Credit Cards Past Due - Need Advice about Credit Counseling/Negotiating/Bankruptcy Please?
I have approx. 40K between 4 credit cards that I had before I was married. These credit cards are in my name only, not my husband’s. I have always paid my debts on time and have never been late until the past few months. I am now past due 30-60 days and now owe late fees and over the limit fees and can’t even afford the minimum payments any longer. I have been basically sticking my head in the sand about my financial situation for almost 2 years and borrowing from Peter to pay Paul.
My husband and I jointly have a home loan with a balance of 92K and a home equity loan with a balance of 30K. Our home is worth about 120K so we have no equity. We are current and have never been late on our mortgage loans. We live in Indiana.
My husband has a car loan in his name only. It is current and have never been paid late.
My husband has 2 credit cards with a balance of 11K. These are current and have never been paid late.
I now only work part-time making approx. $300-400 gross per month. I am trying to also substitute teach to make more money.
My husband works full-time and this is how we afford to make our mortgage payment, car payments and his credit card payments on time. We are trying our best to make certain his credit stays good.
My husband has a credit score above 680. I believe mine was 640 until the last few months - now I am sure mine is terrible due to my lack of payments.
I am looking for advice. I have tried to negotiate with my credit card companies and offered to send as much as I can until I can find a higher paying job/more hours. However, they are not agreeing to this and won’t stop the fees/high interest rates from accumulating. I almost feel like it is pointless to send anything because my balance just gets higher after sending a payment.
I definitely want to pay my obligations. I have looked into credit counseling but until I have more income, I can’t afford to make the kind of payments that is required. One counselor suggested that I file bankruptcy individually but I don’t know if that is a real option since I am married. My husband’s credit is perfect and I don’t want to risk his credit.
If I can/should file bankruptcy as my only option, can I still pay back my debt - just on my own terms that I can afford?
If I don’t pay my credit cards, what will happen? Can they take my house or affect my husband’s credit? If they sue me, will the court allow me to make payments that I can afford?
I know this is a lot of information and questions. I truly appreciate your help!!! The stress of this is killing me. I am so tired of worrying.
I have twins so it is tearing me apart to have to put them in daycare in order to work full-time until they are a bit older. Plus, by the time I pay for daycare it’s hardly worth it.
Marq suggests ignoring the calls, etc. But won’t the credit card companies sue me and then I’ll even owe more? If they do sue me, can I get my house?
Tags: Credit Card Payments, Late Fees, Part Time
March 28th, 2009 at 9:11 pm
I would look into all of your options. If you have met with a not for profit consumer credit counseling center, I would also suggest meeting with a bankruptcy attorney. It is possible to file individually since the debt was incurred prior to your marriage. It is also possible to not include your home into the bankruptcy filings as well. Most will offer a free consultation.
First you should file for homestead. This keeps you home safe in the event that there is a judgment against you. It keeps you from having to sell your home to pay the debt. This can be done at you local county recorder’s office, usually for less than $20.
Bottom line, don’t panic. Many people are in your same situation.
March 30th, 2009 at 7:27 am
You really need to sit down with your husband and work out a plan for getting current and starting to pay off debt. When you are married, there is no her debt and his debt. There is only our debt.
As a couple, you need to sit down, make a budget, tighten your belts, cut out all unnecessary spending and attack those balances. It may take awhile, but it is possible.
Is there a reason that you only gross 3-400/month? Do you have children?
March 31st, 2009 at 5:59 pm
during the period in my life when i was over my head in credit card debt, the tactic i chose was simply just to ignore that debt and ignore the bill collectors. bad credit falls off your credit record in seven years. and you can rebuild your credit rating with a secured credit card.
this is what happened to me and what i did at one point in my life. now i have good credit and it worked out well for me.
instead of filing bankruptcy, just simply ignore your credit card bills you can’t pay and ignore the bill collectors calling you. it might be better than filing bankruptcy because a bankruptcy stays on your credit record for ten years and the bill collectors will still nag you!
April 3rd, 2009 at 9:09 am
Contact your local Red Cross for a referral to the local Consumer Credit Counseling Services (CCCS) in your area. They can negotiate much lower payments and interest rates. They DO NOT negotiate settlements.
They will require you to stop using all credit and to cut up your cards. Your credit report will be updated to “enrolled in debt management.” This does not damage your credit, but it may make it impossible to obtain new credit while you are enrolled in their program….so don’t use this service if you anticipate applying for a new apartment, car loan or mortgage anytime soon, as you would probably be denied while you’re enrolled in the CCCS debt management program…. Otherwise, it can be a very good way to deal with your debt.
Please note that CCCS cannot perform miracles in situations where there is an overwhelming level of debt relative to your income/assets.
CCCS is technically a non-profit organization, it is also partially supported/promoted by the credit card industry. My only concern with CCCS is that they would discourage a person from filing for Chapter 7 when in reality that would be in that person’s best interest. Sometimes Chapter 7 bankruptcy is the only solution to overwhelming debt.
Don’t let anyone smear or guilt-trip you for making this decision if you have to…especially all the people who like to quote Dave Ramsey who think that BK should always be avoided….this is ridiculous advise that only benefits credit card companies…Of course BK should be avoided if at all possible…but sometimes it is needed. Do what’s best for you and your family. Corporate America uses BK all the time and no one slams them.
Just remember that you can only file for Chapter 7 once every eight years….so if you file, you won’t be able to discharge your debts again for eight years, even if you find yourself in a worse financial situation..
DO NOT use any firm that promises to settle your debt at 50%…these firms deliberately let your accounts default/charge-off to put them into a position to negotiate settlements…This ruins your credit rating and your creditors have no obligation to accept settlements from these firms.