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The Credit Counseling Group Wants a Higher Payment Than I’m Paying Now. – Debbie

“Dear Steve,

Here is my situation: I used to make some really good money being in the mortgage lending business, but business has slowed down quite a bit. I get paid base plus commission and used to make some really good income, but that has been cut in half over the last few years.

My problem is that I started using my credit cards for everything, daily things, like gasoline and groceries, which is really ridiculous I know, but I was not making ends meet. I was hoping that my business would pick up and I’d be able to throw a chunk here or there to pay off some of the credit cards. Well that didn’t happen, so now I have about $55,000 in credit card debt (on 10 different credit cards) and monthly payments of around $1,200.

The main problem is that I had a credit card that was was at zero percent for a year and when that year was up, my payment skyrocketed to $500 per month. So the two bigger credit cards totaling approx. $30,000 have total payments of $700, which are the ones killing me financially really. I have made all my payments on time somehow, but I can now feel that it’s coming really close to not making them. Really if I just took out one of the bigger credit cards of $400 per month, I’d be able to pay all the other ones.

I will NOT file bankruptcy and have looked at a reputable credit counseling company, who came up with a payment higher than what I’m paying right now on all my credit cards, so that was not helpful!!! I am contemplating not paying one of the big credit cards.

My question to you is this, if I do not pay one of those credit cards with a balance of approx. $15,500, I know it will go to collection and then a charge off, but what will the credit card company do? Will they sue me and garnish my wages???? What suggestions do you have for me? I am looking for a second job as well. I was trying to find a person who may have $55,000 sitting in a savings account making about .50-1% in interest, who would loan the money to me and could charge me 6% interest. I could spread the payments over maybe ten years and cash flow better.

Any suggestions???

Debbie”

The Answer

 

Dear Debbie,

I am intrigued by your emphatic statement that you will NOT file bankruptcy. I find that curious because you are willing to embark on a course of action which can be more damaging and more traumatic, intentionally defaulting on a debt and not paying it.

The underlying issue here is that you fell back on the cards to help make ends meet. You anticipated income arriving that would pay off those obligations. I’m not judging you for that. in fact it’s basically the exact same way I got myself into trouble years ago.

But I honestly think this mountain of debt is now so large that any ‘trick’ to try to stem the tide will not only be insufficient but backfire on you.

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Your other creditors are watching your credit report. The minute you default on one card it starts a chain reaction on your other debts. You should be prepared for all your other accounts to raise your interest rates to the maximum penalty rate, even though you’ve never been late on those other accounts. The reason is that a delinquency on any account is an indication of greater risk for any lender.

I understand your desire to find an angel to lend you money but that search is more likely to end with you being the victim of an up-front loan scam than a real loan. Desperate people fall prey for those scams all the time.

One legitimate source of an unsecured debt consolidation loan is the peer-to-peer group LendingClub.com but the limits on the size of the loan are not sufficient to meet your needs.

As much as you are adverse to bankruptcy, I can promise you this, that aversion and distaste to consider bankruptcy will most likely drive you into an even worse situation.

No other solution other than bankruptcy protects you from lawsuits and resolves the debt situation. Without the legal protection of bankruptcy you should expect to be sued on some or all of these debts, to lose, have a judgment against you and then a property lien, account seizure or wage garnishment.

You owe it to yourself to put all reasons and assumptions aside and click here to find a local bankruptcy attorney you like. Make a free appointment and go in and sit down with them. Ask all the questions you can and then go home and contemplate what you learned. Don’t feel compelled to make a decision about bankruptcy right then.

As far as the credit counseling payment being higher, you really need to read The Truth About The Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. Credit counseling payments are not based on what is reasonable or you can afford, they are based on what the creditors want.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

You really deserve a very big hug.

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P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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