Feel like in a Real Catch 22 -- Perfect Storm Ahead

[Nick9075]

I am deciding on whether to file or scrap together over $3,000 a month to pay off all credit card debt that is current (delinquent is another story) over 18 months according to this debt paydown calculator where I have run the numbers.

Currently -- about $60,000 in credit card debt that is current with many accounts. Many small retail accounts under $1,000 to BOA where I owe about $32,000 combined on three accounts.

Currently two chase accounts are delinquent. One just passed the 180 day mark on my credit report and now over $3,000. Another that was a providian account is now over $6,000 which I stopped paying because I was getting nowhere with a 31.99 APR at 60 days

Two AMEX accounts delinquent as well one is $4,900 & other is $1,100. I get calls from nationwide about 4 times a day.

I have about $6,000 in cash on hand plus another $20,000 in investment accounts. I AM VERY HESITANT TO USE THIS MONEY. My employment situation has been very jumpy since about 2006 and as we all know people are disposable and if you aren't liked or do something wrong you can be on the street tomorrow.

In a 100% payback plan under Chapter 13 the numbers work out to around $1,250 just taking what I think is the total unsecured debt and dividing by 60 BUT interest & fees stop. Under a debt snowball/paydown plan if I pay $3,000 a month for 18-24 months the debt will be paid BUT my credit is still trashed due to the delinquencies.

[backtoschool]

Hi Nick9075,

I had a high income in nyc before I lost my job and moved to the midwest. When I had a high income, I wanted to settle and/or get current on some of my past due cards so that I could keep a few of the current ones. (I had built up debt and gotten past due on a few cards due to a layoff two years ago, where my whole dept was sacked in a hostile takeover by another company, but that's another story...)

The problem with that was that once I was delinquent, my interest rates got jacked on almost ALL of my cards, and the cards that I was current on kept lowering my limits. As soon as I paid off a card that was pass due, they would lower the limit to just what I owed, etc, which would lower my credit score and make my other cards lower their limits.

I realized that I was throwing money at the credit card companies to save my credit, but that I was just chasing my balance, as they kept lowering my credit limit and I could never get ahead or have any usable credit at that point.

Don't assume that you will get to keep your limits or your cards if you pay off your balances. Credit card companies are running scared right now. In a chap 13, at least you are not paying extra interest, and may end up with a less than 100% plan.

[Nick9075]

Hi Nick9075,

I had a high income in nyc before I lost my job and moved to the midwest. When I had a high income, I wanted to settle and/or get current on some of my past due cards so that I could keep a few of the current ones. (I had built up debt and gotten past due on a few cards due to a layoff two years ago, where my whole dept was sacked in a hostile takeover by another company, but that's another story...)

The problem with that was that once I was delinquent, my interest rates got jacked on almost ALL of my cards, and the cards that I was current on kept lowering my limits. As soon as I paid off a card that was pass due, they would lower the limit to just what I owed, etc, which would lower my credit score and make my other cards lower their limits.

I realized that I was throwing money at the credit card companies to save my credit, but that I was just chasing my balance, as they kept lowering my credit limit and I could never get ahead or have any usable credit at that point.

Don't assume that you will get to keep your limits or your cards if you pay off your balances. Credit card companies are running scared right now. In a chap 13, at least you are not paying extra interest, and may end up with a less than 100% plan.

I recently moved to the Boston area from NYC -- Boston is just as expensive as NYC and I am making around the same money.

There is other delinquent debt as well not credit card related. I was unemployed for 5 months and this was the only job I was offered. I got laid off in the 4th quarter of last year when 500,000+ were being lost each month.

I owe over $1,000 to the NYC dept of finance for unpaid parking tickets and a few hundred to Ct Light & power for utility bills.

Chase is now at 180 days and the balance is less than $5,000. It hasn't been turned over to outside collections but I have to watch carefully to see if they sue. If they do and I can't settle it then I may have to file to block a potential lawsuit & wage garnishment.

Amazingly, none of my creditors that I called to try to get a lower rate would work with me even ones I was current with and never missed a payment. Financial experts suggest people do this but many flat out told me that 'we are not negotiating rates with anyone'. Discover told me that they raised their rates across the board. They still use 2 cycle billing to calculate interest so the interest seems higher

With my job situation & living situation still unstable -- I do not believe for one second that I have a 'career' with this company despite what they want to make people believe so I want to hold onto as much cash as possible without throwing it away on credit card interest.

Renting with bad credit is hard so I need to hold on to as much cash as possible. Most complexes run your credit and debt load to come up with a 'rent score' similar to the choicepoint type of scores that insurance companies use that differs from the Fair Isaac Formula. I was denied at many places and had to put up a $2,000 deposit to move into this place. Already counting the days until this 15 month lease is up.

[backtoschool]

I recently moved to the Boston area from NYC -- Boston is just as expensive as NYC and I am making around the same money.

There is other delinquent debt as well not credit card related. I was unemployed for 5 months and this was the only job I was offered. I got laid off in the 4th quarter of last year when 500,000+ were being lost each month.

I owe over $1,000 to the NYC dept of finance for unpaid parking tickets and a few hundred to Ct Light & power for utility bills.

Chase is now at 180 days and the balance is less than $5,000. It hasn't been turned over to outside collections but I have to watch carefully to see if they sue. If they do and I can't settle it then I may have to file to block a potential lawsuit & wage garnishment.

Amazingly, none of my creditors that I called to try to get a lower rate would work with me even ones I was current with and never missed a payment. Financial experts suggest people do this but many flat out told me that 'we are not negotiating rates with anyone'. Discover told me that they raised their rates across the board. They still use 2 cycle billing to calculate interest so the interest seems higher

With my job situation & living situation still unstable -- I do not believe for one second that I have a 'career' with this company despite what they want to make people believe so I want to hold onto as much cash as possible without throwing it away on credit card interest.

Renting with bad credit is hard so I need to hold on to as much cash as possible. Most complexes run your credit and debt load to come up with a 'rent score' similar to the choicepoint type of scores that insurance companies use that differs from the Fair Isaac Formula. I was denied at many places and had to put up a $2,000 deposit to move into this place. Already counting the days until this 15 month lease is up.

Well I hope you got some choice parking spots in the city, right next to good restaurants and clubs for that $1,000.

None of my creditors would work with me either. Believe me I tried. And since I am single, a chapter 13 plan would have been at 100% and over $3,000 a month for five years, at the salary I was making in nyc. When I was laid off again in January of this year, I used the change as an opportunity to reassess what I wanted to be doing with my life. I lived in nyc in a high stress job for ten years, working with wall street and hating every minute of it. In Jan, I moved back to the midwest (where I am from) and am going back to school to get a second graduate degree.

You are right where the credit card companies want you to be: Paying high interest rates and putting their needs ahead of your own. If you file bankruptcy, even if it is a chap 13, at least you can get your life on a forward moving plan instead of just treading water, and can put your own needs first.