Ugh. I'm back. $43k cc debt. Teetering on edge. Any good options?

Discussion in 'Credit Talk' started by daverp, May 20, 2013.

  1. daverp

    daverp Member

    Well, I won't go into a long drawn out history, but I've manged to find myself $43k in CC debt. A move, some reckless spending (over time it built up)...hell, no excuses, I got myself here. A lot of "reasons" I suppose, but none that legitimize my being in my current situation. It is what it is. I screwed up.

    I want to pay this off. Not looking to BK, stop paying, or otherwise harm my credit that I worked so hard at one time to build up.

    My score was 805 about 3.5 years ago when I bought my house. Today it sits at about 690 to 700. I've not had a single late pay (other than one 2 day late...more on that later, but nothing on CR) in the last 15 years or so. Never a day late on any other payment.

    No longer upside down on the house...about even now. Bought at $430k, dropped to about $370k, and now about even again.

    I was 2 days late with Citi about 5 months ago. Rate got jacked up to 29.9%. Have a $9k balance. No card to do a BT to.

    Other cards range from $5k to $12k range, 12% to 18%.

    Tried to get another CC for a balance transfer a few weeks ago. Denied. Afraid to apply again for fear of dragging my score down further.

    Have the following cards:
    Citi platinum ($8k bal on $11k avail)
    Amex Blue ($6k on $8k...they dropped my limit from $18k because of parking collection, since removed)
    Chase platinum ($4k on $5400)
    USAA ($12k on $12k)
    MBNA Platinum ($8k on $9k, also dropped CL from $16k due to parking collection)
    Best Buy ($5k on $10k)
    Cap 1 ($0 on $2500)


    I had room on the cards for BT on the citi, but received a parking ticket that I never got notice about in the mail. Went to collections. I saw it on report. Paid immediately, and called the city. They, after I provided them proof of my address change, removed it from report because I had not received notice of it. BUT, Amex and Citi saw the neg for the 3 weeks or so it was on there, and dropped my limits to the balance.

    Anyway, some very poor choices, a little bad luck, and just life, and here I am.

    I'm making payments, but I'm living paycheck to paycheck, and it is really tight. And I'm not gaining ground.

    I want to salvage this. So, I have a few questions...

    Has anyone had luck with negotiating interest rates down on cards with high balances? If I had a card I could BT to, I'd just do that, but because my limits got dropped, I'm at about 90% usage. I fear nobody is going to drop the rate because they know they've got me by the ballz. Afraid to even ask, for fear they'll "closed by credit grantor" the account.

    Is credit counseling really a viable option?

    Any tactics for calling the CC companies myself and getting lower rates (when I've got high balances to limit ratios)?

    Should I "closed by consumer" any cards before I make calls to get a lower rate? I hear that some companies will want to close it to give the lower rate, and I'd rather not have the "closed by credit grantor" on there.

    If I start closing cards myself, will it hurt my score via the "balance to limit" ratio? In other words, I have $43k balance now on about $48k available. If I close a card, will it show as $43k balance on say $36k available, thereby putting me over 100% usage?

    Any chance of a debt consolidation loan with my score (which isn't terrible) and with such high unsecured balance to limit ratios?

    I make good money at $95k year, but have rented out house due to work relocation at a loss of $700 a month, have a car payment (2 years remaining).

    I know that if I could get these interest rates within reason, I could begin to make some reasonable headway on these.

    I don't have a lot to sell. A paid for truck, but can't get rid of that. I have a small boat, a couple firearms I could sell, and come up with about $6k. That's going to really hurt, but I am contemplating that. But, it won't gain me a lot "payoff wise" on these CC's. If I could just figure a way to lower my payments by a few hundred to get some breathing room, AND get them paid off in 5 or 6 years, I'd be doing pretty good.
     
  2. jmc912

    jmc912 Well-Known Member

    I haven't had any experience with asking for lower interest rates so I can't be of much help there.

    You mention you have a paid for truck and a car loan... Could you sell your car and drive the truck? You could probably pay off your car loan and have money leftover to put on the credit cards. Not ideal, but could help.

    I personally wouldn't sell the guns... but that's a whole separate discussion and can get quite political!

    Paying off your cards in 5-6 years will kill you with interest... Can you see if you can get a personal loan? What is your credit score like? You may have luck with a credit union. I use Navy Federal and they are super lenient, do you have any military connections/family? I have a credit card with them that started at a $7,000 limit last year and now is up to over $20,000. The interest rate is pretty low, so maybe something like that would help you out. I think they have balance transfers too, and if you get denied they will manually review you.

    I also would steer clear of credit counseling.
     
  3. Logan Abbott

    Logan Abbott Well-Known Member

    Daverp - First, I would keep the accounts open since remaining under 100% of your total available credit is crucial to maintaining your current score, which along w/ your payment history is one of the best things you have on your side right now.

    I think it's worth trying to negotiate a better rate because, even though lower interest rates technically mean less money for the credit card company, if your interest rates ultimately become too much to handle and your account goes into collections, ultimately they're going to sell your debt for less to a collection agency. So CC companies have an incentive to keep your account open, which is why you do have the opportunity here to negotiate a lower rate.

    Start w/ your highest interest rate cards. Get on the phone w/ somebody who can help you. If you hear "No" from a customer service rep, ask to speak w/ a supervisor. Explain the situation (one late payment on the Citi card, for example), explain that you've had on-time payments since an honest 2-day slip and ask for a goodwill lowering of your APR. It's worth a shot in my opinion, especially if one late payment capsized your APR (which really shouldn't happen if it was only 2 days late, but I suppose it is what it is).

    See if you can get any of the interest rates lowered - even one or two would be helpful. Pay more than the minimum on your highest interest accounts - as much as you can while keeping those other accounts in good standing. Here's a pretty good article on the topic.


    That said, debt consolidation is an option. It's one I don't normally recommend, but if all of the above accounts carry high interest rates, it could be worth even just a consolation to determine pricing and how they could help. I'm unfamiliar w/ the going rate for such a service but if anyone here has been through the process, consider this a bump.
     
  4. creditnerd

    creditnerd New Member

    Persue the interest rate reductions first, quickest thing you can do. You said you have had these cards for awhile and done good with them, I think some of your creditors will work with you on the interest rate. You can lie and say that you received some other offers for a lower rate but would prefer to stick with them and not do a balance transfer. I've had this work in the past, but I wasn't exactly in your situation so I'm not sure if that changes things. Let us know how it goes if you do.

    Lastly, I consolidated about 25K in credit card debt into a personal loan through a credit union. I believe my credit score at the time was around 700. That was a great option for me as it immediately raises your score even further because the amount of credit you have available increases. Also you gain an additional loan to build credit with. Last but not least of course you'll save money in interest over the long term.

    If you do your homework you can find some decent rates at credit unions. The credit union I would recommend the most is Penfed, basically it's the governments Credit Union and second largest in the country. Even if you aren't a government employee you can join them by paying a small fee and joining one of their organizations that they're affiliated with. Check out there join now form for more details.

    Best of luck!
     
  5. credit guy

    credit guy Member

    I hate to say this but with that kind of debt, you don't have credit. Regardless of what your score is. You wouldn't get approved for anything. Do you have a lot of savings? I'd quit paying and offer settlements down the road. It seems extreme but it works
     
  6. Chemist

    Chemist New Member

    I may be new here, but I would never recommend missing payments!

    You still have a decent credit score. Have you looked at refinancing your auto loans with a company like Penfed .org or a local credit union? You can refi to 100% of retail and eliminate some of the balances on cards with high interest rates.
     
  7. JoshuaHeckathorn

    JoshuaHeckathorn Administrator

    I agree with Chemist. I hope you didn't choose to just stop making payments.

    It's been a couple years now, so I'm curious if you would come back and give us an update on what route you decided to take and how it's played out for your credit scores. Hope to hear from you Daverp!
     

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