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I Went Into Debt as a Single Mom. – Theresa

“Dear Michael,

I went into large amounts of credit card debt as a single mom. I divorced when my house was worth $50,000 more than it is now. I insisted with my ex to keep the house so my kids can graduate in the same house. Once the youngest graduated, I lost a lot of equity and couldn’t sell the house. I put money into selling it, fixing it up, etc. only to go further into debt. I then consolidated about 75% of it with Bank America. They promised if I paid 14% interest, I would pay it off in 7 years. Somehow, they say now it wasn’t 7, even though I have made all my payments and it never goes away. I have about $45,000 in “credit card” debt. i have never missed a payment and have good credit. I rent my house to break even on the mortgage and equity (minimum interest) payment with variable interest rates. (Thank goodness it has been low.) I have fairly good credit but it gets me no where as far as refinancing etc since “to o much debt”. I pay down the credit cards and they lower the ceiling. I feel sooo stuck. I have talked to a bankruptcy lawyer and he thinks that I could do a chapter 13 because I make too much. Went to Credit counseling or tried…doors were locked, no one answered the phone and I left…

The lawyer said to quit paying my cards as it is a waste if I am going to do something. My good credit gets me nothing. What should I do? Where to start?

Thank you so much.

Theresa”

Hi Theresa,

What is the estimated value of the home now? What do you still owe on the loans?

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

If all or the majority of the carrying costs on the home are being covered by the rent you receive, you may want to focus on the unsecured debts first.

Who are the credit card debts with?

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What are the balances and interest rates on each card?

A chapter 13 plan last 3 or 5 years. The vast majority are 5 year plans. You may be able to knock out the unsecured debt in that same time frame, or less, without having to file the 13.

If you can answer my credit card debt questions in the comment section, you will get some tips and feedback to assist you in formulating a plan.

Michael Bovee has worked with financially challenged consumers for the past 17 years and is a recognized expert in his field. Michael founded Consumer Recovery Network (CRN) in 2006. CRN offers debt settlement services and educational resources nationwide. He has served as its president since 2006.

If you have a debt related question you’d like to ask, just use the online form.

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