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My Dad Took Out Cash Advances on My Credit Card And Took All of My Savings. – Heather


“Dear Steve,

I am a recent MBA grad who got into a lot of debt before and during school because I needed to help out my family. Due to my dad taking out cash advances on my credit cards and then my having to live off my credit cards during school because I had also given him all of my savings, I now have $36,000 in credit card debt. I have been working since last May and have managed to keep up with my minimum payments, but I haven’t been able to move out of my parents (now foreclosed) house! I am current on all my cards and I even called all of the account a couple months ago to try to lower the interest rates. I was successful with some of them but all my rates are currently in the teens.

I am moving into a new apartment with my boyfriend and between the extra living expenses and the fact that some of my creditors are raising my APRs (like they are doing to most people right now), it just doesn’t seem feasible to keep struggling with the minimum payments when only about half is going toward the principal.

My question is two-fold:

1) I have an appointment with CCCS this week to see if I should enter a debt management plan. Do you think this is the right path for me, considering that I am current on all my accounts? I really want to eliminate this debt in a reasonable amount of time.

2) Also, I currently own my car free and clear but it’s old and starting to fall apart, so I need to get a new one soon. My credit score is not bad (659) but my utilization ratio is very high (about 85%). Should I go ahead and try to get a car NOW, before I enter a debt management plan? Do you think I will get a better rate if the lender does not know that I’m going to be using a DMP?

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Dear Heather,

Hopefully your father had a really good reason for putting you in such a financial hole and you allowed him to do this with your permission, rather than as yet another victim of family financial fraud.

Let me tackle your second question first, with your current credit score you are on the fence if you would get approved for a new car loan of not. Lender have talked about 650 as a cutoff point but really it will depend on the loans offered at the time you go to apply.

A car loan is probably going to sink you if you are “struggling” just making minimum payments on your credit card and other debts.

Now for your first question. A debt management plan can lower your interest rates but some creditors may not let you do that as long as you are current on your accounts. Falling behind will hurt your credit.

While you have an appointment with CCCS to investigate the debt management plan, I think you should also go and talk to a bankruptcy attorney in your area before you decide to do anything.

Only by having information from both possible choices will you be able to make a well informed decision about which solution is best for you.

The irony here is that your credit will probably recover faster and make it easier to get a car with bankruptcy rather than CCCS. With bankruptcy the debt would be eliminated soon and you can then focus on saving money in a savings account and you’ll have more cash each month to use for a car payment.

Otherwise, you could enter the CCCS five year debt management plan and drive your beater car and not be able to save any money to protect yourself in case of an emergency.


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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About the author

Steve Rhode

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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