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Question: $125,000 Credit Card Debt?

We are a married couple, both are 32 year old, we lost jobs 2 years ago & came up with $125k unsecured debt. Now both are working & our monthly income is around $6k before tax, which is $4500 after.
Our expense for home rent, car payment, … is about: $3500. So what remains is $1k to pay minimum payment of credit cards, which is much higher than that; however we do not have any late fees so far.
We do not want to go to any program that affects our credit scores as both of us now have professional jobs with the very good income potential in 6-10 years from now.
We have been thinking of the followings:
-Enrolling in a debt consolidation program & pay $7k over 3 years instead of $125k in the cost of our credit
-Enrolling in a “hardship” program & pay $155,k ($125k + interest) over 5 years & save our credit. (monthly payment 3K)
-Finding another better way!
We would appreciate if somebody tells us which of the options is better for us & why?

With warm regards,
Simon

Answer: If you are still able to obtain credit, try to get as many credit cards that offer 6-12 month 0% promotions as possible. Transfer as many of the balances as possible, which may cost 3-5% of the amount of the balance. Pay down the remaining higher rate credit cards so that you are reducing the principal balances.

Usually, once you transfer a balance away from a credit card company, they will offer you a promotional rate to carry a balance with them again. If you are able to start moving balances, you may find that you are getting offers from your existing card providers for relatively low rates, which will allow you to begin paying down principal instead of simply paying interest.

I would be very wary of any “fix” that will show up on your credit report (i.e. settlement, bankruptcy, etc). As a Banker, I am always very reluctant to lend money to someone that has walked away from their obligations without a VERY good reason. On the other hand, if someone has worked hard to dig out of a difficult situation, that speaks favorably to their character and I am much more willing to lend money to them. Remember that the “easy” way out is rarely easy…

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