After 6 years of underemployment/illness, my wife and I are having to cut spending, even more.

You should pay $463 to HomeDepot. The interest rate on the particular BofA credit card will not be affected if you default on the other card from the same company. If your wife is not the co-signer or the joint account holder of the credit cards, then her credit score will not be affected due to defaults.

This is a continuation of my original post. I don't know if I should ask a separate question:
How long should I wait before asking for a settlement. My spouses Citi card debt just went to a collection agency. The debt is 120 days late. The letter I got from the agency lists the debt plus interests added. It asks that I write back to dispute the debt, or they will assume the debt amount is agreed upon, by me. Should I dispute the debt?

Forget Home Depot and everyone else. You need to stop supplementing from the 401k.

If I were you, I would take the money from the credit card min payments and put it on the side in anticipation for settlements. You need to take care of immediate needs first, gas, elect, mortg, food, etc (not cable tv).

By stopping credit card payments you must be aware that if you eventually get sued you run the risk of a judgement in which your wages may be garnished, your bank account may be seized and any property may be attached by a lien.

There is a ton of info here, do your research and devise a plan and ask questions.
Did I mention to stop paying your credit cards with the 401k?

If youre pulling money from your 401k to pay credit cards, you need to stop immediately an forget about what your credit score will look like.

Take care of nessesities, gas, elect, mort etc (not cable tv), put the money you would have sent to the credit cards on the side in anticipation of settlements.
You dont mention if you own a home, but if you are eventually sued and lose, they may place a lien on your home, garnish wages and seize bank accounts.

I was in a situation similar to yours and have for the most part gotten through without a lawsuit.

Do your research, devise a plan and ask questions.

With the exception of Discover and Wells, you should be able to settle with the others very easily.

Thank you ioalot.

I agree with you %100. I do have some equity in a home. Not worried about wage garnishment, because of no wages. However my self employment is paying most of the bills.

When you say I should be able to settle with the other creditors, When do I do that? So far, I have tried, but most of the offers are for paying set amounts for certain time, with no reduction in the debt. Are you saying if I wait longer, I can deal with the collection agencies?

Personally, I would suggest looking into bankruptcy. With your type of debt and no full time employment I would suggest cutting your losses and get fresh start. You should not be touching your 401k. Your credit will crap out doing the settlements...bankrutpcy isnt going to be much worse and you will sleep better at night.

Sorry about double post above...

It would be in your best interest to settle before the creditor charges off which is usually after the 7th missed payment.

In my experience, we did 2 BoA after 6 missed payments for 25% of the balance, 4 Chase cards after 3-4 missed payments for 30 and 35%, Sears Citi after 4 missed for 40%, Amex after 5 missed payments for 38%, this was via an attorney ready to sue for a 37k bal. We did a few more which were very similar including some business cards.

We didnt have Disco but it seems that 50% with them is good.

As far as keeping a card for emergencies, yes it can be done, but I think good nelly is wrong about it being a BoA card. They will most likely close any card of theirs if you dont pay the other, (I would if I were BoA).

In our case I selectively answered the phone say 1-2x a month and reiterated my desire to make good on my debts but just did not have the capacity to do so at this time. After several missed payments I inquired about a one time payment to settle the accounts. Of course the first number was way too high, sorry I wish I could, perhaps next time. The next number comes down a bit an so on. Its just business. BoA though, the settlements seem to come down quite a bit, but not until the very last month.

I truely believe you set your settlement % from the beginning depending on your hardship, if they feel you are trying to get over on them, you may end up paying more. Be honest and give no more information then nessesary.

Thank you SOAPLADY
I am so glad you wrote. I respect your advice very much. Before I start looking for information on bankruptcy. I live in Florida. Is this something I can file myself? I like the Idea of sleeping better at night.

Waves from Naples....

Florida has an unlimited homestead exemption so your equity in your home is safe. I would advise using an attorney if at all possible. Or you could find a paralegal service to prepare the paperwork. Make an appointment with a bk attorney.....consultations are usually free. They will confirm the real estate expemption.

Wow, FL has unlimited homestead exemption.

Wish my state would come out of the stone age and up the lousy 20k homestead exemption, I would have been sleeping better a long time ago.