Three Years Ago We Had a Very Rough Year and Now Facing Rising Interest Rates. – Erin

“Dear Steve,

My husband has his own business and 3 years ago we had a very rough year. We lived above our means and we now have $40,000 in credit card debt.

We have $8,000 on a 14.99% credit card and eventhough we make our payments on time and sometimes even several payments a month (this is our active business card for purchasing parts, but we can’t quite get the balance below $8,000 with the purchasing and paying off of new part orders) Chase will not reduce the APR.

The remaining $32,000 is currently on a 0% interest card under my parents name (they opened the card because they are retired and have the credit and money that allowed them to open it for us.) We make all the payments each month. However, the introductory period ends in January and getting another card with this balance is impossible. Its going to j ump to a variable rate.

We net about $35,000 a year. We are looking at refinancing and trying to get an equiline for some of it, but they said the MOST they could probably give us is $10-$15,000. This still leaves a lot of debt.

What can I do with the rest of this debt so It will be a fixed APR and we can eliminate the debt and not have to worry about jumping balances around? Credit card companies seem to just keep uping our %.


Dear Erin,

My first reaction after reading your email was, “YIKES!” This situation has the unfortunate likelihood of not ending well.

Essentially what we have is an underperforming business that is unable to dig itself out of the hole it created. While things might be going okay now, there isn’t enough revenue to make progress to make amends for the problems in the recent past.

The parent situation is a mess. I totally understand they did this out of love and to help you out but if you don’t make the payments on that debt it is going to slam their credit. I’m sure that is not what they intended or you want.

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In this environment it is unlikely you are going to find a 0% balance transfer available for $35,000. I think the best you can do is clue the parents in right now about the reality of the situation and ask them either gift you the money by paying the balance off and you will repay them, or encourage them to get a loan. If they get an home equity loan for that amount they will be placing their home at risk.

But really your solution is probably going to lie in a combination of solutions. A debt consolidation loan is available from the peer-to-peer group, LendingClub.com. It’s where people like you and me lend money to people like you and me. That in conjunction with your equity loan should pay off your parents. And that should be your absolute first priority.

Once you do that, come back and update me and we can then focus on saving you. But parents first.


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Damon Day - Pro Debt Coach

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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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