Debt Relief Companies » Credit Card Debt

I am drowning in credit card debt because i became disabled and had to use credit cards for daily expenses, medications etc. I have over 100K in debt other than my house and have wiped out my savings and retirement accounts. I draw Social Security now. Is there an answer besides bankruptcy?

Scott — Tue, 26 Aug 2008 17:33:22 +0000

Hello, sorry to hear about your situation. Unfortunately, it is all too common these days given the state of the economy and healthcare expenses. I am not sure there is a bankruptcy alternative except possibly selling your home to pay off the debt and then renting something using the money left over after the debts are paid off (assuming the home equity is worth more than your debt which may not be the case).

You probably want to consult with a bankruptcy attorney in your state who will be able to give you a much better answer given your sate laws, specifics of your situation, etc.

I wish you the best.

If I am planning on purchasing a house in 18 months and chose to do the “debt settlement” what are the chances in being able to get a house and with a decent interest rate. I have 30,000+ in credit card debt and I am only 27 yrs old HELP!!!!!!!!

Scott — Tue, 24 Jun 2008 03:22:41 +0000

Hello, unfortunately you should not plan on being able to do both. Entering a debt settlement program to reduce your $30K in debt will most likely prevent you from getting a mortgage as your credit will be damaged for longer than 18 months. Most settlement programs take 24-36 months to complete and then after you are done, you would need time to rebuild your credit.

By the same token, you need to ask yourself, with $30K in credit card debt would you be able to get a mortgage at all? That depends on your income level and your ability to pay off that debt AND the mortgage simultaneously.

So assuming you cannot afford the credit card debt and the mortgage payment you may want to deal with one at a time and the credit card debt is upon you now – deal with that first, then you will be more eligible for a mortgage.

Like you said, you are only 27 years old, get rid of the credit card debt first (preferably without debt settlement if you are able to do so), you have many years ahead of you when you can enjoy a new house.

What if my debt problem includes not only credit card debt but a foreclosure as well?

Scott — Mon, 23 Jun 2008 23:36:06 +0000

Hello, the two problems, credit card debt and a foreclosure are typically handled by seperate types of debt relief entities.

Your credit card debt can be handled by a debt settlement company (if you want to reduce your balance) or a debt management company (if you prefer to just reduce interest rates).

Your foreclosure is handled by what’s called a loss mitigation company who try and use legal means to prevent foreclosures.

I suggest you view each debt problem seperately and seek out help for each.

I wish you the best of luck.

What would you recommend for an 87-year old widow with an outstanding credit card debt of slightly more than $11,000 and no assets. She has been paying off this bill (and adding nothing to her credit card) since the death of her husband almost five years ago. For some time she paid the minimum, but more recently as the minimum has dropped, she has been able to pay slightly more. Now she is in a nursing home. Her income is modest (social security and a very small pension); assets are now down to less than $5,000 and will be depleted in short order by her need for either a nursing home or assisted living. In fact, she is applying for financial assistance. Two lawyers have recommended that she simply stop paying the bill since there is nothing they can go after. There is a concern, however, with harassment of this fragile elderly woman from bill collectors. As the relative handling her financial affairs, I feel horribly uncomfortable at simply not paying a bill. Do you have any suggestions?

Scott — Fri, 16 May 2008 19:36:48 +0000

This is a difficult one because you really have to decide for yourself what’s best. Do you follow the lawyers advice and bear the brunt of the collection calls (and it sounds like some guilt as well…totally understandable) OR do you try and work something out.

Even if you were able to negotiate the debt down to half of the $11,000, the $5,000 in assets still would not cover it and, of course, would leave her with zero money. Obviously, that is not an option. So you can take the lawyer’s advice if you believe what they have told you based on your state laws, etc. or you can find the money from somewhere else to pay the bills.

Unfortunately, neither decision sounds very good but that’s really all there is as far as I can tell. That is a tough situation and a judgement call only you and she can make together. I wish I had a better answer for you…good luck.

I have been paying around $1,000/month with almost 20% APR. Then they put me in a program where I am paying $661.00/month with 2% APR. My problem is that I could no longer pay that amount and I would like to know what will happen after I stop paying? They told me they would put me back to the 20% APR and if I still do not pay, they would give my account to a collection agency. I know this will affect my credit score, but since I could no longer pay $661.00/month, what can I do before or after they give my account to a collection agency? I need an advice on what to do?

Scott — Mon, 17 Mar 2008 15:53:02 +0000

Unfortunately, if you already reduced your payment from $1000 to $661 and still cannot keep up with the credit card debt payment, you probably need to seek professional debt relief help before the problem gets worse. I assume you have stopped accumulating more debt and the reason why you can no longer afford the $661 is due to a change in your income.

Once you have stopped using your credit cards and tightened your budget to squeeze every penny out of it AND you still cannot make the $661 payment, then you have a problem that needs to be dealt with. You are doing the right thing by researching your options BEFORE the situation gets out of hand.

You may read about debt management and debt settlement.

You may also want to reference this pagearticle about credit card debt. Thank You for the question.

the collectors want $ 7103.03. I am willing to pay 4000.00 in 10months. Is that to hard to negotiate with the collectors?

Scott — Sat, 23 Feb 2008 01:52:29 +0000

Go for it. Contact them and see what you can do realizing that you will get extreme resistance from them so it will take a lot of phone calls back and forth. I am assuming your debt is unsecured, like credit card debt, so there is no reason it cannot be negotiated. Whether or not you are successful depends on your actual debt repayment ability and their willingness to take less than what’s owed.

If you are dealing with a collector and not your actual creditor it would help to know if they own your debt or if they are employed by your creditor to collect. Ideally you should spend your time negotiating with whomever still owns the debt (sometimes credit card companies will write off the very old debt that they have given up on collecting and a collection agency will buy it for pennies on the dollar, takes the risk, and make money if he/she is able to collect more that they purchased the debt for)…confusing, I know.

Try it. Good luck to you.

I am overwhelmed by my credit card debt. I am still able to pay my minimum payments plus some to the principle of the card. I am not making any headway and have already cut up my credit cards. What is the next step that I should take.

Scott — Fri, 14 Dec 2007 01:12:00 +0000

You have already taken a huge first step by cutting up your cards. I assume you already have yourself on a very strict budget however, if you do not, that would be the next step. Make sacrifices and squeeze every penny you can from your income and send it to your card company to pay down as much principle as possible as fast as you are able to. Decrease your bills wherever possible…just buy the essentials, nothing more.

However, that still may not be enough to make any serious headway given interest rates in the 30%+ range which is unfortunately becomming increasingly common. If you still have too much debt given the income you make, you can:

1. Try and find “cheaper money” to use to pay back the credit card companies. The best form of cheaper money is found by pulling out equity in your home if you have any. If not, maybe you can borrow money from friends or relatives (not an ideal choice).

2. Find a good debt management program which will be able to help you lower the interest rates and help you form a solid budgeting plan.

3. If that still does not lower your payments enough, the third option is to look into a debt settlement program to try and reduce the amount of debt that you owe. This option should be considered if the others are not enough.

Best to you.

10 months ago I started a business with someone I thought I knew well. Now he’s run off with all my $, the company profits and a 10,000 investment my son put up in May ’07, plus he ran up $8,000 woth of debt on one of my credit cards, and I’ve also had to use some of my credit cards to keep operating, until my cc debt is now approaching $10,000. AND if things don’t improve dramatically in the next few weeks I’ll have to close up shop. What do I do to deal with the cc co’s without ruining my credit?

Scott — Mon, 05 Nov 2007 16:44:37 +0000

Sounds like there are 2 issues, one is dealing with your former partner and deciding if you should take legal action against him and for that you obviously should talk to the police and a lawyer. The other issue is to determine how to handle the credit card debt you are now responsible for before it gets out of hand and sinks your business. As there may be a criminal element to your situation, the credit card companies MAY handle your situation differently but I’d imagine they would need police reports, etc to consider doing so. You should contact them and ask.

Unfortunately, if the debt is in your name and you do not want to legally pursue the former partner, you will be liable to repay it. You can talk to a debt management company to learn how they may be able to assist you lower your interest rates and fees on the debt but it will still have a slightly negative impact on your credit. Good luck.

My credit card debt has been charged off and now a collection agency is harrassing me for payment. My contract is not with them, but with the credit card co.

Scott — Tue, 30 Oct 2007 21:03:14 +0000

When you fall behind on your payments, credit card companies often use 3rd party collection agencies to try and retrieve the money for them. In addition, often they will sell the “bad debt” to a 3rd party collection agency for pennies on the dollar and then the collection agency profits by getting you to pay as much as they can.

I have no idea which situation your is, but either way the credit card companies do have the right to use 3rd party companies to try and collect the money so long as the laws are followed by that company in collecting the debt.

They are likely to continue to contact you until either:

1. You pay the debt back
2. You hire a debt relief company to help you (will likely reduce but not stop the calls to you)
3. You file bankruptcy
4. You hire a lawyer to take your calls
5. They sue you for the money
6. They decide to “write off” your account – not likely

Sorry but they or someone else will continue to come after the money you owe them.

how can I lower this debt bill since the credit card Co adds $200 finance fee every month – I pay ahead of time

Scott — Mon, 30 Jul 2007 18:44:46 +0000

Credit card companies have tricky ways of imposing finance fees. Often the fees start even if you are late on one payment resulting in immediate application of finance fees on every purchase regardless on if you pay all future balances in full and on time.

My guess is that you were late at some point in your payments or you are paying less than the full balance on your credit card every month. If you are only paying a portion of your bill, then yes, they will add finance fees to the unpaid balance you carry over into the next month. The finance fees will continue to grow along with your outstanding balance which ultimately results in a huge and ever growing debt load.

This is how the credit card companies make money. Credit cards become exceedingly expensive for people who carry growing balances from month to month. Everybody should try and pay off all of their credit card balance every month, not just the minimum payment. If you are unable to do so, then do not make any more purchases using credit cards – that is my advice. Thanks.

I keep getting these Bank Of America “CleanSweep” loan offers of up to $50k at “non-variable” rates. However, I’ve read a lot of negative things online about this. My bank is BoA, and I was thinking this might be a great way to consolidate two large credit cards at a lower rate… but not if they just jack me for no reason down the road. What do you know about this?

Scott — Wed, 25 Jul 2007 16:44:47 +0000

Hello. As far as credit card offers are concerned, the best way to protect yourself is to take the time to read the fine print that comes with every offer you get in the mail for a new card, as painful as that process is. One companies “non-variable” may be different from another companies definition of the same term. It used to be that if a rate did not vary, it was called a “fixed” rate so I have to wonder why they now call it “non-variable”. As usual, it is probably a term made up by the bank’s marketing department to describe a new way to present you with the rate structure (which is where you need to be careful, because they may be trying to trick you with the term “non-variable”).

You must read the fine print on any card to ensure you know what you are actually signing up for. Ideally you want a true fixed rate at a percentage that is good (at least in terms of credit card rates) with no balance transfer fees (or any other “hidden” fees)…

…AND…

You need to be sure that the fixed rate they give you is fixed forever, not just for the first 6 months or a year. Unfortunately, it’s all in the fine print but it’s in there and that’s the only way to truly find out what they are offering you. Thanks.

How much a month can I expect to pay to pay off credit card debt of about $17,000?

Scott — Sat, 21 Apr 2007 16:15:52 +0000

Hello. Actually you will have to discuss your specific credit card debt reduction numbers with a debt help company. What your monthly payment will be to pay off credit card debt of $17,000 really depends on each unique situation abd the type of debt help solution you choose. These are the questions you will have to consider:

1. What type of solution you decide to use – debt settlement vs. debt management
2. The types of debt that you have and who your creditors are
3. Your income level
4. How fast you want to get out of debt given your ability to save money

…And a host of other issues that a debt help company will discuss with you during your free consultation. I suggest you contact one or two and see what options they present to you given your situation and needs. Thanks.