Starting a discussion here since there wasn’t much feedback in the weekly thread. I’m a 30yo male, NYC resident, living in a rent stabilized apartment through a city-subsidized affordable housing program. FICO is somewhere in the 650s. My spending habits have not been great for years, and I recognize that and know that things need to change.
Unfortunately, I've amassed $50K of credit card debt over the last 10 years. Never missed a payment, paid cards off several times, but my bad habits + random large expenses mean the debt has always crept back. I took out one personal loan a few years ago in desparation, with an interest rate that's only marginally better than the debt that was consolidated to it. I have $17K left to pay on it as well, making the total debt in question around $70K. I also have around $20K federal student loans, but the normal interest rate is very low, and is currently 0%.
I've taken 401k disbursements to try to reduce my debt in the past. This helped in the short term but I'm still in a bad situation, and don't want to go this route again. Also, my 401k balance isn't high enough to take advantage of a 401k loan to fully consolidate the debt.
Two weeks ago, my dog required emergency vet care, and ultimately passed away. This cost me around $7K (along with an immeasurable emotional cost), and I simply can't keep myself above water for much longer with this new expense factored in. I had been making minimum payments on all but one account, but then putting most daily expenses back onto that account because I’ve been throwing all of my actual money at debt - I haven’t even been able to save much, outside of my 401k and HSA contributions.
Moving back in with my parents is something I’ve considered, but they live 1,000 miles away, meaning I’d likely have to find a new job, as mine is no longer fully remote as of this month. Cheaper housing really isn’t doable without moving significantly farther away from work, which involves more commuting expenses, more time away from home, or both. The other option would be to find roommates, but that would also involve moving as I’m currently in a small 1BR apartment, unless a significant other moved in, but I’m currently single. I’d also like to keep my apartment since it’s part of the affordable housing program mentioned above, which comes with significant benefits such as city-determined annual rent increases, automatic lease renewal, and other tenant protections.
Unfortunately my career doesn't allow me to have a second job, but I do enjoy my work and see a path for upward movement, so I would hope to stay. I make $71k/yr before taxes, and I’m not sure where I could go to make more money, other than some sort of commission-based role, or something that would require additional education or certifications. I do have a few alternative income streams such as selling plasma, occasional paid photography gigs, and I have been selling unused posessions, clothing etc. instead of donating them. This helps, but I barely saw a light at the end of the tunnel before these emergency vet expenses, and I really don't see it now.
I’ve tried to get myself out of this situation on my own, and I’ve recognized that it’s a problem for awhile now, but the vet expenses reallllllly made me realize the unsustainability of it all. I told my parents about everything. They have excellent credit and my father agreed to co-sign for a personal loan with me, but unfortunately, we were not approved by either Lightstream or SoFi. We discussed the situation with SoFi, who suggested reapplying with my father as the primary applicant and myself as the co-applicant, but were still denied. Is my situation really seen as enough of a risk that my father’s 838 FICO is not enough to get us approved?
How else do I get myself out of this hole? I've called my creditors myself to ask for hardship assistance in the past, but Discover was the only company to offer anything - they lowered my APR to 14.99%. My situation was different then (able to make minimum payments, just hoping to chip away at my debt faster via a lowered APR or some other sort of assistance), so maybe it’s worth calling them again?
I’ve also considered debt settlement programs before, but really don't want to go this route if I don’t have to. Most of the feedback I've seen on these programs has been negative, but the last person I spoke with about settlement said most of the negative feedback is from people who don’t understand how the program works, and end up getting upset with the settlement company when they start getting late fees or other negative communication from their creditors. I likely won't have any big purchases coming up in the next few years, but also don't want to further run my credit score into the ground if I can avoid it, or to find myself unable to bank with Chase, BofA, Discover, and CapitalOne after finishing the program.
I guess bankruptcy is the ultimate option, but I haven’t even explored this as I hoped I’d never have to consider it.
After rent, utilities, phone bill, student loans and groceries I'm left with around $1400 per month. Health care, HSA, 401k and transportation costs are all paid pre-tax. Unfortunately this $1400 ends up going entirely toward paying down existing debt, meaning that most of my other daily expenses (takeout, subscriptions, going out with friends etc., all of which I’m cutting back on) are currently on credit.
I was hoping to consolidate everything to one personal loan with a payment of no more than ~$1200 (<10% APR for 60-84mos, with my parents cosigning) while ramping up my side income streams. meaning I could use cash to cover any other expenses and avoid further increasing my credit card debt, but the two denials have me in a bit of a panic, and I'm not sure what to do. My parents have some funds available via a home equity line of credit at a very low APR, which they also offered to me, but this also isn't enough to fully consolidate my debt, and I wouldn’t want them to max the line of credit out.
TL;DR: $70K in debt, all of my income is currently going towards minimum payments (+ extra on one account), but I'm barely treading water, and just incurred $7K in emergency expenses. Parents have excellent credit and cosigned for personal loan to consolidate all debt, but was still denied. Do I have other options besides debt settlement or bankruptcy?
Submitted October 03, 2021 at 10:45AM by Joscosticks https://ift.tt/2Ya94tW
