newbie looking for advice

[njguy1972]

This is my first post. I have a good job paying a very good salary so credit cards have been very kind to me over the years.

Recently with the tough times I have felt the crunch. I maxed out 1 card over the summer. What is bad is it is from the company I work for with a great interest rate (7.5%). Then last week Amex removed 15k of available credit so now I only have $500 of available credit. Lastly BOA raised my interest rate on a large balance from 11% to 25.99%. I also have a condo that I am current on.

I have a good credit score today (650-675).

Starting next month I will be missing credit card payments and my score will drop fast.

I was hoping to make it to February since I would have my annual raise and bonus from my company. Now I am stuck.

Based on my salary I can barely meet the expenditures needed each month:
Mortgage, transportation to work, food, and utilities.

With no extra money the cards will not be getting anything.

What steps should I take now? I called a lawyer my friend used for a bankruptcy but based on what I am reading here, I am acting too quickly on that. I considered credit counseling but do not see how it can help since I have no extra money right now for the card companies.

Should I just stop paying them and in a month or 2 (after I can be sure the cards have been frozen 60 days) retain the lawyer officially?

If I get a bonus (maybe $3000) and tax return (about $6000) should I use it to pay down my car loan ($10000 remaining) or HELOC (Home Equity)? My condo is under water right now by about $30,000.

[flower04]

I can't answer your question except to say that we missed a payment on a card when we were in a similar situation and the interest rate went up to 30% and the minimum payment which was about $300 became $1300. Can you pay just the minimum or close to? What about reducing other expenses? Selling stuff?

If you consult an attorney, they can at least give you some options now before you are so far down the road that you don't have any.

Good luck!

[flower04]

Oh, forgot to mention, We were financially like you, would have been fine in a few months as my health was beginning to improve and I could start working again in 2 months from the date of that missed payment. I can definately say it was that $1300 payment that pushed us into a CH13. It was Chase. We begged and pleaded with them, showed them my medical records, bills, etc. They said that since our debt to income ratio was higher than most, they have the right to increase our rate after 1 missed payment....so read the fine print carefully.

[njguy1972]

Thanks for the input. I cannot make minimum payments on any cards now that I have no available balances remaining. I typically use cards a lot at the end of the year because I get a bonus from work and tax refund. In my case the bonus may not happen this year.

My situation came 4 years ago when I bought a condo I thought I could afford but it is now more than half my take home salary. Every time something went wrong: Car repairs, additional costs when switching jobs, lack of raises at work, etc... the credit cards got used.

I am lucky in that I have family that is willing to help me with the lawyer costs.

I guess talking to the lawyer is the best 1st step for me.