21K in credit card debt. Need help.

[BobAbood]

Hi, I'll try not to make this too long but I'm currently 26 and a full time undergrad student.

In 2005 I dropped out of college after 1 year to play online poker full time (great idea I know). Did relatively well and had about 300K by late 2009. Took some bad advice and invested 150k with someone who was supposed to be very conservative with it. Over the next year I took a beating at the tables and in general spent too much and lost the 150k I had left over. This would have been OK except that the guy I invested with ended up losing almost all the money I gave him in 1 day in 2010. I only got back enough money to pay off about $20k in taxes that I owed for 2009. I also had about 17k in credit card debt that I planned to pay off with the money the guy lost but obviously that money was all gone.

I moved back in with my parents and reenrolled in school full time. I've been taking 22 hours/semester to try and finish as quickly as possible but it's going to take me 1 more year before I'm done with school. For a while I was selling everything I had and doing whatever I could to keep up with min payments but several months ago I just ran out. My current debt is 21k, all on one credit card. I haven't made any sort of payment in 4 months and they are charging me about $600/month in interest and fees. With the amount of school I'm taking it's hard to work more than just enough to cover my bare essentials (plus I have extra tuition above my loans and scholarships because of the amount of hours I'm taking, not to mention books etc.). I have no intention of filing for bankruptcy or anything but I won't be able to put a solid dent in my debt until I can go to work full time once I graduate.

Is there any way I could get this debt deferred for a year and get the interest % lowered so that it isn't 8-10,000 higher by the time I graduate?

I know I screwed this whole thing really badly, but I attend a pretty good University and have close to a 4.0, so I feel like the fastest way to paying off my debt is to graduate as quickly as possible rather than cut back on school hours to work more now, at a low hourly rate, just to keep up with the min payments. Sorry this ended up being so long but I would really appreciate any advice at all as this has been eating away at me for a while. Thanks.

[dczech09]

How did some guy lose almost $150k of your money in one day in 2010? The market did not crash that much; actually 2010 was an up year (for me at least). If you ask me, something smells fishy. I would hate to assume too quickly, but it almost sounds like this "somebody" either took you for a ride or did not invest conservatively. Either way, they screwed you over and if this is an investment professional, you could potentially sue for malpractice. $150k does not vanish in one day unless you do something stupid like invest all of the money in futures contracts or just plain steal it. You need to look into this because something happened with YOUR money!

As far as your credit card debt goes-

To my knowledge, student loans are the only things you can defer- and that is because they are usually Federally insured.

Credit cards cannot be deferred unless it is some sort of promotion, or deal, that you strike up with the lender.

You said you have not made any payments for 4 months. After 60 days of no payment, the bank reports it to the credit bureau. So your credit is probably trashed at this point. So your leverage to strike a deal with the lender is pretty low. You could look to settle the debt in the future, but that would usually require paying a large lump sum and A LOT of negotiation with the bank. Basically they are not going to be willing to accept less than what you owe unless there is a possibility that you file bankruptcy (thus they get nothing).

You have $21k on one credit card now. You have to find a way to pay that off. Period. If you do not, then you are gonna have some fun with these guys. They do not care if you are in college, not working that much, or had a bad beat with investing and gambling. They want their money and they will get it somehow.

Collections calls are gonna come in, the debt may be sold to a third party, and they may even go as far as to try to sue you or get a garnishment of your wages through court. I do not want to scare you, but you need to understand that this is a big deal.

How much do you work now? How many classes are you taking? How many years do you have left until graduation?

You are going to have to find a way to work more hours or find something you can do on the side to make more money. When I was in college I went full time, worked 30 hours per week, sold vacuum cleaners door to door during the summer, and was involved in multiple student organizations. I did not have a 4.0 or even close to it, but I did graduate in 4 years. It was tough but it was worth it. And it is possible. You may need to build up the intensity a bit.

If you do not, you are gonna fight with the lender for a while and will likely have a much larger debt before you graduate.

Again I do not want to scare. I just want to light a fire under you

[jpg7n16]

How did some guy lose almost $150k of your money in one day in 2010? The market did not crash that much; actually 2010 was an up year (for me at least). If you ask me, something smells fishy. I would hate to assume too quickly, but it almost sounds like this "somebody" either took you for a ride or did not invest conservatively.

You have obviously never played poker professionally My guess was that he was backing another player taking a shot at the 100/200NL stakes. Poker is a crazy swingy beast.

Either that, or was lied to by said individual. Oh... I "lost" it all. I am curious to know what exactly the arrangement was though.


I used to play 3/6 and 5/10NL. Never played with that much though.

-----------------------------------------

To OP, you can attempt a 0% balance transfer, but I doubt you'll qualify - seeing as you're a student with no income.

May end up having to bite the bullet on that debt. Or reduce study hours for working hours.


What are you studying to become?

[BobAbood]

How did some guy lose almost $150k of your money in one day in 2010? The market did not crash that much; actually 2010 was an up year (for me at least). If you ask me, something smells fishy. I would hate to assume too quickly, but it almost sounds like this "somebody" either took you for a ride or did not invest conservatively. Either way, they screwed you over and if this is an investment professional, you could potentially sue for malpractice. $150k does not vanish in one day unless you do something stupid like invest all of the money in futures contracts or just plain steal it. You need to look into this because something happened with YOUR money!

As far as your credit card debt goes-

To my knowledge, student loans are the only things you can defer- and that is because they are usually Federally insured.

Credit cards cannot be deferred unless it is some sort of promotion, or deal, that you strike up with the lender.

You said you have not made any payments for 4 months. After 60 days of no payment, the bank reports it to the credit bureau. So your credit is probably trashed at this point. So your leverage to strike a deal with the lender is pretty low. You could look to settle the debt in the future, but that would usually require paying a large lump sum and A LOT of negotiation with the bank. Basically they are not going to be willing to accept less than what you owe unless there is a possibility that you file bankruptcy (thus they get nothing).

You have $21k on one credit card now. You have to find a way to pay that off. Period. If you do not, then you are gonna have some fun with these guys. They do not care if you are in college, not working that much, or had a bad beat with investing and gambling. They want their money and they will get it somehow.

Collections calls are gonna come in, the debt may be sold to a third party, and they may even go as far as to try to sue you or get a garnishment of your wages through court. I do not want to scare you, but you need to understand that this is a big deal.

How much do you work now? How many classes are you taking? How many years do you have left until graduation?

You are going to have to find a way to work more hours or find something you can do on the side to make more money. When I was in college I went full time, worked 30 hours per week, sold vacuum cleaners door to door during the summer, and was involved in multiple student organizations. I did not have a 4.0 or even close to it, but I did graduate in 4 years. It was tough but it was worth it. And it is possible. You may need to build up the intensity a bit.

If you do not, you are gonna fight with the lender for a while and will likely have a much larger debt before you graduate.

Again I do not want to scare. I just want to light a fire under you

Hey thanks for replying. I'll do my best to explain what happened.

The guy I invested with was actually trading S&P options. What he would do it write far out of the money SPY options (SPY I believe is an e-mini stock based on S&P performance) and then buy slightly further out of the money SPX options in equal proportion to cover. So basically he was setting up really far out of the money option spreads and just collecting the small difference in premiums when they all expired worthless. I know very little about option strategy (which is why I never should have invested) but it seemed to me at the time like it wasn't terribly risky, and the most I could lose is the difference between the options he was writing and the ones he was buying.

The day he lost it all was actually on the "flash crash" day in 2010 (I tried to add a link but forum won't let me, so try google if you haven't heard of it). He was using Interactive Brokers and when the market crashed obviously all the prices on my options went through the roof. Interactive Brokers immediately made a margin call, but there's no way I could fill it in the few seconds they gave me, and they immediately began to liquidate all my written options for 10-30x what I had written them for. I wouldn't have lost more than 15-20k if they had also liquidated the options I had bought to cover my shorts because prices on those were just as high, but since options you buy aren't any risk to the broker since you pay for them upfront they just left those alone. All of this happened in less than 10 minutes and by the time it was over all my bought options had returned to normal levels and I had lost almost 90% of my account value. After speaking with a lot of other traders and a couple lawyers it seems like Interactive Brokers were the ones who really screwed me. They said in all likelihood IB has traders were on the other ends of those trades that made a killing off me, and that they shouldn't have liquidated just my shorts in such a crazy moment but that it was their right to do so, so I have no case to sue. The guy who was I invested with also handled the whole thing really poorly, and just kept saying that they will reverse the trades and everything would be ok. He was very unapologetic and did nothing to help in dealing with IB and eventually wouldn't even return my calls for days at a time. I would sue him but as far as I know he lost basically everything he had as well and is pretty broke. That's probably the best I can explain it, let me know if something doesn't make sense.

As far as the credit card debt I didn't mean defer like a student loan, just do you think they would be willing to accept something small like just interest rate payments for a year until I graduate and can start knocking down the principle. I'm currently enrolled in 6 classes (5x4hours and one 2 hour class) and work about 15-20 hours a week. If I keep up the pace I'm on of taking 20+ hours/semester and take summer school I will be graduated by the end of next year (spring 2013). The problem with contributing more $ towards the credit card is that I still have to pay school about 2k/semester because I'm taking more than 18 hours, also books add up to another 500-800. I agree that I need to take this on with more intensity and that's why I came here to post about it. I never realized how paralyzing it can be when you feel so overwhelmed, and that just a couple years ago life was going really great for me and it all changed so quickly.

A couple questions, do you think my best chance to negotiate some sort of payment plan or anything would be with the bank or with the third party who might have bought my debt? I know they usually buy debt for something like 50 cents on the dollar so maybe they would be more willing to deal. I assume getting it paid back to bank directly would be less damaging to my credit than paying back the third party or would this not really make much of a difference?

Again thanks for taking time to do read this and help out and hopefully I clarified a few things from my original post.

[BobAbood]

You have obviously never played poker professionally My guess was that he was backing another player taking a shot at the 100/200NL stakes. Poker is a crazy swingy beast.

Either that, or was lied to by said individual. Oh... I "lost" it all. I am curious to know what exactly the arrangement was though.


I used to play 3/6 and 5/10NL. Never played with that much though.

-----------------------------------------

To OP, you can attempt a 0% balance transfer, but I doubt you'll qualify - seeing as you're a student with no income.

May end up having to bite the bullet on that debt. Or reduce study hours for working hours.


What are you studying to become?

Hey good to hear from another poker player. At my highest I was playing 5/10 and 10/20NL heads up online and bumhunting some 25/50 games. Got tough to get action after a while so I switched to MTTs and did well but it gets really swingy playing 5Ks and the whole WSOP without backing, that's how I went on my 100k+ downswing. Not sure if you know about options trading but I tried to explain what happened with my "investment" in the post above this one.

I'm majoring in finance and I actually went about things a little bit backwards and only have 1 more finance class left. I'm thinking next year I should be able to work more as a lot of the freshman and sophomore classes I need to finish take a lot less work than the ones I'm currently enrolled in. Appreciate you taking time to read and reply.

[BobAbood]

Not sure if you guys know anything about hiring, but I heard that some employers do credit checks when you're applying for jobs these days. Do you know if there's any validity to that? It's already really hard to find jobs these days and I would hate to lose one because of my terrible money management as a 23 year old. Thanks again.

[jpg7n16]

Not sure if you know about options trading but I tried to explain what happened with my "investment" in the post above this one.

I saw your post, and IMO you should likely have a case against IA. You'd need to speak to another lawyer about it. I know many firms had to cancel out a lot of trades due to that issue, and if it cost you a ton, you may have a case. Worth a shot at least.

The purpose of a spread is to have the security behind the risk, and manage the risk. I believe you should have only been liable for the gap between exercise prices as I believe IA should have exercised your options to cover the ones you were exercised on. That was the whole purpose of entering into a spread as opposed to writing a naked put.

And if what you say about their firms policies is true, then that's terrible. And I'm sorry you had to deal with that firm.

[LuckyRobin]

Yes, some employers check your credit report. Yes, your bad management of your money could affect whether or not you are hired. No, I don't think any creditor is going to be willing to work with you because you went too many months without paying. The time to try to get creditors to work with you is when you are still paying your minimum balances. They are a lot less forgiving once you default.

Honestly, I think you need to be working full time and only taking fifteen credits at a time (or whatever the least amount is that qualifies for full time). You cannot afford the time to be going to so many classes with such debt. You might think you'll get through your classes faster and then pay off things faster, but you will be trashing your credit even further than you already are if you are not paying during this time frame. I also think if you are not going to school over the summer you should try to get a second job and bust your tail all summer trying to get your debt caught up to where it should be at. Then someone might be willing to work with you.

You don't list what your expenses are that you are barely covering with your part time job. I think you should. Some of your expenses may be ones you don't actually need, but are accustomed to, for example a data package on your cell phone or internet access when you can get it free at school or the public library. Or maybe you can ride a bike to college or take the bus instead of drive a car (dropping your gas and possibly your insurance due to less mileage). Or even selling your car if you own one. It's hard to see where you might cut back if you don't list what you're expenses are.

[BobAbood]

I saw your post, and IMO you should likely have a case against IA. You'd need to speak to another lawyer about it. I know many firms had to cancel out a lot of trades due to that issue, and if it cost you a ton, you may have a case. Worth a shot at least.

The purpose of a spread is to have the security behind the risk, and manage the risk. I believe you should have only been liable for the gap between exercise prices as I believe IA should have exercised your options to cover the ones you were exercised on. That was the whole purpose of entering into a spread as opposed to writing a naked put.

And if what you say about their firms policies is true, then that's terrible. And I'm sorry you had to deal with that firm.

I agree and this is how I felt as well but I really couldn't get anyone to even give me a solid answer. All the lawyers and traders I spoke with said they've never heard of something like this, but that they didn't think I had a chance at recovering any money. If you have any ideas as to where I could find someone who could better explain if pursuing something legally is even an option I would be interested, I just don't know much about the whole business. Maybe a forum where a lot of traders frequent would be a good start. Thanks.

[BobAbood]

Yes, some employers check your credit report. Yes, your bad management of your money could affect whether or not you are hired. No, I don't think any creditor is going to be willing to work with you because you went too many months without paying. The time to try to get creditors to work with you is when you are still paying your minimum balances. They are a lot less forgiving once you default.

Honestly, I think you need to be working full time and only taking fifteen credits at a time (or whatever the least amount is that qualifies for full time). You cannot afford the time to be going to so many classes with such debt. You might think you'll get through your classes faster and then pay off things faster, but you will be trashing your credit even further than you already are if you are not paying during this time frame. I also think if you are not going to school over the summer you should try to get a second job and bust your tail all summer trying to get your debt caught up to where it should be at. Then someone might be willing to work with you.

You don't list what your expenses are that you are barely covering with your part time job. I think you should. Some of your expenses may be ones you don't actually need, but are accustomed to, for example a data package on your cell phone or internet access when you can get it free at school or the public library. Or maybe you can ride a bike to college or take the bus instead of drive a car (dropping your gas and possibly your insurance due to less mileage). Or even selling your car if you own one. It's hard to see where you might cut back if you don't list what you're expenses are.

Hey thanks for your reply. Currently my expenses are around 300/month which is mostly just for food and a little things like bathroom supplies. Thankfully my parents still pay for my cell phone on their family plan. I do not have a car and school provides me with a free public transit card so I use that to get around. I do have a few hundred dollars and could get together maybe 1k to make a payment. Do you think that would help to show that I'm at least trying to do the right thing and maybe they would be more willing to make a deal with me? I was told some of them have hardship programs that could possibly help me lower my monthly payment till I am out of school and can afford to start knocking down the principle. If I am to graduate next spring I have to take summer classes, so unless I decide to drop my hours and put more focus on working I will be in school over the summer as well. Someone in another forum suggested I look into a sperm bank, and after having a quick laugh about it, I'm actually going to look into it.

[LuckyRobin]

Well, it's possible they might work with you if you get up to date, but it's hard to say once the damage has been done.

You might look into selling plasma as well. If you are healthy you can usually donate twice a week. It takes longer than blood donation, about 1.5 hours each time, but plain blood donation usually doesn't pay. And you're allowed to read, so you could do it while reading one of your text books, making your study time pay.

[BrokeMike]

I was in pretty much the same boat as you, minus the exciting poker story. I paid for medical stuff and made some poor purchasing decisions with my credit card early in college.

My debt got to around 20k on credit cards in college. I always made payments, but had to choose between getting a job or stopping payments. I stopped making payments because I was scared of getting stuck in school longer.

The only problem I saw then was the constant phone calls that the credit card company made to me and my references. They don't stop, EVER.

2 years ago I graduated college with all of that debt still not being paid, and no job. So, I still didn't pay it. And student loans popped up, and you have no choice but to pay that.

Today I'm still struggling to pay for the student loans, partly due to the horrible credit I have now from ignoring the CC debt.

Bad credit means higher car insurance, higher car payments, huge deposit when renting, etc. The damaged credit will cost you so much later on.

I highly recommend you figure out a way to keep making the minimums at least on your card. It will mean a lot later down the line.

[Wonga]

Bro, be as frugal as you can. Get rid of everything you don't need, get to a certain balance and from then on start to save, you have what it takes to reach that number again. All winners have to face this sooner or later. But failing like this is what makes you stronger, and stronger, and stronger.

[chrisburke21]

Bro, be as frugal as you can. Get rid of everything you don't need, get to a certain balance and from then on start to save, you have what it takes to reach that number again. All winners have to face this sooner or later. But failing like this is what makes you stronger, and stronger, and stronger.

I think this is sound advice. Also if you can transfer the balance of this card to a card with an intro of 0% for the a year or longer I would do that. You don't want to not pay for too long because a lot of employers do credit checks when you get hired.

[JoeP]

Someone in another forum suggested I look into a sperm bank, and after having a quick laugh about it, I'm actually going to look into it.

Sounds like you need a stroke of good luck. Give it a shot.