Should you continue to pay credit cards monthly if you have room in your budget?
I have a substantial amount of credit card debt, around 60k for me and 20k for my wife. I'm not behind and not being bothered by creditors. I have always made payments on time. Most months I can make more than the minimum payment as long as nothing else creeps up. I've been able to knock it down some. If I stick to my plan I can knock it out in less than 3 years. Most months we stick to the plan unless something like car repairs or right now a new baby comes into play.
Would it make sense to try to settle this debt instead of working through my plan which gets pushed back every time something comes along. I can come up with 30 to 50k if I need to from 401k loans or cash outs to offer as settlement. While I don't really want to hurt my credit it does not seem to matter as every time I pay them down some they lower my limit thereby raising my debt to credit level. At some point I will need to replace my car but can't seem to get a loan due to the high ratio. My credit score is 729 and the only negative is that ratio. I always pay every bill on time but feel I can't get ahead with these credit cards hanging over us. I also don't want necessarily to "take the easy way out". We charged what we charged and I am responsible for it. Just that with interest, it will cost another 20k before we get this done.
Given the above situation, do you have a recommendation?
—Jim
Being in a position to aggressively pay down 80k in credit card debt in a three year period would not exactly put you in a hardship category with the need to pursue debt settlement. Credit card debt consolidation could make more sense for you.
If your interest rates were lower, you could complete your debt pay down plan even faster.
What are your interest rates and with what balances?
If you do find yourself in a position where you are unable to maintain current payments to your creditors, from the detail I picked up in the background you provided, you would be a great candidate for settlement. In that event, you could request a consult to get into specifics as they would relate to you.
I hear you on the credit limit decreases as you pay down balances. Lender risk aversion is back, and here to stay for sometime.
Anyone with questions or a situation like Jim’s, where debt consolidation and debt settlement make sense, is welcome to post in the comment section below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
I found out 2 years ago that a collection agency have been trying to get judgments to put holds on my bank accout. I finally got a bank accout and they got a order for a non reaquiring hold. It wasnt but a few dollars in there so i didnt worry then six months later they did it again. With 2 hundred dollars in the bank so i went to dispute it because i was garnished 26 years ago for this dept but the the judge wasnt listinig to me. Then in the last month they put a hold on my bank account. Then released it back to me what do i do
Who is the creditor or debt collection agency that you are dealing with?
You Bet.
If you hit a brick wall with your requests for interest rate reduction, you do have a couple options.
1. A Credit Counseling Agency will typically have preset interest rate concessions arranged with national card issuers. You can give one a call at 888-317-8770 for a free consult to see what they can get your monthly credit card payments reduced to.
2. Falling behind in payment to a creditor, more specifically a credit card issuer, suddenly creates options to reduce interest rates that did not exist prior to having missed a payment.
Hey
Thanks for the quick response and honest answer. My ave rate is about 14%. The highest is 18% and I’m paying that off first with the avalanche approach. I’ll see if I can’t get lowered and work from there. If circumstances change I will reach back to you.
Thanks!
Jim