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- 08-15-2009, 09:03 AM #1
White Belt
- Join Date
- Aug 2009
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where to start
So I didn't see any good parked links on where to start! I hoping to get some advice on how I tackle this mountain of debt!
Here is my story:
I've made some poor decisions with credit and accumulated quite a bit of debt. About $50K in CC. I also have a rental property that has been an absolute headache. I cleaned out my 401K to buy this house, was relocated, rented the home and it has been a huge burden (partially responsible for the CC balance).
Several months ago I was laid off followed by an accident. I took a couple of months to get myselft on physically/mentally back on track. I was not able to pay anything! So now I am trying to get myself financially back on track. I had a 650+ score before and had never missed a payment. So I am looking at all credits are 90 days past due. Including my leased vehicle. I am now gainfully employed with a 100K salary. But now items are in collections, I'm getting flooded with calls and I'm looking at back taxes/CC charges etc!
Anyone have a suggestion on how I can most expeditiously get myself back to paying these bad boys off? I have no savings, and my cash flow is good for $1200/month which in therory I should be able to pay this stuff off in 5 years. CC companies are sending me settlements for 1/2 value. I thought of doing a ch13 BK and giving up the house/rental...
Should I go to a credit counseling company? hire a lawyer? Call the creditors one by one? write only? what's the best advice out there?
Thanks in advance for your time and consideration to reply.
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This is what I'd do personally, but is by no means the "holy grail" of what anyone/everyone should do. There are a ton of variables involved, so take it with a grain of salt.
1. Map out a budget ("net" income every month, "fixed" expenses)
2. List out current expenses and define as either a *want* or a *need* (gotta know the difference for this to matter)
3. Plan to eliminate *wants* for the time being, until the situation can get under control
4. Focus on paying off one account at a time - the one that charges the highest interest and pay as much as possible toward principal each month, and continue making minimum payments on everything else.
5. Once the first account is paid off, pick the next highest interest account and pay it down using all the extra (including what you aren't spending now on the account you just paid off), continue making minimum payments on time for everything else.
6. Repeat until all accounts are paid off.
If you can negotiate reduced principal amounts with any of your creditors, great. Do that in addition.
Good luck and let us know what you end up deciding to do.
Oh by the way, I wouldn't use credit counseling as that can be as bad as a bankruptcy on your credit report.
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