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Debt consolidation question (specifically paying off credit cards)?

MarkI

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Originally Posted by pg600rr
So here is the deal.... my mother currently has 10 credit cards with balances ranging from $350-$5000. The total of all 10 is roughly $23k. Some of them have interest rates as high as 24%. Basically she cannot keep up with the payments and is getting no where paying them off. Today I suggested she cut them all up and consolidate them all somewhere to get a dramatically reduced interest rate and finally start making some headway on them. Problem is I have no idea where she should look or contact??? any suggestions??

Also she has $10k cash coming in the next month or so that is all going to go toward paying these off. I am hopeful she can consolidate all 10 cards into one $23k bill with an interest rate near 6%. Any help in how to go about doing so would be greatly appreciated.

THANKS!!


Please check your private messages.
 

SkinnyGoomba

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Originally Posted by Rambo
I will take the credit.

Seriously though, his assets are not counted in her bankruptcy calculation. Even with consolidation, she's still buried under a mountain of debt. No home to repo and no major assets. I can't imagine her credit being stellar so the 7 year period won't be too much of a difference.

I am not really up to date on bankruptcy law but didn't they change the code to make it much harder to discharge debt while Bush was in office?


if you're flowing money through a bank account, it'll come up in the bankruptcy process, especially an amount of 10k, when the debt is 23k.

No credit is far worse then bad credit, its simply rediculous. Use the 10k, pay down the debt, now you have 13k. the 13k is going to be on the 6% cards, and if you're lucky only a little bit of the others, at that point you see if you can get a bank loan for the rest, then just pay it off.
 

dsgNYC

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Originally Posted by SkinnyGoomba
Going bankrupt is a horrible option, you have no credit for 10 years if you go bankrupt.

Bankruptcy is pretty bad, but I had a friend who declared bankruptcy and bought a condo 3 or 4 years later. He had an overwhelming amount of debt and no job at the time. Once he got a job, got a credit card and paid his bills on time his credit increased to the point where he was eligible for a mortgage (albeit, not at the ideal rate). I'm just trying to say that you can rebuild your credit if you stick at it.

However, with $23K in debt and $10K coming within the next month, bankruptcy should absolutely not be an option. Assuming your mother has a job and has enough free cash-flow each month to pay down the debt she should definitely be going the debt consolidation route.

Sorry, I can't offer any help RE where to go for debt consolidation.
 

SkinnyGoomba

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Originally Posted by dsgNYC
Bankruptcy is pretty bad, but I had a friend who declared bankruptcy and bought a condo 3 or 4 years later. He had an overwhelming amount of debt and no job at the time. Once he got a job, got a credit card and paid his bills on time his credit increased to the point where he was eligible for a mortgage (albeit, not at the ideal rate). I'm just trying to say that you can rebuild your credit if you stick at it. However, with $23K in debt and $10K coming within the next month, bankruptcy should absolutely not be an option. Assuming your mother has a job and has enough free cash-flow each month to pay down the debt she should definitely be going the debt consolidation route. Sorry, I can't offer any help RE where to go for debt consolidation.
Your friend most likely bought that condo prior to the credit crunch, its a whole new ballgame now, and if you're sub prime or have had a bankruptcy I'm thinking it next to impossible to buy something now. When it comes to this stuff, everything that happened prior to 2009 and late '08 doesn't count. Banks are now responsible for the dumb **** that they do, and credit card companies arent taking any chances.
 

pg600rr

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Originally Posted by why
Credit report != credit.

Hell, if she were flat out broke Chapter 7 would be the best deal I bet. Why is she all of a sudden getting $10K?


She sold her car for $25k bought another for $15k throwing the extra $10k toward the c.c.

Originally Posted by EL72
MBNA usually has some pretty good balance transfer rates (2-3% for 12 months) and then get a bank loan to pay that off. Assuming she has a job, I can't believe getting an unsecured line of credit for $20K will be difficult.

she does have a job, makes around 60-65k/yr.
 

pg600rr

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bankruptcy is def. not an option, as her credit is actually quite good and dont want to see it go down the ******* for what will be $13k in debt... I was thinking the consolidation route, but as mentioned before the two largest ones have been lowered from roughly 28% to 6% just by calling them and asking if they could help out... that $10k is gonna wipe out 7 of the credit cards leaving her with 3 and around $13k of debt, $10k of which will only be at 6%, so I think everything is going to work out and I am going to make sure this **** doesnt happen again!

her and my sister have always been irresponsible with $$$ while myself and my other sister are the responsible ones.... I own two c.c's with a balance of about $200...however I also have $130k in student debt
 

why

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CREDIT REPORT != CREDIT

Credit report is the record of payments made to creditors. Credit is how much money can be lended responsibly. If someone makes $40,000/year and has $13K in debt they will not have much credit. If a person makes $100,000/year and has $5K in debt but has missed a payment here and there they will have credit.

By the way, settlements appear on credit reports for a long time.
 

Despos

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Two approaches on the remaining debt. Pay the card with the smallest balance first. When that debt is gone you have that much more for the next one, then tackle the last one.
Some say to pay the one with the highest interest rate first. Pick a strategy and stick to it.
Does she have any way to get some extra income like a second job or something work to do from home to earn a few extra bucks? It could help and get her out of debt faster.

Kudos to her for selling the car for a less expensive one.
 

Piobaire

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Originally Posted by SkinnyGoomba
Going bankrupt is a horrible option, you have no credit for 10 years if you go bankrupt.

You could not be more wrong.
 

dsgNYC

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Originally Posted by SkinnyGoomba
Your friend most likely bought that condo prior to the credit crunch, its a whole new ballgame now, and if you're sub prime or have had a bankruptcy I'm thinking it next to impossible to buy something now.

When it comes to this stuff, everything that happened prior to 2009 and late '08 doesn't count. Banks are now responsible for the dumb **** that they do, and credit card companies arent taking any chances.


This is true, but I was just giving an example of what working hard towards bettering your credit score, even after a bankruptcy, can do; even if you're not looking to buy a house.


I was stuck in an airport yesterday watching their force-fed CNN channel and Clark Howard's show was on and he mentioned that CCCS was a good option for people needing help with their credit.
 

lee_44106

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Lots of good advice.

good luck PG600RR.

Paying off debt takes serious discipline, and hopefully learning a good lesson to not get in the situation again.
 

videocrew

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Debt consolidation is, for the most part, a scam. $65k income means bankruptcy is a terrible option, she'll end up paying all of it back anyway, and demolish her credit in the process.

There are two schools of thought on the best way to do this. The economist in me says you should line up all of the bills from highest interest to lowest. Pay the minimum on all of them except the one with the highest interest rate. Throw every drop of disposable income you have at that one until it is gone. Then move on to the next. This is the cheapest way to do it mathematically.

The Dave Ramsey/debt snowball approach is more of a behavioral economics trick. Start paying off the smallest debt first. Pay the minimum on all of the others. Once the first one is gone (should be quick) you'll feel motivated to keep going. Its like a snowball, you just keep throwing all the money you have at the next smallest balance, and as minimum payments disappear, you keep making bigger and bigger payments.

One guy I can't recommend enough for getting out of debt and getting your money matters in check is Dave Ramsey. Buy your mother a copy of his Total Money Makeover. https://www.daveramsey.com/store/prod326.html He gets people exciting about being debt-free and getting out of the borrowing lifestyle. Great stuff.
 

Piobaire

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Originally Posted by SkinnyGoomba
'splain.

You can not only get, you can keep credit through the process. I have a business associate that is the area's leading re-org attorney, and has been so for 50 years. (Yes, 50!) He often regales me with stories of the trade, and I've asked him various questions, along the lines of your statement. It stays on your credit for 10 years, but you apparently can "affirm" debt on a revolving credit card, through the BK process, and actually keep that account going. Same with cars loans I guess. Or, if you have everything wiped out, apparently you'll get offers for CC's within the year. They figure you're definitionally debt free, so a risk they're willing to take.
 

SkinnyGoomba

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Does this remain true in our current economy?

I apologize for my incorrectness, but that was how i understood it.

I love it, they'll lend to you now that you have no debt.
cry.gif
scary no doubt.
 

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