I’m a 34-year-old woman, and my husband left two years ago. At that time, I wasn’t working because I was caring for my sister’s three children for the past three years, but they’ve now returned to their mom. That’s the short version of how I ended up in this situation.
I’m finally starting to get back on my feet, but I feel overwhelmed by debt. After covering necessities, I have only about $500 a month, which mostly goes to the minimum payments on my credit cards, but the balances aren’t decreasing. My credit score used to be in the 800s, but now it’s in the low 600s due to high credit utilization, though I haven’t missed any payments.
What can I do? What’s the best debt relief option? I applied for a debt consolidation loan but was denied. I also contacted the credit card companies, but they aren’t willing to help. Is there any other way out of this?
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Consult a bankruptcy lawyer and submit your chapter 7 application. It hurts, but if you can only afford the minimal payments, it will take you over a decade to get back on your feet. Just make sure that before you press the trigger, your mode of transportation is set.
You should consider filing for bankruptcy. I had half the credit card debt you have and filed in 2017. With a lawyer, the process was completed in just a few months. I was able to keep my car because I was almost done paying it off. Once you eliminate the debt, you’ll have room to breathe without the stress of paying minimums that don’t make a dent. After a couple of years, I rebuilt my credit and was able to buy a home a year and a half ago my credit score was back in the 700s.
Credit scores aren’t everything. As long as you can prove you’re employed, you can do most things, except getting a loan. If you’re not a fan of debt and don’t plan on getting a loan anytime soon, your credit score doesn’t really matter. I followed Dave Ramsey’s advice, and it’s true: no debt means no credit. I became invisible to the credit bureaus and had to use proof of employment for housing instead of credit checks. But I’m still alive and doing fine.
You might want to consider either learning new skills to get a higher-paying job or even taking on multiple jobs if possible. Your credit card debt is really high, especially if you don’t have the income to pay it down quickly.
If you’re willing to put in the effort, paying down most of the debt is doable and usually the best option. However, bankruptcy is always an alternative if needed. It depends on other factors like what assets you own such as a car, house, or mortgage. I suggest researching local bankruptcy lawyers in your area. Many offer free consultations to help you understand the costs involved and which debts can be discharged.
Your best option, provided you avoid getting into this predicament again, is bankruptcy. Bankruptcies are frequently filed by individuals and companies, and you may typically obtain fresh credit lines a few months after the debt is cleared.
Avoid using a debt settlement business at all costs.
Chapter 7: If you owe too much, throw your car in there too. Purchase a car with cash after being discharged.