$40,000 In Credit Card Debt

I have almost 40K in cc debt. I don't know what to do. I am 30 years old and married, but my husband has very little cc debt (we paid all his off with wedding money since his interest rates were higher). A portion of my debt was surgery I had to have that my insurance wouldn't cover (about $13K...and I should get a lot of that back on taxes).

My total minimun payments are $731. Citibank just upped my largest balance ($20K) to 14.99% (from 5.99%) even though I've never been late. All my other cards are around 5%.

I currently only work part-time because I have a 1-year-old baby. Our combined net income is about $4,000 a month. Our mortgage is $1225 (including escrow). We have two cars, total payments of $570. We would love to sell our house, but with the economy, we now have negative equity. (The value has decreased $50,000).

I didn't realize how serious my debt was until I realized that I wasn't paying off my Discover every month like I used to. I thought my debt was under control; now I realize it's spun out of control.

I have never been late on anything. But that's because I'm using credit to get by.

I am supposed to start grad school next May, but I have no clue how we're going to make it.

With my low rates, who on earth can help me? I know that if I started paying cash for everything, there's no way we'd be able to pay everything and I would get behind.

If I get $11,000 back from taxes and have another $6,000 in money we have saved for my daughter (I know, I hate using it, but I will make a lot more money in the future), do you think I'd be able to get cc companies to settle with me for close to $17K total? I hate ruining my credit score, but I see no other way. Or if I pay off all my other cards, but settle with Citibank -- can I do that?  My head is swimming. I have considered putting my daughter in daycare and working full-time even...but I don't think she'd do well in day care at this point.

Can anyone help?


Thanks in advance,

Shannon

Hi there,

40K in cc debt qualifies for a debt settlement program, however, your accounts must be all past due, as the creditors would not settle otherwise.

If I get $11,000 back from taxes and have another $6,000 in money we have saved for my daughter (I know, I hate using it, but I will make a lot more money in the future), do you think I'd be able to get cc companies to settle with me for close to $17K total? I hate ruining my credit score, but I see no other way. Or if I pay off all my other cards, but settle with Citibank -- can I do that?

I do not know how much citibank settle consumer accounts for but I'm wondering why singled them out over the other creditors...

Also, debt settlement may be able to cut your balance to more or less half -- it really depends on the creditors though.

Did you mean to settle your accounts on your own or have a settlement company represent you? The advantage of enrolling in a settlement program is that the negotiators know how how much the creditors are settling accounts for at a given month -

If you wish to get matched up the right company for you, please feel free to fill out a form here at destroydebt.com, it is free of charge.

Hi, if you're curious as to how much debt settlement would cost you:

Debt settlement companies will usually charge 15% of the total debt amount and spread the fees out over 18 months--or they will take a percentage of the settlement amount, usually between 20-25%.

Just to add to the fees (if you enroll in a debt settlement program) - and somebody please  correct me if I'm wrong - If you owe $10,000, your monthly payment will be about $150.00/month.  If you owe $20,000, your monthly payment would be about $300.00/month. --

That's a lot of difference from if you're paying your original minimum credit card payment of more or less $800/month.

So on a 40,000 debt you'd pay something like 600/mo.

You do not have to be in arrears to settle your debt. I can show you how to settle them for $.10 to $.15 on the dollar and still have good or better credit when the process is complete.

Settling debt for pennies on the dollar? Isn't that illegal?

Just wondering why you'd choose to keep the Citibank card when it has the highest rate than your other cards. Why not pay that one off to avoid the extremely high monthly interest instead and work on paying off the other gradually?

Have you been able to switch over those balances yet, or some other initial victory?