What is a good way to get out of credit card dept?

Question

I want to sell my house, then I need to split the difference I get from the sale with my ex husband. After paying off the credit cards it will leave us about $150,000.00 for each of us. I want to pay down the credit cards as fast as possible before we sell the house which my ex husband is not rushing me to sell. Then I want to look into a foreclosure home I can afford to buy. Any good advice from anyone that is familiar with foreclosure homes would be appreciated. Also, are companies that offer to reduce your dept legitimate or is this just another money scam? Please advise.

Answer 1

Lots to talk about here.

As to the credit card debt:

Most of the companies that offer to get rid of or reduce your debt for you are either scams or injurious to your credit scores.  Indeed, most mortgage lenders, in their underwriting guidelines, state that any form of consumer credit counseling must be treated as though it were a Chapter 7 bankruptcy.  It's right in their underwriting matrices.  I've read them.  If your plan in the near future is to get another home loan, then steer clear of these companies.  On the other hand, if your credit score is no big deal to you personally, then these are good options for you.

The best way to get rid of credit card (CC) debt quickly is to use a rollup system.  It's simple to do.  Just find a few extra bucks in your budget somewhere.  If necessary, eat out less, cancel cable, or some such money-saving thing.  Take the extra money, and apply it as extra principal to the CC with the lowest balance.  When that CC is paid off, take all of the money that you were throwing at it every month, and apply all of THAT money as extra principal to the CC with the next smallest balance.  Continue doing this, and your CCs will be paid off rapidly, with nothing but positive impact for your credit scores.

And by the way, from a credit score perspective, never use any more than 50% of the available limits on your credit cards.  Once you go over 50% available credit usage, it begins to drag your credit down rather quickly.

As for foreclosed or in-the-process-of-foreclosure homes, I know quite a bit about this subject.  E-mail me, as the answer is probably too long for this forum.

Good luck to you!