Bill, I ran up a lot of credit card debt. I own a home, but owe as much as it is worth. I making my mortgage payments on time. I make decent income. My credit score is 615. My score used to be better, but I my debt levels are much larger now. All my money goes to paying my bills and the high interest is killing me. With some of my fixed expenses rising, like gasoline to get my job, I am down to making minimum payments on my bills and getting nowhere. What kind of help is available to help me? I'm stressed out.
My quick recommendation is that a Consumer Credit Counseling Service is the first solution you should investigate to solve your debt problems. You will benefit from the free budget analysis this type of debt counseling provides and find out how much they can lower the interest on your high-interest credit cards.
Your 615 FICO score eliminates a debt consolidation loan as a solution. Paying it off on your own is not going to work if you are only able to make minimum payments. Very little of your payment will go to the principal. It is going to be a long and expensive route, unless you find a way to cut expenses or raise income, and then pay more than the minimum payments.
These factors lead me to put a CCCS as the primary solution to investigate.
Consumer Credit Counseling Services offer a two-pronged approach to getting out of debt. A good Consumer Credit Counseling Service can help you get of debt faster and at a lower long-term cost. Consumer Credit Counseling Services are especially effective for someone, like you, who has high-interest credit cards.
A Consumer Credit Counseling Service can provide you a way to escape the financial treadmill of making timely payments without seeing your balances coming down. It can provide a way out of the “minimum payment trap.” A DMP could help you greatly, depending on the interest rates the program can get in place with your creditors. The credit counseling firm will tell you in advance what rates they can get in place with your creditors and then offer a monthly payment that includes all their fees. The standard program runs 4.5 to 5 years, far shorter than how long it would take you making minimum payments.
Based on the debts you have and an analysis of the available options, I recommend that you speak with a reputable Consumer Credit Counseling Service, to hear exactly what kind of plan can be put together. Here are the main benefits I see for you: