15k in debt, which card to tackle first?

[Apheod]

Hello, I've read around a bit on here but this is my first post. I have an 8000 dollar balance on a Washington Mutual (Providian) card, with about 18 percent interest, a Discover with an 1100 dollar balance, and about 20 percent interest, and a Chase with about 6600 and 30 percent interest. All 3 are about 2 months deliquent now.

I recently cashed out my 401k, and together with what I get at Christmas time, and what little I can save, I should have around 4000 cash to work with. What I'm unsure of, is whether i need to first set my sights on settling the Providian being that it has the highest balance, or the Chase, since the interest is insane.

I'm not making much money at all now, my hours at work were cut to where I'm only getting 5-10 hours a week, but it will pick up around the holiday season, and I have been trying very hard to get a better paying job, so it is possible after settling one, that I could get current on the others and pay them off.

My credit score is about 500 right now if it makes any difference, so I'm not worried about settling affecting that. I have been current on making payments on an unsecured loan I have for my vehicle, and my insurance. I had to move back in with my parents because of this, so I don't make house payments. Will being current on my unsecured bank loan affect a companies willingness to settle? Are there any other things I need to consider?

Thanks a lot for any help.

[Apheod]

I also read on here that Chase will not deal with, or even speak to you once they turn you over to collections. That is done after it's been 3 months since your last payment, correct? About 5 months ago I had another 2 month lapse in payments, because I lost my job and had trouble getting another one, will this make them turn it over sooner?

[swirlgirl]

How much money do you have now? Do you have enought to bring the Wamu and Chase current, and pay off all of the Discover? Have the accounts been closed? If they are still open, you want to do your best to keep them open.

[Apheod]

I have about 2500 now, Chase and Providian are both wanting about 500 each to bring them current. I could bring them both current and pay off the Discover but it would only leave me with about 500. My monthly car payment is 240 and insurance is about 100. I'd be in trouble again next month if I did that and had no luck with another job.

Could you explain a bit why I should pursue paying off the Discover first and letting interest stack up on the others? They are all still open accounts.

[swirlgirl]

I'm no expert, but paying off the Discover is achievable, while the other are not right now. It's better to have one completely paid off than to have all three deliquent and accruing more interest. No matter what, you'll still have to pay the interest on the other two because you can't pay them off.

Also, you will need more income regardless. Have you looked into a second job? With the holidays coming, all of the retail stores are hiring extra staff.

[Apheod]

Right, but I'm not overly worried about the amount of interest building up on the Discover, once I get a better job I can pay it all off with one paycheck.

That 30 percent on the Chase is killing me, that adds up to over 160 a month in interest alone. if I'm going to do anything with the money I have now besides settling, it's going to be to throw as much as I can at that card.

Unfortunately, with the job I have now, a second one isn't really an option. I was working 35 hours a week up until a month ago, when they hired another installer. I install car audio and alarms at a local Circuit City. Now I only get 5 hours a week, one day, but in a few weeks it will pick back up to 35-40, maybe more with the holiday season, everyone wanting remote starts for the cold weather, etc. However, after the holiday season, it will likely be the same as it is now, which is why I'm trying so hard to get another job.

[Apheod]

Is this a feasible situation where I could declare hardship and maybe get my payments suspended for a few months? From what I've seen, that's mainly for injury or loss of employment that isn't my fault.

[lisajt66]

I watched an Oprah show today and the guest was Suze Orman a financial expert. She said

always pay down the card with the highest interest rate first. "I think one of the biggest mistakes people make is that they don't know how to pay down credit card debt and they pay the one with the biggest balance first"

Check this out...

http://www.oprah.com/tows/pastshows/200710/tows_past_20071031.jhtml

[MaxedOut]

Not sure I have a full understanding of your situation, but I will give a crack at it anyway.

In my opinion, it is best to do whatever you can to keep the cards from closing and going to collections. You do NOT want that if you can avoid it. Paying a few hundred (again, in my opinion) in interest for a couple months is FAR better than allowing any accounts to get too far behind or go to collections. Avoid it at all (reasonable) costs.

Call the card companies and see if you are eligible for any hardship programs and what you need to do.

If you are pretty certain about getting more hours soon, pay all of the accounts CURRENT, suck it up and deal with the interest payments for a few months, and then pay them down once the income starts flowing again. A few hundred in interest to keep them open is WELL worth it when it comes to the headache you will be saving yourself credit wise over the next few years if they go to collections.

Hope this helps, and good luck!

[Dette]

Yes, call all OC's and ask for hardship program, ask for lower interest rate, I did this once with an MBDA card and they droped the interest to like 10% from 25%.

Make payments so you don't fall further behind and save some of your cash for the weeks in the future that you won't have big paychecks.