Newbie need advise!! What is the best way for me to get out

Instead of charging the taxes, set up a payment plan with the IRS. Their interest rate is lower and they are very easy to work with this year from what I have heard.Kind of pay what you can.

Thanks for your help! I did think of that, however, my DH already has a payment plan that he is working on prior to our marriage and I just really would rather owe a CC than the IRS.

Thanks,
Angela

If you overextended to where you can't really afford the minimum payments than it looks like debt settlement is going to probably be your best option.You can either settle the debt on your own or hire a company. A payment towards a settlement program should be around half of what your combined minimum payments were. Be sure to not do more than a 36 month program " preferably faster if within your budget". That hopefully free up enough money to where you can get your car payments caught up. Can you break down your budget so I can see if you will be able to save enough to do a aggressive enough settlement program ?

Thanks mobile! It's not my car payments that are an issue. I can pay those, and one will be paid off next June so that will free up about $385. I also get a $2,000 end of year bonus. I too think debt settlement would be my best option but it makes me nervous b/c of lawsuits or what if they won't settle.

My budget is as follows:

CitiFinancial Auto - $2,500 @ 10% - $280 mo. (doing to default b/c no car)
Wamu/Chase - $2,600 @ 10% - $55 mo. (but will be charging $2,500-ish tax bill) (limit is $5,000)
B of A - $4,100 @ 9% - $80 mo. (limit is $5,000) (opted out of increast in APR a few days ago but don't know if it will stay that way)
Discover ??? $10,000 @ 20% - $210 mo. (limit is $11,000)
IRS - $200 mo. don't know interest or total amount due

Thanks for you help. I really appreicate it. I just feel like I am throwing my money away and I don't want to stay trapped forever!

Thanks,
Angela

No insurance on the totalled car?? Usually financed require full coverage.

We had full coverage collision insurance but didn't purchase the GAP insurance. So when the car was totaled the insurance company paid off the valute of the car, but I was upside down in the loan and we are stuck with the balance. Tough lesson learned!!

I should have been more specific. Can you break down your budget as far as basic living expenses ? I need to know your net income minus fixed expenses like groceries , power , water , rent , car , ect... I want to make sure that debt settlement is within your budget or if bankruptcy if a better option.

Thank you so much mobile!! Let me put those numbers together for you and I will be back.

Angela

Ok, I already have a little spreadsheet, so these are my rough figures:
Household net Income: 5000 (give or take, my dh is in sales)
Rent: 1,100
Health Insurance: 400
Car payments: 670
Car insurance: 160
Power: 150
Cable/phone/internet: 150
Cell: 85
Water: 25
Gas: 150
groceries/misc: 800
Trash: 15

Thanks again!
Angela

$5000-$3705 in fixed expenses. That leaves you with around $1295 a month left over to use to fund the settlement program. You can afford to do a pretty aggressive settlement program. I suggest you do the fastest program you can afford to reduce the odds of a judgment as much as possible.

Ok, while thinking things over last night, I realized I left off a a few more fixed expenses:

Child care: $200 (may go up during the summer)
Gas:$150
Gym membership: $20
Loan from mom: $50 (she paid off a CC that was going to start accuring interest b/c 0% promotion was ending)

That puts me at $5000-$4125 which would be $875 a month left over. So I am thinking save the $400 a month minumum payments and put that towards settlement. Although it doesn't leave us much breathing room. Is there such a thing as a budget counselor? I think we need one. :)

Ideally, I would like to try to settle on my own first before I sign up with a company. My main concern would be if they start calling my work. What is the best way to prevent that, just staying in contact with them?

Also, how soon will my accounts be turned over to an attorney? I am thinking that I could get Chase and B of A wrapped up pretty quickly. It's Discover that I am worried about. What if I do a hardship progam with Discover while I am trying to settle Chase and B of A, would that work, or would they not settle if I am still paying Discover?

Also, would I be able to get a secured credit card while this is going on?

Thanks again for your help!
Angela

Its hard to say how long you have before an account gets to an attorney. I will say Discover has a reputation of suing people with around 10 months to a year. They would definitely be the first I would settle with. I also suggest you save more than 400 a month. If I were you will would save at least 600 a month. That way you will build funds much faster to settle with Discover because of how aggressive they can be.

Thanks mobile! I think 600 a month would be difficult but possible, if I get some budget counseling!! :) If I owe them about $10,500 now, about how much should I save up to settle for? And then Chase and B of A won't sue in the meantime?

Also, what about a secured card, would that even be a possibility?

Thanks,
Angela

One more question, I just charged my taxes to my one CC, if I stop paying on the next statement after I just made a huge charge will that be an issue? Should I keep paying for another month or two? And does it make a difference if you stop paying all CC's at once, or one at a time?

Thanks,
Angela

We I would stop paying them all at the same time. The reason being is its kinda hard to convince a creditor that you can't afford to pay them but yet you can afford to make minimums to their competitors.

That's what I thought, but I wasn't sure how it looked maxing out your credit card like. And I am probably going to have to charge groceries this week. I just didn't want it to become a fraud thing.

I'm really, really nervous about starting this whole process even though I feel like it is definitely the best way to go. I would like to try it on my own first and then if that doesn't work, sign up with a company. Do you or anyone else have any recommendations of good DIY books or programs?

Thanks,
Angela

Thanks,
Angela

I will try to do it myself too. I've beed reading this site it will really help e a lot once I start to settle on my own.Me and my husband have abt 90k in CC (ouch!) and i dont want to pay abt 9k on fees, might as well keep that as addtl funds.I found this site zipdebt.com and you'll find out a lot on info on doing it yourself. I sent the guy an email and he was very helpful too. I'll get his "training" stuffs maybe in a month or 2 when we start to be delinquent.

You may want to consider a bankruptcy. Yes it will severely impact your credit scores, but with proper guidance you can rebuild these within a couple years. Once your BK is discharged you can't buy a home for at least 2 years. All depends on your long term plans and your willingness to change your habits.