How can a relative pay off $10,000 on four credit cards on $850 month SSDI income without destroying credit?

Question

Has only $150 month for paying the credit cards, and cannot afford the traditional paying method when all can afford is minimum payments which over the long run will be massive amount of money lost to interest and fees.

Answer 1

The relative starts by cutting up the cards and never using them again. Then, the relative looks at the interest on the cards and transfers as much as possible from the highest interest to the lowest interest card. If the relative makes at least the minimum payments, there should just be interest and no fees unless he/she is over limit, in which case, the relative needs to call the credit card company and ask for a forbearance on the fees. Next the relative makes the minimum payments as due with any extra money going to the highest interest card. Do that until the cards start to get paid off (remember, if the cards aren't used, the interest should never be more than the payment, so the balances will come down - as the balances come down, the minimums come down - as the minimums come down, there should be some extra money to throw at the highest interest card). When cards get paid off, take the payments from that card and put them towards the next highest interest.



If the $150 does not cover the minimum payments fully, check with a credit counselor about working with the card companies.

Answer 2

They cannot

If they do not make at least the minimum, their credit is going to suffer. They will get late fees and their card will eventually be closed for not living up to the agreement they signed.



Even IF they were to contact consumer credit counseling, their credit would take a hit. When you enroll in one of those programs, your credit report reflects this and it hurts your score. The positive is that you will get your interest either lowered, or will have a lower payment that you make directly to the credit agency. http://www.nfcc.org. Also, you will not be able to get new credit and these cards that they have this 10k debt with will have to be closed. You cannot use or get credit of any kind when enrolled in debt management.

Answer 3

A non profit debt management plan might help. NFCC is a non profit organization that was set up by the credit card industry to offer assistance to people who are struggling to pay their credit card debt.. They can offer reduced payments and interest (but not settlements for less). http://www.nfcc.org

As a general rule, they can reduce your total monthly payment down to 2% of your total debt...so with 10K in credit card debt...your total payment would roughly be $200. They can also reduce the interest to around 10%

- If this person does not own a home, then he/she is judgement proof. This does not mean that they would no long owe the debt. What it means is that if they defaulted and the creditor took them to court, they would be left with a meaningless piece of paper as SSDI cannot be garnished for private debts. They could still call and write to collect, but that's all...They are legally powerless in this case.

- Keep in mind that Chapter 7 bankrupcy is not cheap. It would cost around $2,000. If your relative had a spare $2,000 lying around then it would be better used in paying down this debt...so in this case they'd have $8,000...a large, but not a crisis/emergency level of debt.

- Stay away from any debt consolidation firm that promises to cut your debt and payments in half. These firms work by having you deliberately default on your credit cards to settle for half. This is a risky process and your creditors might respond by taking you to court to get a judgment.

Answer 4

Contact a bankruptcy attorney. Usually the first visit is free, Their fees run about $1500 to 2,000

Answer 5

in the event that they gave you undesirable shopper provider, cancel the cardboard. Blaming 'head workplace' is BS. If the automated structures desperate you have been no longer credit worth, there could be another reason, possibly another blot on your checklist, yet in any journey, the customer provider people could have been able to handle it in the event that they decide for to maintain their shoppers. For any mastercard employer, preserving present day stable shoppers is plenty better than taking over new, untried shoppers, so it is an exceptionally stupid physique of innovations for them to take. in case you choose for, you could attempt taking it extra up the line (ask to talk with a supervisor, then HIS supervisor, etc), yet in my view, i could unload them.

Answer 6

he can't if he is not paying at least the min monthly payments (which will take 15+ yrs to pay off the cards), then his credit is already wrecked

Answer 7

I would contact the consumer credit counseling group in your area - they may be able to direct this person to consolidating the debt and any other options available to them.

Answer 8

I guess he should have thought about that BEFORE racking up debt equal to a year's income.





Sounds like he better get some extra income coming in.