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My Boyfriend Has $20,000 in Credit Card Debt on 8 Cards. – Kathryn


“Dear Steve,

My boyfriend has $20,000 in credit card debt on a total of 8 credit cards. He was able to pay his minimum payments & a little extra, as he had been trying to do the debt snowball elimination method. Recently Chase bought out a couple of the companies he has credit cards with and now his minimum payments have jumped to the point where he can’t afford the minimum’s let alone pay anything extra. He only grosses $29,000 a year and our rent is below average for the area at $850.

We have been looking at cheaper apartments but the cheapest we have found would only save us $100 a month and we still wouldn’t be able to make the minimum payments. Also the quality of living would be cut in half, as we got an amazing deal where we are, and got a $1100 a month place for $850. So basically we are wondering what our options are. Would it be best to move to a cheaper place even if it only saves us a little. I’ve heard credit counseling hurts your credit almost as much as bankruptcy, is one better then the other. If we go to credit counseling are they even going to be able to help us since we don’t have any extra money. Should we look at bankruptcy as an option?



Dear Kathryn,

Thank you for the question.

Payment reductions promised in credit counseling usual come when people are behind on their bills when they go to credit counseling. For example, you are one month past due and the creditor is asking for $200, $100 for this month and $100 for last month, then many credit counseling groups advertise that they can cut your monthly payment in half but really what happens is that they can get the past due amount added on the back end and return you to your normal monthly payment of $100. This they advertise as a 50% reduction in your payments. It’s both true and false at the same time.

If you are struggling to pay the minimums, I seriously doubt that a credit counseling approach is going to work for you in the long run. When you enter a credit counseling debt management plan you need to make at least five years of payments. The chances of you doing that, without defaulting, while barely limping along, and without an emergency savings account to fall back on, are honestly, slim.

But I’m not going to tell you to go file bankruptcy. Only you can decide if that is the right path for the two of you to follow. Instead, I’m going to urge you to go and speak with a local bankruptcy attorney so you can become better informed about what bankruptcy would mean for your boyfriend in his situation. After that free appointment you will be better prepared to make an informed decision.

If you do decide to opt for the monthly payment credit counseling approach I just want you to be honest with yourself about the following question. If you reduce your lifestyle and expenses down to the point where you can make the credit counseling minimum payment, is that honestly something you can live with for the next 60 months? If not, then bankruptcy is the most likely answer for you.

Please let me know what you guys decide to do.

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About Steve Rhode

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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