Jump to content

21k in credit card debt. Need help.


bobabood
 Share

Recommended Posts

Hi, I'll try not to make this too long but I'm currently 26 and a full time undergrad student.

In 2005 I dropped out of college after 1 year to play online poker full time (great idea I know). Did relatively well and had about 300K by late 2009. Took some bad advice and invested 150k with someone who was supposed to be very conservative with it. Over the next year I took a beating at the tables and in general spent too much and lost the 150k I had left over. This would have been OK except that the guy I invested with ended up losing almost all the money I gave him in 1 day in 2010. I only got back enough money to pay off about $20k in taxes that I owed for 2009. I also had about 17k in credit card debt that I planned to pay off with the money the guy lost but obviously that money was all gone.

I moved back in with my parents and reenrolled in school full time. I've been taking 22 hours/semester to try and finish as quickly as possible but it's going to take me 1 more year before I'm done with school. For a while I was selling everything I had and doing whatever I could to keep up with min payments but several months ago I just ran out. My current debt is 21k, all on one credit card. I haven't made any sort of payment in 4 months and they are charging me about $600/month in interest and fees. With the amount of school I'm taking it's hard to work more than just enough to cover my bare essentials (plus I have extra tuition above my loans and scholarships because of the amount of hours I'm taking, not to mention books etc.). I have no intention of filing for bankruptcy or anything but I won't be able to put a solid dent in my debt until I can go to work full time once I graduate.

Is there any way I could get this debt deferred for a year and get the interest % lowered so that it isn't 8-10,000 higher by the time I graduate?

I know I screwed this whole thing really badly, but I attend a pretty good University and have close to a 4.0, so I feel like the fastest way to paying off my debt is to graduate as quickly as possible rather than cut back on school hours to work more now, at a low hourly rate, just to keep up with the min payments. Sorry this ended up being so long but I would really appreciate any advice at all as this has been eating away at me for a while. Thanks.

Link to comment
Share on other sites

The short answer is -generally no. The CC company is not going to defer for you to finish school. In fact, since you are 4 months behind, expect them to file suit...you're in college and might land a decent job after graduating and they want to be able to attach your wages for the next 10 to 20 years.

You could call and see what they could lower rate or payments, but expect them to want a hefty lump sum settlement of 50 to 70% of the balance.

In your place, I'd BK it...you've got no assets, little wage income (assuming here) and you've learned your lesson. Save up and file Bk7.

Link to comment
Share on other sites

Have you checked out the hardship program the cc co has? You have to get in touch with them directly. You may have already gone past the time allowed to enter the hardship program. FYI, these are hardship programs directly with the credit card issuer and not a third party. The interest rate is reduced anywhere from zero to 6% depending upon the hardship program your creditor has in place and your particular hardship. In exchange, you close your account and allow an auto draft from an account for monthly payment. You re-up either every 3 months, six months or annually depending upon the program. (Don't have them draft from your main bank account, set up a separate account just for this payment). You have a relatively small debt and you are very young, filing BK under those circumstances is not the best thing IMHO.

Then check out Dave Ramsey's book/website and beans and rice your way to pay off the debt.

Edited by Denita
Link to comment
Share on other sites

I may have misunderstood your situation, but am I to understand the only debt you have is 21K on a credit card?

Yes, you could nuke it in BK, but since it sounds like you don't want to do that and you have no student loan debt, have you considered taking some on?

Could you take on student loan debt to pay in full or catch up and make the payments on the credit card? In essence, replacing the credit card debt (dischargeable in BK) with student loan debt (which cannot be discharged in BK) either immediately or by rolling it over time.

The advantage of the student loan debt is that it would be defered as long as you are in school, and generally has a lower--sometimes much lower--and possibly subsidized interest rate. Also, as I understand it, the amount you're required to pay each month after graduation may be capped as a percentage of your income plus you may be able to obtain hardship deferals if needed. Try to get that from a cc company.

Also, the payoff or payment history applied to the credit card would actually help your credit rating which could also help your job prospects after you're done with school and provide lower rates for insurance, financial products, etc.

You'd have to balance the risk/reward ratio and decide, but it seems to me a viable option. Just remember that student loan debt cannot be discharged in BK.

Check with your financial aid office--they see all kinds of situations and they're usually pretty good at coming up with alternatives and they may know of some programs that will assist you. Plus, of course, they have a vested interest in keeping you school.

Good luck.

Link to comment
Share on other sites

Many sperm banks are looking for high gpa college students. the pay could be enough to make credit card payments. I am being serious here because you could actually turn something that is thrown away into cash.

I mean we are all adults here, if you could do something people consider fun and make cash while paying a bunch of greedy people then the karmic balance just seems right.

and if the CC company duns you you can tell them to get the assets directly.:lol:

Just saying the use of unconventional CC warfare is a good thing.

Then you can write a book about it.

Many college girls get their eggs harvested to pay for college, why not do the same.

On that note how come egg harveters pay more money for eggs than the male sperm anyway. they both contain equal dna strands. Blatent discrimination.

Edited by Seadragon
Link to comment
Share on other sites

The short answer is -generally no. The CC company is not going to defer for you to finish school. In fact, since you are 4 months behind, expect them to file suit...you're in college and might land a decent job after graduating and they want to be able to attach your wages for the next 10 to 20 years.

You could call and see what they could lower rate or payments, but expect them to want a hefty lump sum settlement of 50 to 70% of the balance.

In your place, I'd BK it...you've got no assets, little wage income (assuming here) and you've learned your lesson. Save up and file Bk7.

Hey thanks for taking time to read and reply. I think I misspoke when I said defer. I meant more along the lines of if it were possible to maybe just pay interest for a year until I graduate and then I can start knocking away at the principle once I start working full time.

It really does not sit right with me to file bankruptcy. It might be the gambler in me but I borrowed the money, and despite my best intentions, this is no ones fault but my own. Also isn't it near impossible to do basic things like rent an apartment once you've gone through bankruptcy?

Link to comment
Share on other sites

Have you checked out the hardship program the cc co has? You have to get in touch with them directly. You may have already gone past the time allowed to enter the hardship program. FYI, these are hardship programs directly with the credit card issuer and not a third party. The interest rate is reduced anywhere from zero to 6% depending upon the hardship program your creditor has in place and your particular hardship. In exchange, you close your account and allow an auto draft from an account for monthly payment. You re-up either every 3 months, six months or annually depending upon the program. (Don't have them draft from your main bank account, set up a separate account just for this payment). You have a relatively small debt and you are very young, filing BK under those circumstances is not the best thing IMHO.

Then check out Dave Ramsey's book/website and beans and rice your way to pay off the debt.

Thanks for the response I really appreciate it. I had not heard of a program like this but it was the kind of thing I was hoping to find out about. Ideally I would like to make small payments to keep up with the interest and not ruin my credit any further than it has been already. Then once I graduate I could start putting a solid dent in the principle.

Since I haven't made a payment in a while do you think I could still negotiate with the card issuing bank? I do have have a few hundred, up to $1000 I could make a payment with that would maybe show them I'm trying to do the right thing. Any other information about a program like this would be great.

Link to comment
Share on other sites

I may have misunderstood your situation, but am I to understand the only debt you have is 21K on a credit card?

Yes, you could nuke it in BK, but since it sounds like you don't want to do that and you have no student loan debt, have you considered taking some on?

Could you take on student loan debt to pay in full or catch up and make the payments on the credit card? In essence, replacing the credit card debt (dischargeable in BK) with student loan debt (which cannot be discharged in BK) either immediately or by rolling it over time.

The advantage of the student loan debt is that it would be defered as long as you are in school, and generally has a lower--sometimes much lower--and possibly subsidized interest rate. Also, as I understand it, the amount you're required to pay each month after graduation may be capped as a percentage of your income plus you may be able to obtain hardship deferals if needed. Try to get that from a cc company.

Also, the payoff or payment history applied to the credit card would actually help your credit rating which could also help your job prospects after you're done with school and provide lower rates for insurance, financial products, etc.

You'd have to balance the risk/reward ratio and decide, but it seems to me a viable option. Just remember that student loan debt cannot be discharged in BK.

Check with your financial aid office--they see all kinds of situations and they're usually pretty good at coming up with alternatives and they may know of some programs that will assist you. Plus, of course, they have a vested interest in keeping you school.

Good luck.

Hey thanks for the reply I appreciate you taking time to write all that out.

I actually do have some student loans since I started re-attending school this past fall. Tuition runs around 31k/year. I get an 11k/yr scholarship from the school and another 5.5k/yr from the Pell Grant. The other 14.5k is covered by student loans. 4k Perkins loan, 6k federal unsubsidized loan and 4.5k federal subsidized loan. I was thinking that maybe I would be able to borrow some more privately, but since my credit is probably shot already I don't know if that would even be an option. I have no intention of filing bankruptcy so taking on some more student loans doesn't bother me. Since I plan on finishing school by next spring the total amount I will owe should only be around 30k which isn't too bad. Currently I am also paying out of pocket an additional 1-2k/semester because I'm taking over 18 hours which is the max that normal tuition covers.

Regarding some of your other comments I actually had some questions. You mention good credit helping my job prospects. I've heard that some employers will do a credit check on applicants. I didn't know if that was true or not but your post sounds like it's a definite possibility. Is it possible I could not get hired somewhere because of the mess I've made with this? I'm majoring in finance and it's already hard enough to find jobs. Not to mention a huge gap in my resume where I basically did nothing but play poker for a few years. Also do you think it is a good idea to talk to someone at my school about this? I'm very nervous about letting anyone else find out, but if you think they might be able to do something to help me I would be open to the idea. Thanks again for your help.

Link to comment
Share on other sites

Many sperm banks are looking for high gpa college students. the pay could be enough to make credit card payments. I am being serious here because you could actually turn something that is thrown away into cash.

I mean we are all adults here, if you could do something people consider fun and make cash while paying a bunch of greedy people then the karmic balance just seems right.

and if the CC company duns you you can tell them to get the assets directly.:lol:

Just saying the use of unconventional CC warfare is a good thing.

Then you can write a book about it.

Many college girls get their eggs harvested to pay for college, why not do the same.

On that note how come egg harveters pay more money for eggs than the male sperm anyway. they both contain equal dna strands. Blatent discrimination.

Haha you definitely gave me a good laugh, but on a serious note I'll actually check it out. I always like the idea of monetizing my hobbies, and I've been mastering that particular hobby for over 10 years!!

Link to comment
Share on other sites

Also I posted this on another forum and someone asked about how the guy I invested in lost 150k in one day. Some of them thought that I might still have a chance at recovering some of the funds so I thought I would share here as well and see if anyone has any experience with something like this. I know very little about options trading, and after this happened I spoke with a few traders and lawyers all of whom told me that they've never heard of anything like this happening but didn't think I would be able to recover any money. Below I'll copy and paste what I wrote on the other forum:

The guy I invested with was actually trading S&P options. What he would do it write far out of the money SPY options (SPY I believe is an e-mini stock based on S&P performance) and then buy slightly further out of the money SPX options in equal proportion to cover. So basically he was setting up really far out of the money option spreads and just collecting the small difference in premiums when they all expired worthless. I know very little about option strategy (which is why I never should have invested) but it seemed to me at the time like it wasn't terribly risky, and the most I could lose is the difference between the options he was writing and the ones he was buying.

The day he lost it all was actually on the "flash crash" day in 2010 (I tried to add a link but forum won't let me, so try google if you haven't heard of it). He was using Interactive Brokers and when the market crashed obviously all the prices on my options went through the roof. Interactive Brokers immediately made a margin call, but there's no way I could fill it in the few seconds they gave me, and they immediately began to liquidate all my written options for 10-30x what I had written them for. I wouldn't have lost more than 15-20k if they had also liquidated the options I had bought to cover my shorts because prices on those were just as high, but since options you buy aren't any risk to the broker since you pay for them upfront they just left those alone. All of this happened in less than 10 minutes and by the time it was over all my bought options had returned to normal levels and I had lost almost 90% of my account value. After speaking with a lot of other traders and a couple lawyers it seems like Interactive Brokers were the ones who really screwed me. They said in all likelihood IB has traders that were on the other ends of those trades that made a killing off me, and that they shouldn't have liquidated just my shorts in such a crazy moment but that it was their right to do so, so I have no case to sue. The guy who was I invested with also handled the whole thing really poorly, and just kept saying that they will reverse the trades and everything would be ok. He was very unapologetic and did nothing to help in dealing with IB and eventually wouldn't even return my calls for days at a time. I would sue him but as far as I know he lost basically everything he had as well and is pretty broke. That's probably the best I can explain it, let me know if something doesn't make sense

Link to comment
Share on other sites

Yes, I do think you should talk to your financial aid office and, no, I don't think it''s anything you should be bothered by sharing with them. Trust me, you are not the first person nor the last in this situation. Most financial aid offices are set up to provide a wide variety of assistance and the absolute worse that could happen is they say, sorry can't help.

As far as your credit goes, late payments on a credit card while you're in school are hardly going to be fatal to your job prospects, although it would help not to have a charge off. Credit report pulling for employment is going to vary, but since you're majoring in finance, you will want to be aware that charge offs or judgments may be a very bad thing for job prospects, particularly if you are applying for a job which has fiduciary responsibilities. Charge offs could be a problem, for example, for any job acting as an agent or broker where you'd be responsible for client payments or money.

I wouldn't worry about it too much, it's just one factor in many. But it would be a good idea to nip this problem before it spirals out of control. BTW, I think it's smart to do anything you can to finish school. The absolute worse place to be is "some college" on an app or resume. You'd be effectively shut out of any decent paying jobs and you'd have a hard time finding a lower level job because employers will think you're "too smart" to be tossing freight off a WalMart truck or whatever and they won't want to hire you.

A lot of your education is what they don't teach you...I learned more defaulting on my student loan than I did spending it. Good luck.

Link to comment
Share on other sites

Student loans are very rarely discharged in bankruptcy for public policy reasons. If one could easily get rid of their student loans just by filing bankruptcy, the whole student loan program and bankruptcy court system would collapse due to the large number of people who borrowed thousands to pay for college and then filed for bankruptcy to get rid of the debt.

This does not mean that one cannot have student loans successfully discharged in bankruptcy. It is just very difficult to accomplish. Student loans cannot be discharged in bankruptcy unless (1) they have been in repayment for at least seven years; or (2) the debtor can prove that he or she has a permanent diminished capacity to earn a sufficient income to pay back the student loans.

For example, (1) above means that you must be paying back your student loans for at least seven years before you file bankruptcy. The seven year period does not have to be one long, continuous stretch of time; it can be a combined total of seven years in repayment mode. Periods where your student loans were in deferment because you were in school or unemployed don't count. This doesn't mean that anyone who has been paying their student loans back for seven years will automatically have them discharged in a Chapter 7 bankruptcy. Unless one can prove that he or she will not have the ability to repay the student loans back in the foreseeable future, they will probably not be discharged in bankruptcy. Being underemployed or unemployed doesn't qualify. If the judge thinks you could get a job that would pay you enough to be able to repay your student loans, they won't be discharged.

Student loan debt can be discharged in a Chapter 7 bankruptcy if one can prove that he or she cannot repay the student loan debt because of some permanent, irreversible condition that prevents one from ever earning enough income to repay the debt. For example, suppose you incurred $100,000 in student loan debt to pay for law school, but three years afterwards, you were in a car accident that permanently diminished your intellectual capacity and you are no longer able to practice law. Your only employment for the foreseeable future is limited and your earning capacity has been reduced by 70 percent. A bankruptcy judge would probably discharge your student loan debt in this situation if you don't have the money to pay it back and can't earn enough in the future to pay it off without creating a hardship condition.

Now change the example above so that your injury in the car accident was physical and not mental. You are now paralyzed and in a wheelchair but your intellect is just fine and you will be able to practice law again in a year or two. Will your student loans be discharged? Probably not, but the student loan program would defer repayment until you completed rehab and found a position as an attorney.

If you should decide to try and get student loan debt discharged in bankruptcy you must hire an attorney and not try to do it yourself. Make sure you hire an attorney who can produce case records proving that he has successfully gotten student loan debt discharged for clients in the past. Ask for proof because many attorneys make empty promises telling you they can get student loan discharged when they know they can't, so don't believe them unless they can produce case files showing they have done so in the past.

Edited by racecar
Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.. For more information, please see our Privacy Policy and Terms of Use.