So I (22M) have about 12k in credit card debt, some medical (carecredit) but most commercial.
My debt battle initially began after losing my vehicle and job in succession a couple years back (plus a terribly abusive relationship). Since then I've slowly lost everything, I had about 5k in debt naturally from jumping home to home then another 5k this year in emergency dental I put on a card stupidly 😭
I have chase (2.5k no apr 8 more months)
Discover (4.8k APR 29%)
Capital One (2.8k APR 29%)
Amazon (JUST closed at 1.1k 29% interest)
CareCredit (400$ APR approx 29%)
I took them all out as a teen and never contacted for a better APR, I'm getting my ass kicked and JUST got let go from my job when I was barely starting to make progress.
I am almost fully committed to defaulting on my Amazon card. I believe I'm submitting to default on my Discover (4.8k) as well. I'm aware this will do a terrible number on my credit but I already lost my 760 score down to abt 600 so I'm feeling like going scorched earth.
I do want to have a relationship w capitol one and chase in the future but I know defaulting on Discover and Amazon will likely lose them forever. I can cope with this if it means feasibly paying down my other cards and slowly rebuild over time. I'm hoping to kind of meet in the middle. Frankly I can barely make more than minimum on them all (around 500$ monthly) even when employeed and I'll be paying this off for a decade.
I'd much rather take the big credit hit if it meant I could actually manage and improve going forward rather than staying stuck. Probably should've mentioned sooner I'm absolutely going to be contacting abt financial hardship programs for my 3 major cards but I'm struggling to see how defaulting on Discover/Amazon would have worse longterm results.
Please give me your opinions!!
What to do with my cc debt
byu/InternationalFig4153 inpersonalfinance
Posted by InternationalFig4153
6 Comments
Your score is meaningless at this point, don’t worry about your credit score. Don’t worry about maintaining a ‘relationship’ with a bank. Right now worry about getting new employment, multiple jobs if needed.
You’re in the kind of position that Dave Ramsey’s advice might be good for you, check out his steps. You don’t need to pay for any courses or whatever he sells just stop digging deeper, get a small emergency fund together, and hammer away at the debt. Eat cheaply, don’t order out, trim any fat you can.
Your second to last sentence really suggests you aren’t realizing the scope of your issues. A ‘credit hit’ isn’t your concern.
You need income and you need to stop your spending. There is not much more. Contact all the CC companies and ask them to reduce your interest as you are not able to pay and might default.
Get a job or another job and focus on paying these off. Only rent, basic utilities, and eat-at-home food until you do.
I was in a worse spot than you at the same age, mostly due to not being able to budget & control my discretionary spending. Clothes, makeup, getting hair /nails done, nicest place to live, etc. Had a decent income but not enough to finance the lifestyle I thought I should have. I finally went to a nonprofit agency I found thru United Way. At the time (1985) they were called Consumer credit counseling. They went thru my debt, put me on a budget, worked out a repayment plan & contacted my creditors for me. I had to pay $$ into a fund from which the agency made the payments. It took 3 years, and it was tough but I got through it & I learned a lot
I’m in more debt than you (25k including a car with a blown engine, medical debt, credit cards) not including students loans and mortgage. We’re exploring options as we are financially drowning. We’re having a free consultation with a bankruptcy attorney this coming Friday. Praying this is the route to some peace.
I was in your shoes when I was about your age, plus I had student loans. Big cc debt and FICO 610. I used this “snowball” method to get debt free and by 27 I put a down payment on a house. (I know the housing market is much different now, unfortunately)
Assuming you’ve secured a job to give you cash to make payments, here’s what worked.
1. Contact each creditor. Be honest about having lost your job and make it clear that you want to pay back what you owe. Ask them to pause the late fees and to let you make deferred minimum payments. No guarantees but try it.
2. Start with the $400 29% loan and put half of any cash available to make payments toward that. Your goal is to at least double the minimum payment. Pay minimums on your other cards.
3. Paying that first low balance card off will give you momentum. Go to the card with the next lowest balance having the highest interest rate. Repeat the process.
4. Don’t cancel any more cards, especially the oldest one. It lowers your total credit which hurts your FICO score. Your future goal is maximum credit available with low or zero balances.
5. Stay in touch with the cc companies if you’re going to miss any minimums because you don’t want them to reinstate the late fees!
Be proactive and focused and you can do it. You’ve had a great credit score before, and you can get it back just be patient.
Here’s a cc payoff calculator you can use: https://www.bankrate.com/personal-finance/debt/debt-payoff-calculator/
Regardless whatever plan you end up using, best of luck.