Internet's first get-out-of-debt community - 134,000 members

I make 18,000 per year.

I have 4 credit cards I want to consolidate.

5,000 @ 29%

2,500 @ 12%

5,000 @ 22%

550 @ 29%

My credit score was 752 and after quitting my job, moving twice and some other personal matters it has dropped to 500 over 5 months. So I know I couldn't get a loan to pay them off. I also have 8k in student loans that I plan to pay off by monthly payments. I didn't factor in those nor do I want to.

Anyways, I set up payment plans and now all the cards are under the credit limit and in good standing. But the interests are killing me as I only make 1,500 a month and after living expenses I can only afford to pay the minimums on them. The interests will eat me alive. I called to see if they could lower them, but they said I have to do six consecutive months on time before they could consider it.

Does my situation warrant debt consolidation? Plus how does debt consolidation affect your credit score and for how long.

I would ask for a consultation, but I don't see them saying that I shouldn't consolidate. After all, they are doing it for money as well. So I am hesitant I'll get a straight answer.

Posted: Sat Feb 16, 2008 7:02 am Subject:

I would definately consider debt consolidation in this situation, you would then just have the one payment.

Sorry to hear about the huge drop in your credit score, that is awful, maybe you can work your way back up again by consolidating.

Posted: Sat Feb 16, 2008 9:38 am Subject:

Because you are a registered member yiu are entitled to a free consultation, Please call the number to the right of the screen. They will be able to help direct you in what is best for your specific needs.

Midlandsucks · Posted: Wed Feb 20, 2008 1:54 am Subject: Consolidate

Right now your credit card score doesnt matter...its in the tank. Plus you also have to consider the 8K in student loan debt as it is a part of the total debt you owe. So breath deep and say, I owe $21,000.00. Now...realize that you will not be able to get a debt consolidation loan while making only $18,000 a year and a credit score of 520. Therefore, stop paying the credit cards. THEY ARE RIPPING YOU OFF. Yes, they will call and harass you, yes they keep accruing interest. However, pay down that student loan debt as fast as you can. Get a second job to increase your income. Save up $5,000 and put that into saving for an Emergency Fund only. That money will only be touched for true emergencies. IE...transmission in the car goes out and you dont have a way to work. A much needed trip to disneyland doesnt count as an emergency. Once you get the student loan paid off and have your emergency fund set up, now you are ready to deal with the credit card companies that ripped you off (due in part to your own greed...yes...you have to admit that you made a stupid mistake...its ok..we all make them, however you learned the hard way. Great lessons are learned this way.) Write a formal letter to the credit card company (or collection agency by this time) to whom you owe the lowest amount on. Tell them that you will wish to settle the account with a one time payment of about 35% ( you will need to put a hard number, not a percentage. IE. $550.00 x 35% = $192.50) if they will accept the payment and consider the debt settled, report to the three credit bureaus that the debt is settle for less than balance and will cease all previous, present and future collections. (They must agree in writing to those three contingencies or all bets are off.) That if they choose not to accept this offer that you are going to have to put them at the bottom of the pile and will get back to them at another time. Make sure that you have the $192.50 ready to send them if they accept. DO NOT LET them automatically draw money out of your account electronically. Send them a check via mail if they do accept. Do not talk to them on the phone. Do this all via mail. If they accept great, if not...then we go to the next balance...($2,500.00 x 35% = $875.00) Again...make sure that you have $875.00 ready to go if they accept.
Keep working your way down the line. If you create a tight budget and stick to it, you will be surprised at how fast you can pay this off. One last thing. Dont go getting credit cards. Pay cash. The only time you ever want to borrow any money is when you purchase a home. And that is whole other ball of wax.

Posted: Sat Feb 23, 2008 5:59 pm Subject:

So just quit paying on the credit cards? My friend actually suggested this very method. Said once I have enough available funds call them to settle. I will pay off the 550 one within the next 2 months. I also have to pay off the 5k one with the 22% interest. This is a bike I financed two years ago. And it's through HSBC. If I stop paying that then it'll be up for repossesion. If I lose my bike I will quit life lol.

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