So far I’ve been able to pay credit card bills (total balances over $150k) , my mortgage ($1 million jumbo) and home equity line on time and my credit score is still above 700. All accounts have good interest rates, even the credit cards have none above 7.9%. I no longer have the cash resources to make payments.
Which one do I stop paying first? As soon as I stop paying one of the accounts, will there be a credit death spiral where my only alternative is BK?
You might not recognize it, since the first stage of debt is denial, but you’ve been in the debt death spiral for some time now. I suspect that you’ve been using your credit cards to pay for expenses that you otherwise could not afford.
Ultimately the plank is only so long and you’ve walked nearly to the end.
Just from the tone of your question I don’t think you have a lot of financial resources to fall back on so I’m going to answer assuming that.
Which debt to stop paying first is an interesting question and it really depends on a number of different factors. If it was simply a choice between keeping a roof over your head or making the credit card payments, then you should stop making the credit card payments.
But doing that will start a chain reaction that you may not be able to stop. That is not necessarily a bad thing, it is just a life readjustment.
I don’t think you have a lot of equity in your home and I have no idea if you want to stay in the home or if can afford it. If you want to stay in the home then you might need to consider a chapter 13 bankruptcy.
But ultimately what your situation boils down to is a good honest look at your income and life and an honest introspection if your lifestyle is sustainable on your income.
Easy credit in the past is not an indication that it was either right or affordable for you to have access to it. Having tons of credit cards, huge balances and a million dollar mortgage are not indicators of success or wealth, just debt and liabilities.
Bankruptcy is not your only alternative but before I can help you to plan a journey, I need to know what the destination is. Is the destination to adjust your lifestyle to live within your income or to continue the path you are on?
I’m here for you and will help. Just give me more information in the comments section about your situation, assets, and goals.