if you get to the later part of the thread, there are some really good suggestions about how to negotiate with his creditors to get the interest stopped..etc..

 

I think you could probably apply some of those principles to your situation.

 

In general, most people here will tell you to either BK or 'build your own CCCS plan'. (as jenn just did) In other words, you can negotiate everything that a CCCS can, but you can do it in a way that also protects how a creditor will report on your credit report. A CCCS plan will generally be as bad or worse than BK for your CR.

 

 

If you are weighing doing your own CCCS plan and want to post all your expenses and credit cards here, people will nitpick through every expense, which requires somewhat of a thick skin. But if you can see it as helpful and weather through it, you will also get a lot of great suggestions.

 

You can also request that anyone who responds to your thread has to confess the luxury items they refuse to let go of no matter how ridiculous. it'll make everyone seem less preachy.

Edited May 13, 2008 by powers64

[Jen23514]

I was researching FL judgments for another poster, and ran across this thread and thought it might help:

 

http://creditboards.com/forums/index.php?s...orida+judgment*

[how did it get this far?]

Jenn - I have not plugged everything in to the spreadsheet yet. Very good idea! I will do that and see if we can get out of this in the next 24 months or so. We have cars that will be paid for by then and only one more year of private school x 2 kids (our schools here are beyond HORRIBLE). We are clipping coupons and making a real difference there! No vacation this year either!

[how did it get this far?]

Quick spreadsheet shows 53 months to pay off if I can pay an extra $150 per month! Don't really understand the spreadsheet though. I have to make the minimum payments and it looks like spreadsheet doesn't show that. I am thinking I will stop using them totally as step #1, it will be tough as some months we use them for necessities. We may get behind a couple of weeks here and there in order to stop using the cards and establish cash flow. I hate to ding our credit, but I think it just not an option and I really want to pay it off rather than file BK. We want to keep our house (for now) and it has significant equity so we probably wouldn't be able to file BK and keep it.

[radi8]

Is there a way to file BK on everything except the house?

 

To answer that question: no.

All debt must by law be included in a bankruptcy filing. In a chapter 13 you can choose to keep the house and make your mortgage payments outside of the BK plan. (You could include delinquent payments in the BK plan though)

In a chapter 7, if your equity in the house exceeds the exemption in your state, you run a very large risk of losing the house to the BK court. They'll sell it and use the proceeds as partial repayment to creditors.

If all of your equity is exempt you can generally keep it as long as the payments are current at the time of filing and are kept current.

 

 

RE: the minimum payments- are you still at reasonable interest rates, or have the creditors rate-jacked you?

[how did it get this far?]

No rate jacks, all are reasonable, only a couple at 21%, the rest are 9.99 or 8.74, etc. We are not behind on anything, no cards, not the house, etc. I am trying to figure out how to make the minimums plus a little extra without missing any. We are saving a lot on groceries but that still doesn't allow me to quit using the cards totally. I guess I need a 1-2-3-4 plan of paying them down and it looks like the spreadsheets are the way to do it, although I cannot access Excel - is there another one that is preferred? I used one that was posted already but it was just a quick fill-in-blank and hard to understand the steps of payment after I had plugged in the numbers.

[powers64]

Quick spreadsheet shows 53 months to pay off if I can pay an extra $150 per month! Don't really understand the spreadsheet though. I have to make the minimum payments and it looks like spreadsheet doesn't show that. I am thinking I will stop using them totally as step #1, it will be tough as some months we use them for necessities. We may get behind a couple of weeks here and there in order to stop using the cards and establish cash flow. I hate to ding our credit, but I think it just not an option and I really want to pay it off rather than file BK. We want to keep our house (for now) and it has significant equity so we probably wouldn't be able to file BK and keep it.

 

 

You can contact your creditors and negotiate a lower monthly minimum and reduce/stop the interest rates (they all have hardship programs). I would recommend figuring out a target number that you can pay each month for monthly minimums + snowball + emergency fund.

 

So, if you have $2600 available after your living expenses to put toward debt and emergency savings then you might target 10% for savings 10% for snowball, which leaves you $2080 for monthly minimums. Then you can go through each of your cards and based on the balance/interest rate, determine what you should try to negotiate with your creditors.

 

Doing so should not hurt your credit (i don't believe). You aren't closing the accounts or trying to negotiate to pay less than the full amount. As long as you renegotiate your payments and make sure that you stick to the agreement, you should be fine.

[radi8]

No rate jacks, all are reasonable, only a couple at 21%, the rest are 9.99 or 8.74, etc. We are not behind on anything, no cards, not the house, etc. I am trying to figure out how to make the minimums plus a little extra without missing any. We are saving a lot on groceries but that still doesn't allow me to quit using the cards totally. I guess I need a 1-2-3-4 plan of paying them down and it looks like the spreadsheets are the way to do it, although I cannot access Excel - is there another one that is preferred? I used one that was posted already but it was just a quick fill-in-blank and hard to understand the steps of payment after I had plugged in the numbers.

 

If you don't have a copy of Excel, you could download Open Office (free!) which has an equivalent program that will open XLS files.

 

Sounds like you're on a spare money hunt. The place to start is with a notebook and pencil, keeping track of every last penny that you spend. After doing that for about a month you can compile the numbers into two basic categories:

1) I had to spend that; and

2) I could've gotten along without spending that.

 

Then start adding up items in category #2 until you have enough freed up to make extra payments on a card. Pick just one to snowball BTW, make the minimums on all the others. Some people like to start with the highest interest card (saves money) others like to start with the lowest balance card (faster initial victory!) Once that card is paid off- apply that entire payment + the minimum you are making anyway to the second card. Once you get going they pay down faster and faster...

 

 

Some folk find things they can sell off to raise cash for an initial larger payment to get the ball rolling. Might be an option if you have some excess stuff you don't currently need. Heck, once your debts are paid off you'll have an awful lot of money freed up to buy replacements!

 

 

I was asking about your interest rates because you'd asked about CCCS.

As long as you aren't paying default rates (23-29%) and aren't paying late penalties, there isn't much they can do for you. They aren't going to get the interest rates under the 8.7-9.9 you are paying now- and there aren't any late fees or Overlimit fees to waive. All they'll do at this point is damage your credit.

 

 

You are still needing the cards to get from one payday to the next? How large a gap are you needing to fill?

Are you managing to pay what you charge back off again or are the balances slowly increasing?

[radi8]

(they all have hardship programs).

 

 

Most of them have discontinued doing that, they just point the consumer to CCCS now. Over and over again in the BK forum we see people who attempted to get the creditors to work with them- and they were refused.

In fact I remember MBNA a few years ago actually rate-jacking consumers who called and asked for a hardship adjustment. They saw the call as an "increased risk factor". Bah. It's almost as if they don't want their money back.

I'd try it in a nothing-to-lose situation where the rates are already at 29.9%. If they are at 8 or 9% now, I wouldn't risk it. Lay low and don't give 'em a reason.

[how did it get this far?]

These are all great suggestions! We have not done an exact budget to know how much we could do without but I am sure there is plenty! Will look at eactly what it takes to pay mtg, eat, and keep the lights on, then will seet what is left and try to negotiate with the creditors on a lower monthly payment. There are a couple that we could ask for a lower interest rate on. I really want to try to keep our credit from being hit too hard so we could refinance the house in a year or so.

 

Radi8 - we do use the cards to get from one pay check to another, and this stops TODAY! They are all almost maxed anyway and we have to start somewhere! My fear is getting a week or two behind on the payments and getting the rate jacked up

[radi8]

Radi8 - we do use the cards to get from one pay check to another, and this stops TODAY! They are all almost maxed anyway and we have to start somewhere! My fear is getting a week or two behind on the payments and getting the rate jacked up

 

You might consider delaying a creditor that doesn't play games with interest rates if it comes to that.

Phone bill? Cable? Something like that where 2-3 weeks late isn't going to do you any real damage.

A better option would be to free up some quick cash though, yard sale, etc.

 

A friend of mine who is a Bankruptcy court judge refers to credit cards as "financial shock absorbers", lol.

People use them to take up the slack when things are tight and pay them down a little when they have some extra cash. But they generally just bounce back and forth between the upper limit and a few inches below.

Boing boing boing. I thought it was pretty accurate, that's the reality for an awful lot of families.

It's a tough thing to break yourself free of that- and we salute you for digging in and digging out!

Let us know how we can help-

 

Oh- have you shopped your insurance around lately? Car? Homeowners? I just chopped $125/year off of my homeowners and roughly $900 (!) per year off of my auto insurance. And I though I had a pretty good deal before, lol. Make a couple calls!

[vampireluck7]

We may get behind a couple of weeks here and there in order to stop using the cards and establish cash flow.

IMO, not a good idea, as you will be rate jacked, and have to pay late fees. Rate jacking might be even with cards you are not late on (universal default).

 

Other ideas: Can you get a job/second job? Your DH?

This is to increase income so you have enough to live on without cards and can put the excess towards a debt snowball.

[how did it get this far?]

I can try to work more, but cannot get a second job, 2 kids. DH already works a lot, salary. He is hoping for a raise soon! I am thinking if we can make it through 12 more months, one car will be paid for, one less kid in private school, and hopefully we can inch down the cards.

[VibrantEcho]

Radi8 - we do use the cards to get from one pay check to another, and this stops TODAY! They are all almost maxed anyway and we have to start somewhere! My fear is getting a week or two behind on the payments and getting the rate jacked up

 

You might consider delaying a creditor that doesn't play games with interest rates if it comes to that.

Phone bill? Cable? Something like that where 2-3 weeks late isn't going to do you any real damage.

A better option would be to free up some quick cash though, yard sale, etc.

 

 

+1000%

 

Protect those single-digit interest rates with your life! Quite honestly, if you are that close to your limits they are probably all that is standing between you and chaos. (One ratejack = tripled finance charge = overlimit = overlimit fees, and it snowballs from there...) And I'm sure you're aware that even ONE day late with a payment could be enough to trigger a ratejack...and should the other CCs get wind of that, you could have a REAL mess on your hands (stupid universal default or whatever it's called! )

 

My other tip is, when organizing your snowball, make sure the "minimum payment" is enough to actually cover the interest each month even if it doesn't put a dent in the principal. Not so much an issue with low-interest cards (to exceed a 2% minimum payment your APR would have to be in the neighborhood of 24%), but I learned this the hard way and now I've got a real mess on my hands.

[Jen23514]

These are all great suggestions! We have not done an exact budget to know how much we could do without but I am sure there is plenty! Will look at eactly what it takes to pay mtg, eat, and keep the lights on, then will see what is left and try to negotiate with the creditors on a lower monthly payment.

 

The best way to do this is to download or dig out your bank and credit card statements since the first of the year (or the last3 mos) and look at what your actual spending is. Too many people look at a budget as a wish list.

 

Once you get an idea of where your money is actually going, versus where you think it's going..... then you can move forward.

 

GOOD LUCK!

[Daddy]

We have about $3000 in monthly debt payments (mortgage, cars, credit cards, student loans), and make $100k a year. We are doing just fine. We just had to drastically cut back on things.

 

Good luck.

[how did it get this far?]

We have about $3000 in monthly debt payments (mortgage, cars, credit cards, student loans), and make $100k a year. We are doing just fine. We just had to drastically cut back on things.

 

Good luck.

 

Our mtg is $5050 per month, plus another $950 in cars, plus all of the credit card payments. And, tuition!!!! One will be paid for shortly, then car pymt. drops to $650. These are ridiculous, I know. I am going to talk to my husband about getting rid of the more expensive car (it's mine). That would save on ins. too. I have a budget for June already which looks okay. It includes NOT using the cards for anything and buying tires for one car. We do not pay tuition in the summer, thank goodness! Will work on finding a spreadsheet that I can use (and read). Next big hurdle is taxes - one thing at a time!

 

Selling the house is in the back of my mind in the next year. We could be in great shape with a high income, no debt, good credit, and a huge downpayment on a less expensive house.

[how did it get this far?]

One other thought I had to earn extra income: Being paid for surveys. That is something I and my husband could do a few hours per week. Does anyone know anything about that industry? I know a lot of college kids do it.

[fishbjc]

I am with a CCCS for two accounts with BofA. My cc interest is now 4% and my signature loan is 13%. Due to a few extra payments, the signature loan will be paid by the end of the year. Fico doesn't count *managed by CCCS* against you.

 

These two accounts were closed and I kept my other accounts. Clear Point Financial is the organization. I pay about $15/monthly for them to handle the account.

[how did it get this far?]

I am with a CCCS for two accounts with BofA. My cc interest is now 4% and my signature loan is 13%. Due to a few extra payments, the signature loan will be paid by the end of the year. Fico doesn't count *managed by CCCS* against you.

 

These two accounts were closed and I kept my other accounts. Clear Point Financial is the organization. I pay about $15/monthly for them to handle the account.

 

So you did not include all of your accounts in CCCS? Can I ask why? I am just trying to think about that as an option for us on the high dollar accounts. What were your interest rates before? Did it substantially lower your monthly payment?

[bakerman]

I am with a CCCS for two accounts with BofA. My cc interest is now 4% and my signature loan is 13%. Due to a few extra payments, the signature loan will be paid by the end of the year. Fico doesn't count *managed by CCCS* against you.

 

These two accounts were closed and I kept my other accounts. Clear Point Financial is the organization. I pay about $15/monthly for them to handle the account.

 

I am pretty sure that this statement is incorrect!!!!!!!!!! CCCS did more damage to my credit than BK.

 

 

Glad you are having good luck with this company, because with me with no missed payments (by me) my debt nearly doubled from them not making timely payments, then they would negotiate to make the accounts current (but all of the crazy fees would remain). So after 2 years of payments of over $7000 (about the original amount of my debt) I was still in debt, but the debt had grown to close to $14000, between that and a job loss, I went BK.

 

MAC