“Dear Steve,
I currently have around $65K in credit card debt. Some of it is from paying of my auto loans, 13K, with balance transfers in order to lower monthly payments. The bulk of it was from 4-6 years ago, when My wife and I both had a 25% reduction in pay for over 2 years (thought it was going to be a short term) to help save family business. That did not work but probably ended up with 40K debt in trying to maintain lifestyle.
I recently went from a 60K sales job to a sales/service IT position. My sales are commision only and have not had many sales so far. I am getting enough service work to barely maintain current bills but am losing the battle.
I am tyring to sell my house to my step son and move in with my father in law to help with my finances.
My wife makes about 60-65K and most of our credit cards are joint accounts. We are both around 50 years old and I cannot forsee paying off credit card at the rate I am going for 10-15 years. I have been told that in Texas the best thinbg to do is quit paying the cards and the credit cards will eventually write it off.
My current FICO score is in the 750 range and I have always had excellent credit. I don’t know what else to do. Basically if anything needs to be fixed or replaced I have to charge it since almost all of my spare money goes to paying credit card bills.
I do not have any savings, less than 40K in retirement money. Question I have asked myself: At my age will it really hurt to ruin my credit? I look forward to hearing a bit of wisdom from you. Thank you so much.
Steve”
Dear Steve,
While your FICO credit score is 750, it really isn’t an accurate number and you should not try to live your life by it. Your credit score is calculated by the digital computation of identifiable factors from your credit report. It really can’t take into account you using cards and building debt you can’t afford to repay.
The term Charge-Off is an often misunderstood term. Many people believe that when a debt charges off that it is no longer collectible. That is not true. Charging a debt off is actually an accounting function and not an elimination of liability exercise.
I think the bigger picture here is what the prognosis is for you to increase your income or reduce your expenses so you can fit your life within the money the two of you are making. You are going to have to get real with yourself about the reality of you repaying this debt.
If you can make income and expense adjustment to free up money each month to repay your debt, do that. But if you can’t, then I am afraid that you might have to seek the professional assistance of a bankruptcy lawyer in Texas. Most bankruptcy attorneys will offer you a free bankruptcy consultation to review your situation.
It is not financially safe for you to be in your current position. It is mandatory that you either be able to maintain a savings account with an emergency fund, or you get yourself in a position where you will be able to save money in a boring old savings account each month.
With maxed out cards or without the access to credit, emergency expenses will need to be paid for in cash. The irony here is unless you go bankrupt, you probably can’t save to protect yourself.
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.
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