make about 90000 a year
budget is 200 a month underwater
my wife and I have about 43000 in credit card debt and an unsecured loan for 12 000
credit score is about 620
home value is about 340000 balance is 288000
wife income low due to some health problems
Thinking about doing credit card settlement . I dont know if I can get a consolidation loan .
Need a Christmas present and just need some guidance on what to do .
Money troubles and debt problems are really a math problem cloaked in emotion.
Based on what you shared it seems you’ve been using credit cards and an unsecured loan to help make ends meet. Credit fills the spending gap and the result is debt you owe.
The big question now is how are you going to deal with the situation.
The obvious solutions are to reduce spending to free up money to use to repay the debt, increase income to find more money or a combination of the two options.
If that is not a reasonable solution then we need to look at intervening in the debt situation.
There are two approaches. The first is a judicial approach that gives you rights and legal protection. This is typically a Chapter 7 bankruptcy or Chapter 13. Depending on where you live the equity in your home may create a problem to be able to file a Chapter 7 bankruptcy. But if you could, your debt could be eliminated in about 90 days for a total cost of about $2,000.
Chapter 13 bankruptcy gives you legal protection as well from creditors but you would be required to make payments, based on your income, over a period of years. In the end, any debt not repaid would be forgiven.
Non-judicial solutions would include debt settlement, credit counseling, debt consolidation loan, etc.
You can compare different options by using my Get Out of Debt calculator.
If you had cash on hand to settle these debts quickly, then that might be an option. However, I am concerned with your wife’s health and the stress a prolonged settlement approach might have if you have to save money for settlements that it could be very stressful and take valuable time. You see, the longer it takes to resolve your debt the more it can impact your retirement savings. it can also leave you more exposed to being sued by a creditor.
I believe that picking the solution you want to use first, is a mistake. Ultimately what you want is the correct solution to accomplish your goals. You don’t want to use a hammer when you really need a screwdriver.
The best approach is to gather facts by talking to a number of different solution providers, let what they say percolate for a few days, and then move ahead after all of your questions are answered.
Solution providers run the gamut from a personalized and custom debt elimination plan created by an experienced debt coach like Damon Day to some mass-market debt relief widget you find in an advertisement. In between that you also have legal professionals and you can find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Keep in mind, bankruptcy can be the fastest way to get a fresh start for the least amount of money.
I applaud your efforts to start the journey to a better financial future where you alter your life to fit within your income and have the ability to save for retirement.
But without a doubt, the first step is for you to be a smart consumer and educate yourself on all the debt solutions before you emotionally leap and just reach to the tastiest solution some salesperson sells you.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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