DigginOut
01-25-2006, 06:57 AM
I'm so glad I found this board - it really helps to know that we're not alone and that there are things we can do to help ourselves! Here goes (skip to bold for bottom line):
My husband and I are trying to decide if and how to go the debt settlement route and need advice about our specific situation. We've accumulated huge credit card debt (not to mention additional consumer debt concealed by mortgage refinances and $80K in home equity revolving credit...). Six months ago, our credit ratings were hovering around 700 but are probably lower now due to more late payments (nothing beyond 60 days late yet). We've had some extenuating circumstances: two spells of unemployment, unexpectedly having twins (for 3 kids total), associated high child care expenses, and health problems. Now we're trying to dust ourselves off and develop a strategy for attacking our debt and reducing our living expenses.
I don't think BK13 is an option b/c (a) We've been paying a nanny under the table so exposing ourselves to financial scrutiny by the federal government would be asking for trouble; and (b) We can probably replicate the BK13 repayment plan in other ways w/o as much credit damage, e.g., debt settlement.
We have 401-K savings and are poised to borrow (& partially liquidate? - ouch!) in order to pay off much of our debt (and bridge us until our child care expenses subside - we're hoping to switch from a nanny to day care this summer). BTW, a 401-K loan would be a wash on our monthly expenses for now but would convert open-ended high-interest debt into contained (5 yrs), lower-interest debt (i.e., do-it-yourself debt consolidation).
DS sounds like the best option. However, from what I've been reading on this site/board and the books, I have some concerns and questions.
Our specific CC debts are:
Citi Visa - $27K @ 29.9%
Credit Union MC - $20K @ 14%
Credit Union credit line - $5K @ 14%
Chase Visa - $5K @ 3.5% (going up soon)
Concerns and Q's:
* What are our prospects of getting a decent settlement from Citi? On the one hand, I've heard that they won't settle for less than 80%, but then I've also heard contradictory accounts of them settling for less (but only if you use a professional DS service?). BTW, one of our smaller 401-K accounts is managed by Citi, which the CC dept might know about. In addition, my husband took a call from them yesterday and told them that we're working on paying off some or all of the account (he was vague so I'm not sure if this hurt our bargaining position).
* Even if we settle, can't they still sue us? We're not in one of the states that enforces protections against this.
* Two of the other debts are w/credit unions. Does this impact DS prospects? (My husband has been w/this credit union for 15+ years, and we don't relish the thought of trashing that relationship but is there any alternative?)
* The last card is w/our regular bank, Chase, so they would know that (a) our checking account is perpetually overdrawn and (b) we make decent salaries, which are deposited directly. Can we just settle the other 3 w/o settling or closing out Chase (perhaps simply paying it off in full but leaving it open)?
* Can we just start w/Citi or do we have to do all simultaneously?
* Should we hold off on the 401-K loan until (all?) settlements are negotiated? If not, should we park it in a savings account w/another bank?
* If we go the DS route, should we hire someone to help us? I know that the general advice on this board is to do it yourself but that would be difficult b/c: (a) both of us work in cubicles and have no privacy at work; (b) given our work/family demands, it's probably not realistic, esp. b/c I have a medical condition that saps my energy.
Depending on the answers to the above, I have a lot more Qs (How bad/lasting will the damage to our credit be? Do we stop paying our CC bills? How much do we stand to gain/pay for professional DS help? etc.)
Thanks for reading this long post, and for any info / insight / advice!
My husband and I are trying to decide if and how to go the debt settlement route and need advice about our specific situation. We've accumulated huge credit card debt (not to mention additional consumer debt concealed by mortgage refinances and $80K in home equity revolving credit...). Six months ago, our credit ratings were hovering around 700 but are probably lower now due to more late payments (nothing beyond 60 days late yet). We've had some extenuating circumstances: two spells of unemployment, unexpectedly having twins (for 3 kids total), associated high child care expenses, and health problems. Now we're trying to dust ourselves off and develop a strategy for attacking our debt and reducing our living expenses.
I don't think BK13 is an option b/c (a) We've been paying a nanny under the table so exposing ourselves to financial scrutiny by the federal government would be asking for trouble; and (b) We can probably replicate the BK13 repayment plan in other ways w/o as much credit damage, e.g., debt settlement.
We have 401-K savings and are poised to borrow (& partially liquidate? - ouch!) in order to pay off much of our debt (and bridge us until our child care expenses subside - we're hoping to switch from a nanny to day care this summer). BTW, a 401-K loan would be a wash on our monthly expenses for now but would convert open-ended high-interest debt into contained (5 yrs), lower-interest debt (i.e., do-it-yourself debt consolidation).
DS sounds like the best option. However, from what I've been reading on this site/board and the books, I have some concerns and questions.
Our specific CC debts are:
Citi Visa - $27K @ 29.9%
Credit Union MC - $20K @ 14%
Credit Union credit line - $5K @ 14%
Chase Visa - $5K @ 3.5% (going up soon)
Concerns and Q's:
* What are our prospects of getting a decent settlement from Citi? On the one hand, I've heard that they won't settle for less than 80%, but then I've also heard contradictory accounts of them settling for less (but only if you use a professional DS service?). BTW, one of our smaller 401-K accounts is managed by Citi, which the CC dept might know about. In addition, my husband took a call from them yesterday and told them that we're working on paying off some or all of the account (he was vague so I'm not sure if this hurt our bargaining position).
* Even if we settle, can't they still sue us? We're not in one of the states that enforces protections against this.
* Two of the other debts are w/credit unions. Does this impact DS prospects? (My husband has been w/this credit union for 15+ years, and we don't relish the thought of trashing that relationship but is there any alternative?)
* The last card is w/our regular bank, Chase, so they would know that (a) our checking account is perpetually overdrawn and (b) we make decent salaries, which are deposited directly. Can we just settle the other 3 w/o settling or closing out Chase (perhaps simply paying it off in full but leaving it open)?
* Can we just start w/Citi or do we have to do all simultaneously?
* Should we hold off on the 401-K loan until (all?) settlements are negotiated? If not, should we park it in a savings account w/another bank?
* If we go the DS route, should we hire someone to help us? I know that the general advice on this board is to do it yourself but that would be difficult b/c: (a) both of us work in cubicles and have no privacy at work; (b) given our work/family demands, it's probably not realistic, esp. b/c I have a medical condition that saps my energy.
Depending on the answers to the above, I have a lot more Qs (How bad/lasting will the damage to our credit be? Do we stop paying our CC bills? How much do we stand to gain/pay for professional DS help? etc.)
Thanks for reading this long post, and for any info / insight / advice!