I have a gredit score of 723-740 depending on the reporting agency. I have never had a late payment but carry 100k+ in Credit Card debt. With the slowing economy and realestate slump, my income level has really dropped. Starting next month I will have a 00 monthly shortfall for my minimum credit card payments. My payments total ,000 a month and I can afford 00. I've read that debt reduction companies will destroy my credit, and with the real estate slump, debt consolidation loans are not possible. Anyone have a solution that can help me maintain my good credit rating?
My business has been flipping homes. My credit card debt comes from buying appliances, cabinets, flooring etc. for the homes I buy. Because of the real estate slow down, I am forced to rent a number of homes that I had hoped to sell outright. This is the reason for my monthly shortfall. Also because these homes aren't my primary residence, a 2nd mortgage (debt consolidation loan) is not possible.
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Wed, Apr 29, 2009
April 29th, 2009 at 2:34 pm
Sounds like you made lots of money during the real estate boom. Many people are going through what you are going through right now. Realistically, when you are in need of debt relief, you have about 4 options:
1. Try to increase your income somehow. Possibly by getting another job.
2. Get a debt consolidation loan. This will typically put you back in the same situation if you are not good with your finances since all that you are doing is transferring the debt amount from one loan to the next. Also, thats considering the fact that a bank would actually even lend you a 100k as a personal line/loan in today's market since the U.S. banking system is currently in a huge "credit crunch."
3. File for bankruptcy. This should be considered as the worst case scenario since it will be reported and may stay on your credit report for the next 7-10 years which will make it very difficult for you to apply for any kind of credit within that time.
4. A Debt Settlement/Solutions company's purpose is to negotiate with your creditors in an effort to reduce your debts by about half of what you owe and to get you out of debt in 2-3 years. Typically, your monthly payments would be cut down to about half as well. You are correct. This program will place a negative impact on your score, but you have to understand that there is no quick fix for this type of a situation. A good debt company would usually evaluate your situation, find out your financial hardship, qualify you and fully disclose to you the pros and cons of the program before it will allow you to join. This will educate you on how debt settlement works , so that you may decide on what's best for you.
http://reachoutdebt.com/
April 29th, 2009 at 2:34 pm
Why do you think a debt consolidation loan is out of the question? You would not be applying for a mortgage. What you want here is to pay less interest than what the credit card companies are charging (which is huge!!!)
If you are dead set against getting a debt consolidation loan, may I suggest that you look for a new credit card, with a lower interest rate and transfer your balance there.
April 29th, 2009 at 2:34 pm
are those payments the minimum? talk with the companies and see if they can erase some interest without hurting your credit and explain why, but chances are slim they will do anything as long as you are current they aren't worried about what will happen later. it is worth a try though. can you pay less on some cards and pay off one at a time depending on which one has the most interest and highest balance. you do not want to pay settlement amounts because that will show on your credit report that you didn't pay your debt in full. and that's probably what a debt reduction co. would cause, plus i'm positive you have to pay them also. BTW it sounds like to me you have had a great income and still will but you have still went way out of what your standard of living should be. i'm not judging you for this but you would benefit from cutting way back on all things not necessary at least until you can really afford it on your own. how can you have a retirement or leave any $ to your wife/children when you pass if you have debt like this???? Good Luck!!
April 29th, 2009 at 2:34 pm
Everyone is going through the slump, including credit companies. More and more people are either filing bankrupcty or just ignoring the creditors. I suggest you talk to the creditor for each one of your cards. Most of them would rather try and help you out than to loose the money. Right now BOA is offering to assist their customers with lower interest rates and Citi is offering some customers the consolated credit card with a lower interest rate. Contact them if you are a good customer they will work with you.
April 29th, 2009 at 2:34 pm
Hi,
I used "Credit Solution" to settle my debt and improve my credit score.They managed to reduce my debt up to 58%.It's legitimate.I came across this company on NBC News Special Edition.Check it out here:
http://urlcut.com/1kvhf