Question Please evaluate my options (~90K in CC debt)

[bombajstampa]

Hello All,

I'd appreciate if someone can take a look at my position below and let me know your thoughts about my options to decrease and eliminate credit card debt. I am located in California.

Any suggestions would be appreciated very much.

Cheers,

Ben

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Income:
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Me: 95K/year
Spouse: 40K/year

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Debt:
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Credit Card Debt: $80K (5 cards, average APR ~18%, accumulated gradually over 10 years)
Car Loans: $15K (1st car 12K, 2nd car 3K)
Student Loans: 20K (5K me, 15K spouse)
401K Loan: 10K

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Major Expenses:
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Renting at $1.8K/month
Child Care at $1K/month
Parent Support (paying for nursing care, long story): $1K/month
Gas/Car insurance: $0.7K

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Savings:
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401K: $90K (60K me, 30K spouse)
Stock: $1K
Cash: $3K

[SMinGA]

First thoughts: don't touch the 401k.

At a glance, I am guessing you would have disposable income for a plan payment for ch 13 and would have a hard time filing ch. 7.

[lovemybugs10]

I am in the same situation as you. (except with less income, but high dmi)

I spoke with Dave Ramsey yesterday. He recommended not filing, but settling with the credit card companies.

He said I am far from bankrupt.

I am taking his advice.

[Blueboy]

Just curious if you are using his method to get your debt down?

[HHM]

I'd say a chapter 13 might make sense. As was mentioned, you have too much income for chapter 7 to simply wipe away the debt, but a chapter 13 is about getting back in control, pay what you can afford to pay your creditors based on your budget, and discharging the rest.

Unless you can slash enough expenses to be able to pay off your debt in 5 years or less, chapter 13 is the ONLY option that can do that for you in a cost effective way.

[lovemybugs10]

I am- we have gone completely to the envelope system. (My bank looks like me like I'm insane each month when I pull all this cash out. Especially because I ask for the specific number of 20, 50, 10 and 5's I need. So that I can put the exact amount in each envelope )

Except in my case-because of a job loss, I haven't paid my cc's in about a year. So I am settling with them one at a time, and paying them monthly. I owe 10k to discover. I'm going to give them 670 a month for 6 months, to settle, then on to the next one. Every penny that doesn't have a necessity home after that goes into savings and ready to offer the next creditor.

We are sitting down at the beginning of each month and coming up with a budget for every penny.

[bombajstampa]

Thanks for the input. It seems that the 13 is the way to go. lovemybugs10's approach seems good too if all the cc companies are willing to negotiate - that's an unknown for now as i haven't contacted anyone else and i am paying on time as of now.

i am so fed up and angry with these 20% and 30% interested rates that sometimes i feel if i should just quit my job and go straight for the 7 - i know that would harm me the most but would also harm the bloodsucking leeches as well.

thanks for all the input...

[HHM]

I am- we have gone completely to the envelope system. (My bank looks like me like I'm insane each month when I pull all this cash out. Especially because I ask for the specific number of 20, 50, 10 and 5's I need. So that I can put the exact amount in each envelope )

Except in my case-because of a job loss, I haven't paid my cc's in about a year. So I am settling with them one at a time, and paying them monthly. I owe 10k to discover. I'm going to give them 670 a month for 6 months, to settle, then on to the next one. Every penny that doesn't have a necessity home after that goes into savings and ready to offer the next creditor.

We are sitting down at the beginning of each month and coming up with a budget for every penny.

Why waste money settling? You do realize that there is no benefit to settling as compared to BK. The damage is done, at least with BK, you don't have to pay anything back, just file chapter 7 and get it done.

[Blueboy]

I am- we have gone completely to the envelope system. (My bank looks like me like I'm insane each month when I pull all this cash out. Especially because I ask for the specific number of 20, 50, 10 and 5's I need. So that I can put the exact amount in each envelope )

Except in my case-because of a job loss, I haven't paid my cc's in about a year. So I am settling with them one at a time, and paying them monthly. I owe 10k to discover. I'm going to give them 670 a month for 6 months, to settle, then on to the next one. Every penny that doesn't have a necessity home after that goes into savings and ready to offer the next creditor.

We are sitting down at the beginning of each month and coming up with a budget for every penny.

Well Dave achieved his goal of making money, I hope his system helps you achieve your as well. Best of luck.