How should I repay my credit card debt?
This forum has been really helpful in the past.
I might not use the advice always but I always appreciate the feedback.
Here’s the scoop- I currently have $55,000 in Credit card debt.
It is totally stressing me out and it is really dificult to keep up with the payments.
1-Shoud I us a debt consolidation ageny. I spoke with them and they claim they can greatly reduce the interest and thus the monthly payments- but you do need to pay them a fee. Also, the payments are still close to what I pay now but I can get the cards paid off in 5 years instead of 17 years.
2-Should I get a home equity Loan.
3- should I use my saving to pay this off- I have about $95,000 in the bank.
Thanks for the advise!!!
Tagged with: Card • Credit • Debt • repay • should
Filed under: Debt Consolidation Home Equity Loan
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Item 1. This is NOT debt consolidation. It’s debt settlement. You pay them a fee and ruin your credit. They try to settle for 30 cents on the dollar. Not all firms will agree. Even if they do, you eventually get a 1099-C for the rest and it’s taxable income.
Item 2. Using a home loan to pay off a credit card debt just lowers the rate. It doesn’t pay it off as you’ve moved the debt from an unsecured asset to a secured one…and didn’t cut up the cards.
Item 3. How the heck do you have $55K in debt if you ACTUALLY HAVE $95K in the bank. This is not the last choice, but the first.
I cannot say much more to the previous answer. You need to pay the debts you owe, period. You have the money. If they find out you ACTUALLY have the money, they could come after you again with fraudulent intentions. And yes, your credit will go to “hell in a hand basket” using debt consol. Same as B-ruptcy, essentially.
If your bank savings are just ordinary savings, (i.e. not a retirement account) then of course, pay off the card. Savings accounts pay too little right now to keep it in the bank, especially if you are paying credit card interest.
If it is a retirement account, then leave that alone, and try to balance transfer some to lower interest rate cards if that is available to you. There are some decent 0% balance transfer deals out there.
Also, work up a budget so that you are not in cc debt anymore.
Stay away from any “debt consolidation” company that promises to cut your debt and payments in half through debt settlement….This is a risky tactic of deliberately ceasing all payments to creditors and forcing your accounts into default to attempt settlements. You pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating for sure. Debt settlement is like a roll off the dice with your finances…You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.
Many people who sign up with “debt consolidation” firms incorrectly assume that they have the power to force your creditors to accept settlements…they don’t. Your creditors have the right to refuse settlements and take you to court.
You need a plan, strong discipline and willingness to get out of debt.
You should stop using credit cards first then start paying the balances off one by one.
Avoid debt management services.They are mostly scam.
You can checkout this article for some good tips on getting out of debt.
http://www.ehow.com/how_5381228_succeed-credit-card-debt-management.html