I have $41k in credit card debt and need advice on the best way to pay it off. Should I keep making monthly payments or consider a debt consolidation program? Most of the debt is from a gambling addiction, which I have now overcome and hope never to repeat.
I’m currently paying $2790 twice a month on the 1st and 15th. Here’s a breakdown of my debt:
- Card 1: $8000 balance, $290 minimum payment, 29.99% APR
- Card 2: $6000 balance, $220 minimum payment, 28.24% APR
- Card 3: $12000 balance, $390 minimum payment, 25.49% APR
- Card 4: $14000 balance, $450 minimum payment, 25.99% APR
- Card 5: $1200 balance, $90 minimum payment, 29.99% APR
My recurring expenses are:
- Rent: $1510
- Utilities: $350 (includes electricity, phone, internet, etc.)
- Car insurance: $80
I don’t spend much else aside from food.
Do you think there’s a realistic chance I can pay off this debt in the next few years without opting for debt consolidation or other solutions? Thanks in advance.
You’re capable. The debt snowballs. You have about $2,000 to work with each month. Pay the minimum on all items (about $1,350 for cards 1-4). You need a little money to survive, so let’s assume that your fixed expenses are $2500 for food and entertainment, leaving you with $1750 to pay down your debt.
Month 1: Full payment for Card 5
Months 2–6: Card 2 (paying $1,800 a month; paid off in 4 months)
Card 1 (paying $2100 a month; gone in 4 months) for months 7–11
Month 12: Card 3 and above (get $2,700 monthly)
Essentially, you’re done in three years.
I added $500 to your recurring expenses to estimate your food costs. After covering your bills and minimum credit card payments, you should have around $1,200 extra each month to apply toward your debt.
However, with $41k in credit card debt, you’re accruing nearly $1,000 in interest each month. You might want to consider a debt management plan. These plans are offered by non-profits and involve a small monthly fee. They can negotiate lower interest rates for you, consolidate your debt into one monthly payment, and help you become debt-free in 3-5 years. You’ll need to close your credit card accounts, but the savings on interest could be substantial. You can learn more here: https://www.nfcc.org/resources/debt-management-plans/
You might also consider taking a part-time job or donating plasma to generate extra cash for your debt. Good luck!
Declare insolvency. My spouse accomplished it despite having almost $15,000 in debt. We paid a $100 internet helper to assist us with the papers.
There is currently no effect on credit from this eight years ago.
As a lawyer, I have experience with bankruptcy and collections. In the event that you are eligible for Chapter 7 bankruptcy, I advise against debt settlement or management. When you file for bankruptcy, your credit will start to recover virtually immediately after your debt is dismissed. You pay taxes on any forgiven debt in addition to the company’s charge when you settle your debt. It is essential to seek advice from a personal bankruptcy specialist lawyer.
Personally, I would pay that much in minimum payments and those high APRs. Consider the fact that it would take over 30 years to pay it all off. Declaring bankruptcy would take care of this issue. Remove the worry, and in seven years it will be removed off your credit report. By then, you will have restored your credit and gained important life experience. That debt is excessive. If you decide to employ a lawyer, you can have a free consultation with them.
Have you given a consolidation loan any thought? A few years ago, I had a significant credit card debt and obtained a loan from Happy Money. I paid off the loan in four years with monthly installments that were marginally lower than my total required payments. If I had a lot of credit card debt, I would do it again.
Consider filing for bankruptcy. Stop paying on your credit cards and use the money to hire a bankruptcy attorney (consultations are usually free). If you qualify for Chapter 7, it might be the best option. You could have a fresh start in 3-4 months and then rebuild with a few credit cards and other credit lines. The process involves some paperwork, a couple of credit counseling sessions over the phone, and a Zoom meeting with a few questions. Make sure your rent situation is stable, as moving might affect your ability to secure a new apartment for a year or two. However, if you prefer not to pursue bankruptcy, paying off the debt on your own might not take too long with your income.