AboutRegan Shinski Expertise I can answer questions on collections, repossessions, bankruptcy, credit repair, credit counseling, FICO scores, credit planning, and the cause and effect of credit related decisions. I can also answer questions on collection settlements and preparing to sue your creditors for false debts and credit reporting.
Experience Fifteen years ago I was financially devasted due to severe health issues. I filed bankruptcy, had a foreclosure, car repossession, tax lien, and ruined credit. I immersed myself in credit law. I settled dozens of accounts and had them removed to improve my credit. I personally sued four creditors and collection agencies and won cash settlements for their false reporting on my credit reports.
Since then, I have completely recovered and have nearly $100,000 in revolving credit lines and perfect credit. I have owned a credit repair company for the past five years and have an additional three years of specific work in the collections and debt management industry.
I am fully versed in the Fair Debt Collection Practices Acts (FDCPA), Fair Credit Reporting Act (FCRA), and have used them successfully in collection settlements and lawsuits for myself and others. I am also familiar with and abide by the Credit Repair Organizations Act (CROA).
I have deleted or helped delete literally hundreds and hundreds of derogatory items from consumers' credit reports and helped negotiate many settlements with collection agencies and creditors. I have also advised people on bankruptcy at any stage.
In the current credit market, I have successfully advised numerous people on how to obtain credit and how to negotiate for better terms.
Education/Credentials BA - University of Minnesota
Here's our dilemma: We own a home and can afford to make our payments. Our monthly expenses are manageable and we both earn decent incomes, although salaries have been frozen (OT limited also). While my credit card debt is less approx $1,000, my fiancée was not so careful. A few months ago, she told me her debt was $24K and my knees buckled. Now, five months later and with little additional spending, it's up to $28K.
Obviously, we need to pay down this debt, while watching for unexpected costs (repairs and the like). We do not live extravagantly, and have eliminated many costs. I have approx. $7,000 held aside for emergencies, and there’s another approx. $20K in an IRA. She has approx. $150K in a 401(k).
What should we do first? My guess is that we need to call her credit card carriers, but what’s the best and/or most effective approach in dealing with them? What about credit counseling services? Obviously we'll avoid dealing with debt consolidators, but can you recommend a trustworthy service (or direct us to a resource center)?
Any and all ideas are welcome! Thank you for your help.
Answer Dear Lew:
I'm not exactly sure what you are asking because you said you can currently make all the payments. The simple answer is to just keep plugging away at debt, keep the expenses on the cards down, and pay them off.
Personally, I would see if she can cash out some 401k money and pay off the cards. It will likely cost her at least 10% in an income tax penalty, but that is probably offset by the interest savings of getting the debt paid off.
You can contact her creditors and ask for better terms. The thing is unless these are already high interest rate cards, there will not be much movement from them. Sometimes closing the cards will entice the creditor to give better interest rates. I know of at least one major bank that is offering to reduce rates to 6% or less if the card is closed.
I do not see value in any credit counseling or debt consolidator companies. If you can't pay off the cards quickly, a consolidation LOAN may be beneficial. However, I'm sure you know the biggest trap is paying off the cards with a loan, only to re-charge up the cards and be stuck with BOTH.
Bankruptcy could could stop interest and spread payments out, maybe even discharge the debt. I strongly discourage this in your case. You said you can handle the payments and with the reserves you have you would likely be in a chapter 13 at best. It destroys your credit and just doesn't give you enough benefits to offset the negative things it causes.
Finally - and understand this is from a third-party person who doesn't know anything about you or your fiancee so don't take it personally - I can't help but notice you said fiancee, not wife. In virtually all cases in all states, YOU do NOT have much protection here. Her reserves are larger and the cards are in her name. I'm sure this the woman you will spend the rest of your life with, but until you are married, these sound like her debts. I would just offer a word of caution in using all your savings to pay these cards. If something really bad happens (God forbid breakup, loss of job, death, etc.) you have little rights until you are married. I think she should cash out some 401k to pay her debts.
