After spending much time deliberating over BK or just letting go of some of my credit cards, I have decided on letting go of a few key cards. Never in my life have I had bad credt, but recently my health has declinded and I may not be able to return to work for almost another year. I decided that letting go of a couple of cards would be better in the long run than a BK and I could actually negotiate the balances later on. Currently, I have about 40k in credit card debt. I can afford to pay on about 1/2 or 20k of the debt and still have all of my other expenses paid for in the meantime. The past couple of months I have been paying one cards payment with another, just kidding myself that i am avoiding the inevidable. I think that If I strategically let go of 2 of my cards with 10k balances, I may try the Lizard King methods posted here on the forum or try to negotiate how the trade line is being reported in exchange for the amount I owe them at a later time. Does anyone have any thoughts on this method and are there any pitfalls I should look out for, besides my credit being ruined for the time being? Thanks, KellyS
You might try negotiating first. Your goal is to have some control over where you are, say, a couple years out, assuming your finances don't totally collapse, in which case BK may be your only choice. Following BK path, you will be at one state, in terms of credit, debt, net worth, etc. Ignoring some cards, you would likely be at another. Attempting negotiation, you might be able to achieve slightly better, but if not, you're no worse for trying. Also, if you are dealing with health problems, stay on top of making sure insurers and providers shoulder their responsibilities. You don't need additional debts that should have been covered by others.
Since I havent defualted yet, would negotiation be an option? I was always under the impression that they would play, unless the loans were behind or in collection. Even then, I don't plan on settling with them for any less than a removal of the tradeline or a superb rating...Maybe I am niave? I am blessed that I will heal up and be back on my feet again in the next 6-9mos. It is nothing terminal or permenant, just a temporary setback, (I apologize if I made is sound like I might not recover and saying my "health declining didnt help".._) My finances will run dry if I keep paying on "ALL" the debts and this has fueled a deisre to be proactive and ready to repair my credit. I am not going to let a setback like this throw me in credit jail for 7-10 years.
Whether you can negotiate temporarily reducing payments depends a lot on who you are working with. Some CC companies are more amenable than others. You might have the greatest flexibility where a loan is secured by an asset, such as a house, where a lender could in effect put the deferred payments onto the principal, and there is equity to protect them. Be careful, though, since there are lenders that might pile on a lot of additional fees, and might place you into a mortgage with terms increased so much that you would be worse off than you are now.
Also be aware that if medical debt is part of what you are dealing with, and your assets are very low, there may be government programs to cover some of the medical expenses. But if you don't make those claims in a timely manner, and appeal if erroneously rejected, you may miss out on taking advantage of them.
