What’s the Best Way to Keep Our Credit But Reduce Our Debt Payments? – Susan

“Dear Steve,

My husband was laid off and now receives unemployment; he is 51years old, with the rate of unemployment and his age it’s a lot harder to find another job. In addition, we live in a small town so the closest jobs available (if any) are over an hour away.

He is in the electrical trade and was a cement plant supervisor, the electrical trade itself is something he can do residentially and become self employed once he gets his contractor’s license which is something he is working on now.

This requires him to be bonded which I believe means your credit has to be good. At this point I believe our score would fall in the mid 600’s, I have been able to pay the minimum (barely) on our credit cards, but we are at the point where I feel we will not be able to keep it up, I have sold, borrowed, and used every external resources I have left to keep up.

Our income was cut by about 2500 a month because of the layoff and within the next month I am afraid I will have to start choosing which creditors will be the ones I quit paying, I don’t want to go this route but I don’t know what else to do. I will continue to pay the debits I need to survive, the house & 2nd, vehicles (2), and utilities/food then what I can on the credit cards.

I have heard that debt consolidation is worse than bankruptcy but I’m afraid that bankruptcy will ruin my husband’s chance at his contractor’s license. I am looking for any suggestions, courses of action, or any companies that would be able to help us that are reputable. Is there any way the credit card companies would be willing to reduce the interest? Is there a program that helps with that?

What is the best way to keep our credit but reduce our payments.

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Dear Susan,

I certainly understand your desire to improve your credit for the contractor license. But the reality is your credit score in the mid-600s is already not good.

The quest to find some magic solution to this problem leaves you in a vulnerable position to be scammed by the many people promising easy solutions to these types of difficult problems. All of the cures promising a no pain solution are highly suspect.

Even a debt management program is not a solution since the monthly payments would be the same or higher than what is expected from you now.

The only legitimate debt consolidation loan I know of comes from the peer-to-peer lending group LendingClub.com but I don’t think that is a solution for you. The issue here is one of cash flow and if your credit score has already dropped below 660 you would not be eligible at even the highest bad credit interest rates.

I have a very good friend that is in the same boat. He wants to get his GC license but has not addressed his own underlying debt issues. He keeps trying to jump over addressing those issues, hoping they will go away. They don’t and every time he thinks he is getting ahead a collector sues him for the past debts.

Ultimately the solution to your problem will either come by increasing income or legally addressing the debt with bankruptcy. Frankly, without any reasonable expectation that more income is around the corner the logical solution would be to click here to find a local bankruptcy attorney you like. Bankruptcy needs to be seriously considered. Here’s why.

Let’s say you continue to limp along on your current path. By your own admission it is not sustainable. You are running out of cash and borrowing from others has not helped the situation, only pushed it out into the future and you’ve now hit the wall. Bankruptcy would also prevent a list of lawsuits against you by the creditors once you can’t pay the debts anymore. It will stop or prevent you from getting collection calls and it will give you the fresh start you need.

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While you do not want to go bankrupt, in light of the income shortage and no reasonable alternative, the sooner you go bankrupt the quicker you can rebuild the credit after bankruptcy. If you do this you are more likely to get the credit score and your life rebuilt much faster than if you continue to borrow from others and not face the facts. Honestly, what has selling all of the stuff and borrowing from others really achieved?

While I might not have the magic answer you want, I am telling you the plain unvarnished truth that will allow you to move ahead with your lives faster. And if you do this, outside of a sudden increase in income, your husband will be in a better position to start his own GC company sooner than limping along and letting this situation only get worse.


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.
Damon Day - Pro Debt Coach

Steve Rhode

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