Family of 6 – How to Pay Off, Reduce, Eliminate High Credit Card Debt – Phillip
I am a 43 year old male with a wife and 4 teenage children. I have always struggled with debt being a single income family and raising a family. I filed bankruptcy once already ( 9 Years ago ). I am currently back in debt with around $34000 in unsecured debt. I don't know how it got there again. I make a decent income and am on time with all of my payments and have decent credit. My issue is that I am stretched out from month to month and am finding it hard to juggle my payments. I have considered stopping payments and saving that money to try to settle my debts one at a time later on or filing bankruptcy again, which I don't want to do. Is there a different strategy I should take? I really want to pay back what I owe but am feeling a lot of stress. I also keep a few thousand cash on hand for emergency money and will be getting a decent tax refund. Any advice would be greatly appreciated. Thank You
What options / strategies do I have to pay back such a large amount of debt
I would like to walk through a process of elimination with you that will ultimately help you narrow down your options and point to the most reasonable strategies to help you reach your goals while paying off, reducing, or eliminating your credit card debt. In order to do this I will need some questions answered.
What strategy you choose to tackle too much credit card debt and avoid bankruptcy starts with the math.
You want to avoid filing for bankruptcy. This desire is coming from a place of experience because you have already filed for bankruptcy in the past. Most people want to avoid bankruptcy even when they know little to nothing about it. Let’s drill in to some basic math to see if you can avoid bankruptcy. Later, likely after some comment participation, you may have to question if you should avoid bankruptcy.
Can you afford your credit card debts if your interest rates averaged 8 percent?
Is there is room in your household budget to pay roughly $750.00 a month toward your credit card bills? I came up with this figure based on your debt load of 34k and an average of 2.2% of that total being your new monthly payment until the accounts are paid off – which would take close to 60 months.
Can you still contribute a monthly amount to your savings/emergency fund?
Settling credit card debt when you cannot afford minimum monthly payments.
Debt settlement is not a go to alternative to bankruptcy that my industry likes to make it out to be. There are very real risks to debt settlement when you cannot get through the process fairly rapidly. There are also cost based reasons to skip the debt settlement strategy. For more on why debt settlement works best when you take an aggressive approach to settling, see: https://consumerrecoverynetwork.com/settling-credit-card-debt-is-a-race
In order to estimate the costs and timing of your individual debt settlement strategy it is best to know:
The banks the credit cards are with?
The balances on each credit card account?
If there have been recent large purchase or balance transfers to some of the credit cards?
Are any of the credit cards only recently opened (last 12 to 24 months)?
Are you late on any credit card payments, and if so, by how many months?
Are any of the credit card debts already enrolled in any type of hardship payment plan?
Do you have any credit needs in the next 24 months (refi – car loan – parental plus loans)?
If you can answer all of my questions in a comment reply below, I will be better equipped to provide feedback and outline a strategy using today’s trends with your creditors.