So here’s my situation. Last year, I was out of work for 7 months, which led to around $12,000 in credit card debt across five different cards. I tried refinancing, but things just kept going wrong. Now I’m unemployed again, and my unemployment checks only cover my rent. While I was briefly working, I made some progress paying down the debt, but it quickly piled up again when I got laid off.
Now I’m looking at $12k of debt, five cards, no income, and no chance of refinancing. Family help isn’t an option, and I live as frugally as I can. One of my cards only covers the interest each month, another will start charging interest soon (that one has $5k on it), and one just raised its interest rate by 4%. All my cards are maxed, and the interest rates are above 27%. My credit score is still okay, around 630, but I haven’t checked it in a month.
I’ve thought about bankruptcy, but I own a small piece of land from my dad, and I don’t want to lose it. I could keep paying the minimums, but my unemployment is almost out, and I don’t want to end up with nothing saved when it runs out. I’m wondering if I should just stop paying or close the accounts.
I know unpaid debt can fall off your credit report after seven years, but I don’t want to worry about getting sued. I’m really stuck and not sure what to do.
And yes, I’ve been applying for jobs. I have three college degrees, but it doesn’t seem to help.
Try reaching out to your credit card companies to see if they have any Hardship Programs. Also, check out a Debt Management Plan from a non-profit credit counseling group connected with the NFCC. These plans are different from debt relief and settlement options – they work directly with your creditors, which helps you avoid lawsuits, keep your credit in decent shape, and potentially save you some money. The fees are low, and they’re recommended by the Consumer Financial Protection Bureau.
Here’s their website if you want to look into it: https://nfcc.org.
When you’re in a tight spot financially, prioritize your bills. Credit card debt is unsecured, so it’s lower priority. If you skip a payment, you’ll get a late fee, but they can’t take back the stuff you bought. Focus first on your car payment (if you have one), rent, utilities, food, and then credit cards. Call each of your credit card companies, let them know you’re unemployed, and see if they’ll work with you to avoid bankruptcy.
$12k in credit card debt at 25% means $250 a month just in interest. You might need to skip a big credit card payment to keep up with smaller ones and avoid late fees piling up.
Also, it sounds like finding a job is crucial here. Have a friend review your resume or do a mock interview with you. Even a part-time job would help. It might be worth double-checking that former employers aren’t giving negative references.
Try calling your creditors to ask about zero-interest hardship programs. Focus on paying those that offer this option. The others might settle after a few months of missed payments, but your credit will take a hit. Good luck.
Just a thought, but I disputed a debt with a collection agency, and it went away. They couldn’t prove the original amount owed, and I never heard from them again. Sometimes, if they can’t provide documentation, they’ll drop it. Might be worth a try.
If you file for bankruptcy, they might make you sell the land to cover the debt. Non-essential property isn’t usually protected, so that’s something to consider.
Debt doesn’t just vanish after 7 years if you stop paying. Seven years is only the time limit for it to fall off your credit report after filing for bankruptcy. Without filing, the banks or collectors could still sue, get a judgment, or put a lien on your property.
If it’s been more than six months and you can’t find work, maybe try applying to jobs outside your field. Lots of places like Starbucks or retail chains are always hiring – it could help tide you over.
