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mentedia

$170K credit card debt, no way to pay off as of now

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I know it doesnt seem like it now, but in some way be glad this happened when it was $170k, not $870k. We learn from mystakes, you make a good living so this will cause short term pain, but nothing you can't work through

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OP did you ever send Chase the information they asked for? Not sure why you expect them to reduce the interest rate when you won’t provide the docs requested.

 

I agree with the posters who said sell bitcoin as needed to pay for this. Better to get some pathing from your gamble than nothing.

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I wouldn’t count on bitcoin bouncing back that high in the near term. If anything I would bet on it going lower.

 

OP I would talk to an attorney before you stop paying any of this debt.

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I wouldn’t count on bitcoin bouncing back that high in the near term. If anything I would bet on it going lower.

 

 

My thought too. Absent something nutty in the world. There's been a lot less chatter about it amongst my friends that aren't normally into "opportunities."

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I read through the posts here and the ones on MF. If you genuinely want some help digging out of your situation, there are a lot of great, kind people here who will help you work through the details of your finances (monthly income/expenses and minimum payments). I would be happy to do so. My concern is that is seems as though you are only really looking for someone to endorse your plan of defaulting now, and negotiating later. You will notice that not a single responder on either board has told you that is a good idea. Why? Because it is a terrible, terrible idea and this board is filled with people who have found themselves in default and suffered years and years of stress. It is not worth it.

 

There are so many things wrong with the article posted by James Altucher I don't even know where to begin, but i can say this, he is wrong. On all counts. Please note as he admits in the article: he has never had a credit card. So you can choose who's advice you want to take: someone who has never been down this path or those of us who have. The people that have been down this path are all trying to guide you toward a path of taking responsibility and digging out.

 

I know you must be panicked and hearing a solution that promises short-term relief must sound really good. Please don't fall for it. Ditch that plan and let us help you.

Edited by powers64

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What about transferring balance to new credit card with 0% intro interest you could breathe for another 12 months.

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I looked at your spreadsheet.

 

So, the Chase and Amex business cards are the ones that have 0% ending this month. And you talked Amex into a 6% plan, but no luck with your $28,000 balance on Chase, right?

 

Your personal accounts are all at 35% utilization, except Citi. Citi, at $38,000 of 40,000 is 95% utilization. You need to get that down to about 40% utilization if you want to see good 0% balance transfer offers come your way.

You could also apply for new credit cards, with a credit score of 740 and with no single account over 40% utilization you can get new cards that and move the credit around when the 0% promo offers expire.

To do this you'll need to sell some of your cryptocurrency to pay down Citi about $22,000. And sell enough to make the high-interest payments on the Chase account for the next 3 months.

Then, after the next statement closes with your Citibank account, you can wait a week for it to update to the credit bureaus, and your scores should bump up about 20 points. Then, you can apply for new personal credit cards with your $100K income and 760 credit scores, and get 2 good cards. Maybe Alaska Airlines (business or personal) and US Bank Altitude (do research to make sure these will come with Balance Transfer checks). You should get a starting credit line of $10,000 on each of them, and you can move $4000 on each of them. That will knock that Chase business account down to $20,000. Keep making the minimum payments on everything, and in 3 more months apply for 2 more new credit cards with balance transfer checks. And by that point the Chase account will be pretty small.

And, I see from your initial post that you expect cryptocurrencies to go back up around the end of 2018. That is a bit of a gamble. You have your whole life ahead of you, I'd recommend not taking gambles that will result in potentially defaulting on $170K in combined business and personal credit card debt. There are easier ways to make good in life, and if you are making $100K/yr you can get your $120K loss paid off in 3 or 4 years, and you'll have learned a few important life lessons along the way. It will be easier, and you'll sleep better, than if you default and hope crytocurrencies will go up again...

If you liquidate the crypto, surf the 0%/3% promo offers, and put $3000/mo of personal income into paying down the bills, you'll have:
- $120,000 at 3% interest = $4K/yr in interest.
- 12 months through April 2019, that $120K will be paid down to $90K.
- 12 months through April 2020, that $90K will be paid down to $58K.
- 12 months through April 2021, it's down to $24K.
at $24K you can float it indefinitely through 0% promo offers. Maybe even at $58K.

And you'll have done the whole thing without paying lawyers, without losing sleep, without filing bankruptcy, without having the IRS ding you for tax on the written-off debt, etc.

 

MP

Edited by moneypyts

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legaleeagle --

Maybe $100K. Shouldn't be a problem. Look at his spreadsheet.

https://docs.google.com/spreadsheets/d/1tBwJ8xfojfZpgtLzmlAy3fgl201WqG7yUtm_V-IFXLY/edit#gid=0

He has a good framework for getting approved for new, good quality credit cards if he pays Citibank down to 40% utilization.

Current credit score 740

Personal cards:
Barclays $14K/$40K = 35% util
Citi $38K/$40K = 96% util (pay down $22K to 40% util)
Elan $9K/$14K = 60% util (okay, he needs to pay this down $5K, too)
WF $15K/$40K = 45% util (pay this down $2K to 40%

Pay them down $27K to less than 40% utilization overall. Credit score will bump up to 760.
$47K in balances, on $134K of credit.

It's a very respectable portfolio, you have to admit. Even if it's pretty high on the "amount of total outstanding debt" number. I've gotten approved for $10K credit limit new cards with $42K outstanding credit card debt. Denied, too, but approved for some.

He has business cards with Chase, Amex and US Bank.

 

He should be able to apply for airline/hotel personal cards from Bank of America, Cap One, Citi, FNBO and maybe Chase (if he stops calling them). Lets say 2 of these banks approve him, and he gets a $10K starting line from each. Move $5K from that high interest Chase biz card over to them right away, the $28K in high interest on the Chase card drops to $18K. And if he liquidates Bitcoin to make the extra monthly payments on the Chase card for 6 more months, he can open up 4 more credit cards (ideally business, so they don't show up on his personal credit report) and get that high-interest Chase card down to zero. 6 months interest, at 35%, on an average $10K balance is $1700. Not a whole lot.

 

Compare the cost of doing this to $25K in bankruptcy lawyer fees (as per Shifter's experience), 1 yr of $100K balances at 35% interest = $35,000. And attorney fees. And paying income tax on however many $10,000s of balance are written off by the banks.

And if he's living frugally (not dropping $ on more than rent home-cooked food, and gas for his Camry) he can pay down $4 to $5K per month.

 

The biggest single barrier to this, of course, is letting go of "I am hoping when cypto pick up end of 2018 or early 2019..."

mentidia, you still out there?

MP


Edited by moneypyts

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OP has avoided responding to any questions regarding the remainder of his crypto portfolio. I'm guessing that means that using those funds to remedy this situation is off the table. Per his original post, $170k portfolio went down 70%, which would leave him with an investment of approximately $51k. Now he needs it to increase 233% just to get back to breakeven. Not crazy to see this happening given the investment(s), but also not the best strategy since he's using borrowed money in the first place.

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OP is paralysed by the "sunk cost fallacy." To wit:


OP has $40k worth of crypto (on the other forum, OP says the crypto is worth ~40k).

But OP believes s/he has $170k worth of crypto which can only be liquidated for $40k right now.


The correct way to look at this is, "what is the best way to invest $40k which I cannot afford to lose?"


What is the APR on the worst 40k of cc debt? If I lowball it at 10%, I see these 2 options:

1) invest the $40k risk-free for a 10% APY guaranteed tax-free return (i.e., put it toward the cc debt).

2) buy $40k of crypto just after the peak and risk it all.


I would pick #1.

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Occam for the win.

 

 

Smart. Very smart.

 

 

Yep. Excellent analysis by Occam. Mark to market is a harsh mistress.

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How do crypto trading losses factor into future tax deductions? Is it $3500/yr you can deduct from your income until its all used up? Or a credit? I used to know this. But, if you lose $110K in trading, its a $3500 annual tax benefit of some sort for 20 years to come.

 

And youll certainly pay zero personal income tax in 2018, right? If OP is making $100K/yr that will be a major tax refund in March, 2019, right? $20K? $25K?

 

Add these factors on the plus side of closing your positions, taking the loss, and moving forward.

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And youll certainly pay zero personal income tax in 2018, right?

no. capital gains losses are capped at $3k/year. he can't offset his wages with more than that in any year.

 

and the tax rate on 100k gross income is not nearly 25% anyway.

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And youll certainly pay zero personal income tax in 2018, right?

no. capital gains losses are capped at $3k/year. he can't offset his wages with more than that in any year.

 

and the tax rate on 100k gross income is not nearly 25% anyway.

 

Not to mention that, given the use of business cards, it will be difficult to show that it was a personal loss...compounding bad financial decisions with tax fraud is rarely an equation with good outcomes.

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OP is paralysed by the "sunk cost fallacy." To wit:
OP has $40k worth of crypto (on the other forum, OP says the crypto is worth ~40k).
But OP believes s/he has $170k worth of crypto which can only be liquidated for $40k right now.
The correct way to look at this is, "what is the best way to invest $40k which I cannot afford to lose?"
What is the APR on the worst 40k of cc debt? If I lowball it at 10%, I see these 2 options:
1) invest the $40k risk-free for a 10% APY guaranteed tax-free return (i.e., put it toward the cc debt).
2) buy $40k of crypto just after the peak and risk it all.
I would pick #1.

 

Probably closer to $30k than $40k as BTC has dropped almost 20% since the first post. Very volatile though. Could go back up a lot. Or not. Everybody hates mark to market when it's down.

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