Dear Credit Care,
Due to a reduction in pay, I have been unable to pay my credit card debt and have had three cards charged off, three on current payment arrangements and one charged off that may be heading to legal, though I have not yet received this notice. I was told by a bankruptcy attorney that I am over the median income amount to file Chapter 7 bankruptcy, but I can file Chapter 13, paying $575 a month for three years. This would close all accounts, even those in good standing. I would like to try to go through a consumer credit counseling agency to make arrangements with creditors and keep the current accounts open. Which is best? My credit is already ruined.
There are several options for managing debt, but the key is to consider the long-term impact of each of those options.
It sounds like being able to use your credit accounts again is important to you. With this in mind, you will need to find a way to pay your creditors in a way that satisfies the agreed-upon terms, even if they are new agreement terms. It’s also important to remember that in order to pay down your debt, you will need to refrain from using credit that adds to your debt load.
So, if you have not worked out a spending plan based on your reduced income, I encourage you to do so. Your goals for the plan are to spend less than you earn and to save as much of your income each month as you can. More