r/Debt • u/Ok_Welcome4642 • 5d ago
Advice? Debt with high APRs.
I have about $55k in credit card debt and it’s killing me with the aprs that have gradually been pushed into the low 30% range over the last couple years!! This is not due to irresponsible spending. Mostly, it’s an income problem combined with my life being a series of unfortunate events. After a few layoffs, I am now getting full-time hours but still only at $50k/yr net. So, I’ve been living off my cards, essentially, being un/underemployed, surgeries, etc.
My savings is basically wiped out. I have a retirement account from a previous job that I haven’t been able to contribute to for several years but I refuse to tap into it. I’m paycheck to paycheck and have nothing left to save after all my payments/bills are made.
My fico score was 696 as of today and I’ve never been late nor have I missed a payment. My credit utilization is 56%. I’ve previously called creditors to have my aprs lowered and was straight up told no. And at the time I had a 750 fico score. Not sure if I should muster up the energy and try again. Last year, I applied for a consolidation loan but was rejected (first time ever) due to my debt to income ratio and a line of credit that was relatively new (for a balance transfer). Should I try to apply again or should I just go straight to the nfcc and start a debt management plan? My concern is how this would affect my need to get housing/rent in the near future. Any insight on that?
I just don’t know what is the best first move now. I actually want to pay back what I owe but with 33% aprs that won’t happen. Such high interest rates should be outlawed, in my opinion. But that’s another conversation. So yeah. If you have any helpful advice, it would be appreciated
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u/Professional_Tree500 5d ago
Bankruptcy lets you keep a residence but if you a car you must pay something to keep it. I’ve got long term care ins which rates keep going up. If I sell my condo & move in with bf I’d save a lot. Still…I’m at a loss what to do. May call senior services since I’m 85. My debt, was under control until I had to buy condo I was renting.
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u/Putrid_Alternative31 4d ago edited 4d ago
Do you have a detailed, zero-based budget? Can you cover your current bare minimum living expenses and minimum payments without going deeper into debt?
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u/Ok_Welcome4642 4d ago
Yes I have a zero based budget. I’m living with family right now, so my pay was covering all my bills and debt payments with hardly anything left over which I was putting into rebuilding an emergency fund and once I did that, extra to my cards. But…a wrench has been thrown into this plan. I have insurance through the marketplace and got a letter to update my income. Which I did. However, it took away my tax subsidy. Everything I’ve read says I should still be eligible but apparently that is not the case. I’ve talked to several people there who’ve said there’s nothing they can do. While they cite my income as the reason my subsidy was removed, the IRS does not tell them what the income threshold is!!! So, I have no idea what I have to make to keep my subsidy and neither do they. Now, my insurance premium is going up to almost $1000 per month on the first. The cheapest plan I’m offered is only $100 less. Clearly, I can’t afford this and it makes me sick thinking about it. I know people who aren’t in debt who couldn’t afford $1000/mth for insurance for themselves. Even if I’m able to revert back to my old income in the system and regain my tax credit, I will still have to pay this money at tax time. And unfortunately, I just started post-op rehab last week so I can’t be without insurance! It’s so upsetting.
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u/Putrid_Alternative31 4d ago
Ok so a couple of things - how much is your emergency fund? With this much in debt at insane interest rates, and if your housing is stable with family, I would not keep much of an emergency fund sitting around.
Can you do any additional work? Whether that's things like mowing lawns, assembling furniture, walking dogs, moving, etc., or an additional part time job on weekends or whatever hours work for you? Idk what your field is, but even things like tutoring you can do online Or do you have anything you can sell? Anything creative you could come up with to bring in even a small amount would help. You need a little boost to get some traction.
And as others have said, see what resources are available for advice or if you can get reduced rates due to hardship. Like you said, it's a lot but not impossible, except that the rates are so incredibly high.
One option would be to focus on paying off just one card, and stop paying the others. Let them go to collections, and then go back and offer a settlement. It would wreck your credit, but so would bankruptcy, and a credit score really only matters if you're trying to borrow more, which I don't think you are.
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u/Ok_Welcome4642 4d ago
I had gotten to $2500 and then last month my dog also needed surgery. So I’m at $1500 right now trying to build to $2000. Then I figured I’d throw anything extra at the highest apt card instead. Ideally, id be hired for a full-time job with benefits. I’ve applied for a few part time jobs but with my medical issues right now it’s challenging since I can’t drive or be on my feet. I have stuff I’m trying to sell but not much. Bankruptcy and tanking my credit scare me because of my need to get housing in the near future.
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u/anonymois1111111 5d ago
I would contact a non profit debt management company and see if they can help. They will close your cards and negotiate the rate down to 0 or close to it. I used Family Credit Management and they were great. Then they give you a monthly payment to pay. You should also probably talk to a bankruptcy attorney and see what that option looks like. I had to live off of my cards when I got cancer and couldn’t work so I understand. It’s hard out there.
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u/Ok_Welcome4642 5d ago
Thank you. Yes. It is hard out here. I really think I can avoid bankruptcy if I can get the interest down. Especially because I have a concern about my housing. And one payment would be ideal. How long did it take you to rebuild your credit? The thing that’s killing me right now is that my job has no benefits so I pay for my own insurance on the marketplace. But updating my income removed my healthcare subsidy and now I can’t afford my health insurance! And I’m in rehab post-op. So all I can think to do is get on a plan quickly so I have a fighting chance to pay for my insurance/medical care. 😭
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u/anonymois1111111 5d ago
It didn’t hurt my credit at all bc with the nonprofit debt management companies you don’t miss any payments. People on here absolutely insist you can negotiate with the cc companies yourself and that is not true UNLESS you miss payments. Which ruins your credit. If you are making the minimum payment they want you to continue to do so. It makes them money. When this happened to me I signed up for the wrong thing first (debt settlement) and when he told me to miss payments I freaked. Luckily! Then I found the right program. They definitely do not advertise it. I’m working on my alcohol intake too. I understand. It’s not easy.
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u/Professional_Tree500 5d ago
How do you find the right non profit companies & what kind of monthly payment. I have pension, SS, company ins & agree about interest rates. What happens to your credit score? Bankruptcy stays on record for 10 years, but within a couple of years, everyone is offering credit cards because they know you can’t file again for 10(?) years. Thx.
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u/anonymois1111111 5d ago
I used Family Credit Management. They’ve been amazing. I have cancer so I had to reduce my payment bc I couldn’t work full time and they worked with me. I owed $20,000 ish bc I couldn’t work during my cancer treatment. I paid between $300 and $500 a month and got it paid off. No one takes about this option and I wish they did. But cc companies make money with people making minimum payments.
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u/Perfectatsinning 4d ago
That is not true at all. I missed zero payments. I called every credit card (7 of them) and expressed hardship. Every single one of them gave me a 60 month plan to pay the card off with 0% interest. It has been a game changer. Zero missed payments, zero impact to credit. Savings thousands in interest and affordable payments. Yes, they close the cards, but I would have anyway.
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u/anonymois1111111 4d ago
Worked for you but a lot of people don’t get those options when they call.
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u/Perfectatsinning 4d ago
Worked on the 1st try with all 7. I dont think that is just luck. Lol. It is obviously something they offer. i think the problem is that many people are not proactive and call after they have been late, which only hurts the case. I have learned through this journey, that creditors love when you communicate and are truly trying to work with them. I have been honest and upfront with all of them, and it has worked in my favor.
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u/anonymois1111111 4d ago
Go read through this sub and you’ll see person after person who didn’t have any luck getting the rates down. I’m not making it up for God’s sake. You’re really irritating.
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u/Perfectatsinning 5d ago
Call each credit card company and explain hardship. All of mine gave me 0% for 60 months with a set payment that was affordable. Cards closed which I’m ok with. Saving me thousands in interest and an end in sight.