“Dear Steve,
I have a commssion based job. I allowed my credit card debt to increase. I was in a position to pay off the debt when my wife lost her job. The current economic situation caused me to loose deals I thought I had and now, after taking loans out on my c.c.’s, I have over $15K in unsecured debt. My wife is still unemployed. We don’t own a home. My credit rating had been in the low 700′s. Haven’t missed any payments…yet!
Should I try to renegotiate my c.c. debt on my own or try an organization that negotiates all your debt for you into a single monthly payment? What is the extent of the negative impact on my credit rating?
Hank”
The Answer:
Dear Hank,
Anytime you ask for consideration or modification of your original payment terms it can be reported on your credit report and that can impact you.
However the credit report is secondary to the underlying issue here, the lack of income is of primary concern.
It is smart that you are taking steps to deal with it now but if you call the credit card company yourself, or you try an approach like debt management, you need to make sure that you can live without access to your cards or cash advances from your credit cards, since they may be closed, and that if you agree to a negotiated payment, that you can afford it.
My worry is that in your situation, where you may be taking out credit card loans to pay for routine expenses, that the credit is actually what is sustaining you. Without the credit card loans, would you be able to make it moving forward? That’s a key question for you to honestly answer before you do anything.
