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Help me help my mom please. Debt Consolidation.

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    Help me help my mom please. Debt Consolidation.

    I'd appreciate it if I could get some expert or educated advice on Debt and consolidation or a way to attack 65k+ of Credit Card debt with a APR of 19-21% Rate.

    Here's the scenario,

    Mom makes 3000 a month with taxes taken out, and has 65k+ wrapped up into 7 credit cards I believe. Dads leaving and she needs to figure out an affordable and reasonable way to Consolidate all three and lower the APR rate significantly in order to maintain the household and mortgage. Not sure of the mortgage haven't figured out all of the details.

    What is the best course of action?

    I've already talked with Momma about canceling subscriptions and Monthly's (Cable, Phone, etc.)
    Any help is greatly appreciated! Thank you!
    Additional Information:
    Right now she's Got
    3 Bank of america, A Chase Freedom, Chase Slate, Chase, and American Express all opened. Estimated 2100$ going to payments.
    Last edited by jclark11; 01-10-2015, 12:00 AM.

    #2
    Originally posted by jclark11 View Post
    I65k+ of Credit Card debt

    Mom makes 3000 a month

    Dads leaving

    2100$ going to payments.
    Welcome to the site. What does "Dad's leaving" mean exactly? Are they getting a divorce?
    Is this debt all in her name? Or is he responsible for it as well?
    How did someone earning 3K/month end up with 65K in CC debt and a $2,100/month payment and how has she been handling that thus far?

    What are her monthly expenses? Have you sat down with her and created a detailed budget? Obviously, she can't have 2/3 of her income going to CC payments. What is she doing to boost her income? Better job? Second job?

    What is her living arrangement? Does she own a house? Who's name is that in? What other assets does she have?

    Sorry for all of the questions. I doubt that there is any consolidation scheme that is going to fix this so we need to see the big picture. She needs to boost her income. She may need to move. Or she may just need a top-notch divorce lawyer to go after her husband if this debt is really his responsibility.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

    Comment


      #3
      My suggestion is

      1) Cut all CC and start living in cash
      2) Consolidate into one as it is easier to pay just one bank;
      3) $65K / 10 years = $6,500 / year ; $6,500 / 12 months = $542 per month, let's round that to $600. Advise her to pay $600 per month in about 10 years.
      4) Encourage her to sell some stuff she paid for if possible and use proceeds to add to the monthly payment.
      Kill the debt, before it kills you!

      Comment


        #4
        Originally posted by Randomsaver View Post
        3) $65K / 10 years = $6,500 / year ; $6,500 / 12 months = $542 per month, let's round that to $600. Advise her to pay $600 per month in about 10 years.
        I'm sure the minimum payment on 65K is a lot more than $600 even if you drop the interest rate to 0%. How did you arrive at that figure?
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

        Comment


          #5
          If she's getting divorced, she could try contacting the credit card companies to see if they'll put her on a hardship repayment plan. I did this with Chase and Citi, and they lowered my interest rate by about 15-18%; Chase put me on a fixed-payment plan, Citi did not. Some others wouldn't do anything unless I was delinquent on payments (I wasn't), but it's worth trying, and then see about consolidating anything she can't get adjusted.

          Comment


            #6
            Originally posted by disneysteve View Post
            I'm sure the minimum payment on 65K is a lot more than $600 even if you drop the interest rate to 0%. How did you arrive at that figure?
            Not sure where he got his figure but most cards are 2% minimum payment these days. That would be about $1300 / month for a minimum payment. Some cards are 1%.

            The horrible thing about the 2% minimum payment is that it won't even pay the monthly interest on some cards. I got a credit card for some cash off a purchase and the terms of service showed up and showed it had a 29% interest rate (forget which card it was). Is that even legal?

            Comment


              #7
              The minimum payment on $65,000 would be about $1,700 assuming a 20% APR.

              Really, the OP's mother is going to have to get her income up. That kind of payment on a $3,000 income is not sustainable by any means. A second job will be a necessity (not a recommendation).

              The only other option is to prepare for a lot of collection calls, followed by rising fees, interest, and almost certain bankruptcy.

              This is a rough situation and I feel bad for them! However, this calls for drastic measures. Without getting the income up, there really is no way out. They could TRY calling the credit card companies and work out deals, but I wouldn't my get my hopes up (especially with Bank of America owning 3 of those cards).

              Another option is to see if she qualifies for a 0% APR card, however I could only imagine her credit is poor at this point.
              Check out my new website at www.payczech.com !

              Comment


                #8
                To address the debt consolidation question...

                Like I mentioned, she could look at a 0% credit card, however she likely will not qualify. Even if she did, it would not be for anywhere near $65,000.

                She could look into a "debt consolidation loan," however those special loan products usually come with high interest rates.

                If she owns her home, she could look into using the equity (possibly).

                Really, anything that would effectively reduce the interest rate of this debt would help. The interest rates on credit cards is killer!
                Check out my new website at www.payczech.com !

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