“Dear Steve,

We remodeled our home, refinanced, bought vacation time shares (which we enjoy), had unexpected expenses for our son who was going to JC, living at home, not working, and needed COBRA coverage. (He is now away at school on grants and loans). We had high credit card debt that was steadily decreasing as we were paying 5-7%. Then the credit card interest went up to 29%, the timeshare maintenance fees went up, and we are now barely getting by. We earn app. $150,000. We’ve looked at refinancing, but the values have fallen. We have $225,000 on our 1st 15-yr at 5%, and $182,000 on a home equity at 7.9%. Our credit card debt is app. $84,000. We are drowning.

We have looked into turning our 15-year mortage into a 30-yr. No go because the home equity part will not agree, and values are about $375,00 and we owe $412,000. I’m now looking at debt relief, but don’t know where to turn. I don’t want to get scammed (I even made an appt. with Covenant, and then cancelled after I read reviews.) We have a credit rating of 780, co-signed on our son’s college loans, and really don’t want to go into bankruptcy unless there is no other option. Is there any hope for us? Anything at all we can do? Thank you for your advice.

Penelope”

The Answer:

Dear Penelope,

You are definitely caught in nearly the worst spot, current but just barely. The problem is the debt load is so big that budgeting better is not going to give you a miracle cure.

Do you have any cash on hand or can get your hands on any cash, say like maybe $10,000-$20,000? If so, one possibility would be that with that cash and in conjunction with a loan from LendingClub.com you could get enough cash on hand to settle some or all of your debts. But settling your debts can have tax consequences and can hurt your credit.

Almost the larger question is about your outlook on the next three years. Do you want to spend the next three years repaying debt or rebuilding credit after shedding your debt? Would you rather scrape by or do better? Do you have a greater responsibility to repair the past or fix the future?

Post your answers in the comments section below and we’ll have dialogue that will lead us together to the right solution for you.

Keep in mind, this situation is unfortunate and not fun but it’s not fatal. We’ll get through this.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Other Related Articles to Read

• I’m Making My Minimum Payments But It’s Getting Tough. – Barbara
• Current On Our Bills But Want to Get Credit Relief Settlement Help. – Michael
• I Am Current on My Bills But Have Really Nothing Left. – Sheilah
• I’ve Looked Into Credit Counseling But I’m a Little Scared. – Wendy
• We Are Current on Our Bills But Not Getting Anywhere. We Need a Get Out of Debt Plan. – Steven
• How Can I Get My Debt Under Control? – Mark
• We Have Four Kids, My Wife Works Two Days a Week, And I Don’t Know if I Should Pay the Bills? – Scott
• I Am Current on Everything And Have Good Credit But I Owe Too Much. – Robyn

Read the full article at GetOutOfDebt.org, click here: We Are Confused And Not Sure What to Do to Get Out of Debt. – Penelope

Barbara

“Dear Steve,

What can I say. With the ecomony the way it is it seems that prices for everything continues to rise but my paycheck doesn’t. I am grateful to have a job but the interest rates on my cards are making it extremely difficult to balance my family needs such as, groceries, car and just day to day life. I am not late on any of my cards nor have I defaulted on any loans. But each month it gets harder and harder to meet the minimum payments

I have contacted the credit card companies requesting a review to lower my interest rates but they tell me there is nothing they can do. What can I do next, to get them to lower the interest rates?

Thank you.

Barbara”

The Answer:

Dear Barbara,

What we have here is a situation that can easily tip out of balance. Creditors generally do not offer any sort of assistance until you demonstrate you are behind on your payments.

If you are not behind and struggling to make just the minimum payments, it is unlikely that an intervention like a credit counseling program is going to provide much relief. While it may reduce the interest rates on the cards, it will not lower the monthly payments very much. I know, it sounds ironic but that’s the way it is.

If you have not taken a look at your income and outgo, this would be a good time to do that. You can find the process to develop a spending plan for you beginning on page 81 of my free e-book “Eliminate Your Debt Like a Pro.”

If you can review your financial obligations and find a way to reduce your costs, this may give you some breathing room. And in combination with enrollment in a credit counseling or debt management program, that might be all that you need to do to pull back from the cliff.

There is nothing you can say or do to force your creditors to reduce your rates if they don’t want to. Think about it like this, your financial situation is on fire, the creditors are pouring gas on the fire by not lowering your rates. Logic would tell everyone that pouring gas on the fire is a bad thing. But the creditor won’t stop pouring the gas on your fire unless someone up the corporate food chain creates a corporate policy to stop doing it. And if the creditor is making a profit from pouring on the gas, they won’t pour less, they’ll pour more. The key goal here, from the creditor point of view, is not to put out the first, it is to maximize the immediate profit.

Big Hug!

@GetOutOfDebtGuy

Other Related Articles to Read

• We Are Confused And Not Sure What to Do to Get Out of Debt. – Penelope
• I Supported Someone for Three Years That Completely Drained Me. – Jessica
• Current On Our Bills But Want to Get Credit Relief Settlement Help. – Michael
• Do I Need a Really Good Sob Story to Get My Creditors to Lower My Interest Rates? – Laurie
• How Can I Lower My Credit Card Interest Rates? – Richard
• Debt Free! And You Can Be Too
• 58 Years Old, Good Job, Want Out of Debt in Five Years. What Should I Do? – Ricahrd
• We Can Make the Minimum Payments But Can’t Get Ahead. – Andy
• How Do I Get the Credit Card Company to Lower My Payment to What I Want? – Sally
• My Wife and I Are Both Maxed Out on Credit Cards. Where Can We Go? – Alvaro

Read the full article at GetOutOfDebt.org, click here: I’m Making My Minimum Payments But It’s Getting Tough. – Barbara