We are totally upside down on our home in Southern California. We have been here 3 years, and have lost over 150K in value; we owe 570K on a house we could sell for about 430K. Ouch. We have about 35K in credit card debt and are barely making minimum payments. We are working on loan mods for our home, but the credit card payments are killing us. We need to get OUT of this situation.
We are considering a Debt Management Plan to eliminate $35,000 in credit card debt. This would bring the payment to about $900 per month. We have approx. $10,000 that we could use to pay down some of that debt prior to starting the plan. We would like to keep 1 or 2 credit cards open for emergencies and travel, but that’s it. Anything we should know prior to “going for it”? Also, we have talked with a representative about settlements, but that sounds a little (okay, a LOT) more emotionally painful to me than I think I can take….thoughts? We it take forever to get our credit back on track? Thanks!
Check with a couple of credit counseling companies and compare what they have to offer. It should all be about the same.
I’m not thrilled with you using your emergency fund to pay down the debt first. I think you should keep it liquid in case you run into a jam and need some cash. Otherwise surprise expenses may land back on plastic.
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.