Credit and Debt Blog

(Yvonne from North Carolina) my husband and i have about $15,000 in credit card debt. i lost my job & his hours have been cut so much so that we cannot make even the min. payments. interest rates & finance charges are outrageous.  HELP, What do we do ?

Dear Yvonne:

Your situation is similar to that of many families that have found themselves suddenly unable to afford their monthly debt payments due to a big drop in income. It certainly makes it difficult to manage the same amount of expenses using less money.

First, let’s look at some of your options that might help with your immediate needs:

• Given that you have a relatively high amount of unsecured debt and that you are having trouble meeting minimum payments, you should seek credit counseling immediately. If a debt management program is feasible, you might be able to reduce your payments considerably to the point that you can eek by for a few months until your income begins to pick back up. If a debt management program is not feasible, then your credit counselor can discuss additional options.
• If you need protection from creditors that are pursuing legal action against you, then an attorney can discuss various options under the bankruptcy code. These options can depend on your household income, the average income where you live and your total indebtedness. One type of bankruptcy might be more advantageous over the other depending on your assets, laws in your state and your long-term income.
• You might find that certain unneeded assets could be sold to help you pay off some of that debt, thereby freeing up your monthly budget to where it might be better balanced. Examples may include a boat, motorcycle, extra car or even collectibles.
• Nontraditional sources of income might also help you raise some much needed income. Some single debtors might consider a roommate option. Since you are married, you might look for other possibilities, such as helping with child care or other odd jobs in your neighborhood.
• Finally, you might want to look at the laws in your state to see what types of legal actions are possible. Since you are in North Carolina, you might be particularly interested in the fact that private creditors cannot currently obtain levies or garnishments against North Carolina residents. Of course, you will need to verify your legal options on your own or with the help of qualified legal counsel. Perhaps riding out the tough times is an option, in which you would pay the price for your lower credit with higher future borrowing costs and other related consequences of damaged credit.

Whatever option you go with, you should take action now