tremendous debt

[SnoGirl42]

hi everyone. well im really embarrassed about this issue...but today when i came home my dad asked me about how much credit debt i have, and he asked because he saw my statements. I have around 9K in credit debt and honestly no one knows because i am so ashamed of it. I honestly have no fast way of paying this off because i can only work part time making around $750 a month. I can't explain how much stress I am feeling with this, school, famlily, etc. I am now getting severly depressed and I really want to be open about this with my boyfriend but I am scared that he would change his feelings about me. I don't know what to do...

[shes2smart]

Well, I guess the first question is how did you rack up 9k of credit card debt?

 

Do you have a compulsive spending/shopping problem or a string of really bad luck (i.e. medical bills, unexpected expensive car repairs, etc.)?

 

What's the interest rate on your credit card? Is the account(s) still open? Is the account current or have you fallen behind/paid late?

 

The simple answer is to close the account, cut up the card, DO NOT get a new one, and pay it off as you can. However, if you racked up the debt because of a compulsive spending problem, that course of action will not address the real problem.

 

Back in 1992, I was $13k in debt...credit card, student loan, and a car loan. I also had no savings and was making less than $20k a year. It took the better part of 10 years to kill the credit card debt, but I did it (and built up savings), and you can, too.

 

You're already taking the first step which is to add it all up and figure out exactly what you owe. It's scary to look at that number, but you have to know what you are dealing with.

 

You might also want to look for a non-profit Consumer Credit Counseling agency. They may be able to help you negotiate with your creditors and lower your interest rates, payments, or both. They may also be able to help you with budgeting so you don't end up in this situation again.

 

Here's a link to CCCS in Orange County. Dunno if this is anywhere near where you are in California, but it's a start. You can try Googling "Consumer Credit Counseling" + the name of your city for something local.

link removed If you decide to go the CCCS route, just make sure it's a NON-PROFIT or NOT-FOR-PROFIT organization.

[MrKawabata]

This is a very difficult situation because getting out of debt is a long disciplined process. Start with a repayment plan, $20 to $100 per week (10% to 40% of your income), if you can. Knowing that you have started to repay your debt, this is a positive step. Cut up your credit card because it is a killer. Delete links to eBay, if online spending us a problem. Know the value of money. Have some money each week to enjoy with your boyfriend, e.g. see a movie, or have a nice lunch together. If you are questioned about your debt, know that you are taking measures to reduce that debt. I suggest living costs (50% of your income), having fun (10% of your income), and debt repayments (40% of your income). You have to be prudent, redefine what a luxury item is, and try not to get back into debt again.

[FortunateOne]

My training years ago was in banking finance and one thing I learned is that if you go to some type of CCCS it will show up on your credit report and is treated by lenders as a Bankruptcy Ch13 for underwritting purposes. My sugestion is to file a reorganizational BK 13 instead of CCCS since the court can FORCE the creditors to negotiate, unlike CCCS which has NO jurisdictional authority over creditors. Furtheremore, it cost the same in the long run. Go over this very carefully with your parents and a BK attorney.

[renaissancewoman101]

I wouldnt advise filing bankruptcy. That can affect your credit report for 10 years or more. She isnt THAT badly in debt. If she buckles down, cuts up her credit cards, budgets, etc., she can slowly pay off the debt.

 

Maybe she can borrow the money from her dad to pay off the cards, close the accounts and then slowly pay her dad back. That is another idea to consider.

[shes2smart]

I wouldnt advise filing bankruptcy. That can affect your credit report for 10 years or more. She isnt THAT badly in debt. If she buckles down, cuts up her credit cards, budgets, etc., she can slowly pay off the debt.

 

Maybe she can borrow the money from her dad to pay off the cards, close the accounts and then slowly pay her dad back. That is another idea to consider.

 

Agreed. 9k isn't worth filing bankruptcy over. I've never heard that getting help from CCCS would show up as a bankruptcy. In any event, it wouldn't hurt to just talk to them and see what services they offer. Be sure to ask how using their services will impact your credit report. A friend of mine went through CCCS for help with her credit card debt and she never said anything about it showing up as a bankruptcy or screwing up her credit. She was even able to get a home loan a few years after she'd paid off her creditors.

 

Another resource you can look into is the library...they've got a variety of books on financial management, budgeting, and getting out of debt...and if you have a library card, you've got free access to them. I'm a fan of Suze Orman...if you need a place to start, look up some of her books.

 

You can take some of the stress off yourself by coming clean with your parents and bf about your situation. You parents might be mad at first, but if they are generally supportive of you, they'll probably be able to get past that and help you out. With your bf...well..I think this can show you what kind of guy he is when the going gets tough. Really, do you want someone around who's going to cut and run or think poorly of you because you made some bad decisions? It's not like you killed anyone or stole anything, y'know?

[FortunateOne]

I wouldnt advise filing bankruptcy. That can affect your credit report for 10 years or more. She isnt THAT badly in debt. If she buckles down, cuts up her credit cards, budgets, etc., she can slowly pay off the debt.

 

Maybe she can borrow the money from her dad to pay off the cards, close the accounts and then slowly pay her dad back. That is another idea to consider.

 

 

First: I WORK in finance and I know how lenders (Credit Card, Mortgages, Auto, Commercial, Personal Lines of Credit, Etc.) are undrwritten. I deal with this on a daily basis and know that CCCS lowers your FICO score the same amount as any of the two(2) bankruptcies Ch7 and Ch13.

 

Second: The BK I suggested is a restructuring of the debt (Ch13) not complete wipe off of the debt (Ch7). This BK Ch13 only stays on the credit history as long as the court sponsored administrator dispurses the debt through out the creditors. The same thing that CCCS offers, but with the LEGAL backing of the Federal Courts. No creditor can challange the courts ruling.

 

Third: As for CCCS i've seen countless times when they reach terms of repayment based on how the credit card company feels that week. CCCS does NOT have any say what so ever in the repayment of the debt. Furthermore, the three credit rating agencies treat CCCS EXACTLY like a BK Ch13 on their credit rating.

 

Fourth: Future creditors that will give you a loan to buy a house or car will enterpret the BK Ch13 more favorably than CCCS since once the debt is paid off the it is final with out appeals from the creditors, unlike CCCS which after their suggested pay off they can REOPEN the case/debt agaist the original borrower. Once again federal protection is suggested.

 

Lastly: I've seen first hand how predetory these lenders can be to hand out credit so fast to college kids in the bet that Daddy or Mommy will bail them out. I've yet to understand what type of underwritting debt ratios they use to qualify some one with little to no income. I think that's userous and maybe raqueteering, if not for the legal imdemnety that congress gives banks.

 

well, you can take my advice or not, but PLEASE consult an credit and bankruptcy attorney before you decide.

[g44]

9k isn't alot and it would probably make u feel better to tell someone...and let family or bf help out...the more you worry about it the bigger an issue it will become...don't let money cause u trouble...and hold u back

 

good luck

[MrKawabata]

I think 9k is a lot of money in the context of $750/month. Given the rate of repayment you are looking at least 2 years to get rid of the debt.