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What can/should I do before my account goes to collections?


hugnkiss2007
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To give some background, I obtained my first credit card (1st Financial Bank USA) in college, and will admit to exercising some terrible spending habits over the last severaL years. I have accrued a few more credit cards (one through Capital One and 3 dept. store cards). Unfortunately, due to my chosen field (social work) and the fact that I work at a non-profit, I have only been making my minimum payment on all cards (though I have never missed a payment and always make payments on time).

The issue is the my position within my agency has just changed, and my already-low annual salary has been reduced by 6,000. This means that beginning next month I will no longer be able to meet my minimum payments. For the capital one and department store cards, the min payments are low enough that I can still meet them (none above $35), but due to an astronomical interest rate and my very high balance, the 1st Financial Bank payment is around 350, which is about $200 more than I can afford to pay each month.

As of right now I am current on my payments, so I'm wondering if there's anything I can do to get ahead of this. I've gathered online that 1st Financial are very strict and not open to workout agreements. I hate the thought of filing for bankruptcy when it's only the one account I can't afford to stay current on. What should I do? Do I let the account go to collections and hope it doesn't lead to a judgement & wage garnishment? Do I file bankruptcy? Please share any advice or personal experience that could be helpful. 

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I also want to add that I have of course considered ways to increase my income. I'm currently looking for a part time job, but my current full-time work schedule and the fact that I'm required to serve several days a month on call (often without much notice) make it difficult to fit a second job into my schedule.

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I'm embarrassed and ashamed to say that the balance is 10,300. Like I said, I had some pretty terrible spending habits. If only I knew then what I know now! I've been reading a lot on the forum today and see lots about settlements, but unfortunately I don't think that would be an option for me because I don't have the $ for a lump sum. Also, I gather I would need to be a few months behind for them to consider a settlement, and as of right now I am still current. 

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I was afraid of that. :( I have considered consolidation for a lower interest rate (the 1st financial bank interest rate is super high at 29.9%), but with my poor credit didn't think it'd be likely that I'd qualify for a consolidation loan. 

 

See if you can get a consolidation loan. If you are denied then I would speak to a BK attorney ASAP.  They can help you craft a plan to get out of this.  Sometimes living with the pain of a BK for a year or two is a lot less than 7+ years of collections, calls, letters, threats of lawsuits, garnishment, levy, and bad credit.

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I was afraid of that. :( I have considered consolidation for a lower interest rate (the 1st financial bank interest rate is super high at 29.9%), but with my poor credit didn't think it'd be likely that I'd qualify for a consolidation loan. 

 

The worst they can say is "No".  I would at least check into it.  Try and get all your cards consolidated, that might help.  Otherwise, yeah, bankruptcy or you could (idea, not recommendation) stop paying and instead put as much as possible each month into a savings account so that when this does go into collections you have a lump sum available to offer as a settlement.

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