Seriously considering credit counseling but before I do.....

[Tattooedfaerie]

My husband and I bought a house exactly one year ago this month but with the purchase of this new house (and a little left from our previous house) we have racked up quite a bit of credit card debt. Exactly 9,588.00 in credit card debt. This is between 2 cards, one has a 14% intrest rate and the other a 18.9% intrest rate. I have never had a late payment on either card and have always paid more than my minimum payment and up until this point I have usually paid them off 1-2 times a year. Of course I have called each and asked for a reduction in intrest rate but all I get is blah, blah....no. I have spoken with credit counseling agency's and think this is going to be my best option as far as ever getting these paid off and also saving me alot of money.

This is my biggest concern however.....I have been a stay at home mom for over 4 years now so we got our home loan solely on my husbands income however, the credit cards are in my name. Our house loan is kind of weird and is set up for payments based at 15 years but we have to refinance every 5 years which would put us at having to refinance in 4 years. This concerns me because the way the credit counseling is set up we would have the credit cards paid off in 4 years or perhaps a little longer. Now it would be way better to have the credit cards paid off by that time (and with the reduced intrest I think we could) BUT if at that point we are still in credit counseling will it affect us being able to refinance?

Another thing to add is that I plan on going back to work very soon. Would it be better to wait until I get my job and can afford to make double and triple payments a month on the high intrest or would it be better to still do the credit couseling and initially lower the intrest and still make double and triple payments and have it paid off in 2 vs. 4 years with enough time to situate for refinancing?

I hope this makes sense. It is really hard to put into words the points I am trying to get out there

Any help or advice is much appreciated!

[mikeee1]

If you can at all avoid credit counseling the better!! It puts a major ding on your credit reports. Is almost as bad as bankruptcy the way it trashes your accounts. I would try to just make the minimum for now until you have some sort of extra income and pile that on the the highest interest rate card. Then when that is paid down hit the other one the same way. Any chance of opening a new low interest card and do a balance transfer? Also in a few years when you have them paid down a bit consider refinancing into a more conventional mortgage to avoid the constant forced refinancing. Hope you can hang in there and it is great you can be with the kids at home. If you can keep doing that more power to you but I know finance stuff is a real stress.

Mike

[credithelp]

With that amount, I would try to pay at least 300 a month. Lets say your minimum payment was 3% of your outstanding debt which would make your minimum payment be 287.64. I used an average interest of 17% between the two. Paying just the minimum would take you 256 months to pay off but by adding a few dollars each month more you could pay it off in 43 months.

If you could pay around 500 a month you coud have it paid off in 23 months which is not bad at all.

So even paying 10 dollars more than what the minimum calls for will really help to pay the debt off much faster.

I would stay away from debt counseling unless it is a last resort. They tend to rip people off.

[cabledude]

I agree and stay away from Credit counseling. It is a huge negative. Check your credit score and see what it is. Check your husbands score as well. If they are 650 or better you have options for better interest rates. Too many folks believe they have no options with other lenders and that is simply not the case. Since the CC are in your name and the overall utilization is high your husband may qualify for the better interest rate. Keep paying as you have and work a better deal for yourself if you have good credit.

If for some reason one of you have a credit score of over 700 you are home free. Just name your deal!!