Huge Credit Card Debt, but a windfall coming - what do I do?

tall_tom

Hi,
I'll start be saying... great site and wonderful advice! I've been in debt at various times in my life and this time it fells like I have a found a friend to tell me it's not the end of the world and give me get advice about what to do about it! Thank you!

On to my dilema. I have been off work for 8 years with depression and in this period have used credit to a) suppliment my income and b) comfort spend. I now have a debt of about £17,000 on a consoldation loan with Egg and an additional £19,000 split with 4 credit cards.

Having had 7 years of counselling I am now emerging out of depression and wanting to get back to work. But I have this huge debt behind me to deal with, and it is now at the crucial stage of costing more per month than I have coming in.

However, I have a sum of money coming my way which would enable to write the debt off. Possibly within a month.

My question is what do you advise me to do in the short term, in case the windfall takes longer to arrive or does not come, and what do I do when the money comes? Simply pay off everything?

I put my hands up and own up to the debt - but it is very much linked to the depression, like comfort eating/bulimia or using alcohol (both of which I have also done). A hangover is over in a couple of days, but the residue from using my credit cards has turned into this huge problem that stays with me. Are there certain allowances made for people in this position? Can I come to some sort of settlement deal with the credit card companies? If so, would it affect my credit rating as I am just about to start up my own business.

I look forward to your comments.
Tom

ChadClifton

I'm no expert Tom, but if you have the money coming to pay everything off then to do anything else would be silly. Just imagine getting all that debt off your shoulders in one go, something many of us only dream of.

In my experience, it is easy to think about paying some off and use the rest to enjoy yourself, but I think you'll only regret it in the long run. Just try to imagine your first wage at your new job without having to blow it all on cc and loan payments!

Good luck, I'm glad your better either way!

Cute_'n'_Quirky

You could offer a lump sum payment to each credit card company - maybe 50% of your total debt? This does work!! I know people whom have done it.

The credit card company may not allow you to keep your card(s) afterwards, though.

Stompa

Cute_n_Quirky wrote: »

You could offer a lump sum payment to each credit card company - maybe 50% of your total debt? This does work!! I know people whom have done it.

Even if you have sufficient funds to pay it off in full?

DawnW

I think it would affect the OP's credit rating if she or he did this. This may or may not be an issue for them of course.

MABLE

If you have a large sum of money coming your way and is sufficient to pay off your debts why do you need to think about offering your creditors reduced lump sums. Surely if you have had use of the money is it now fair to pay back the amount is full.

I note you say it is linked to your depression but we must all take responsibilities for our own actions.

butch_dingle_2

MABLE wrote: »

If you have a large sum of money coming your way and is sufficient to pay off your debts why do you need to think about offering your creditors reduced lump sums. Surely if you have had use of the money is it now fair to pay back the amount is full.

I note you say it is linked to your depression but we must all take responsibilities for our own actions.

poppycock. if the original poster has an opportunity to make an arrangement with these faceless corporations which pleases everybody then thats exactly what he should do.

this is not about being "fair" its just business.

Cute_'n'_Quirky

Stompa wrote: »

Even if you have sufficient funds to pay it off in full?

Yes you can do this even if you have sufficient funds to pay off the whole lot!

Cute_'n'_Quirky

If you stop paying your credit card bills the Companies will all start sending letters about paying a reduced sum to pay it off in full!!

Stompa

Cute_n_Quirky wrote: »

Yes you can do this even if you have sufficient funds to pay off the whole lot!

I'm inclined to think that anybody who does so should be ashamed of themsleves.

Cute_'n'_Quirky

Stompa wrote: »

I'm inclined to think that anybody who does so should be ashamed of themsleves.

No, not necessarily - remember that the portion of the reduction is mainly from the interest charges, not from the credit card holder being reckless.

The Companies involved still make a lot of money from the transaction and that is why they offer the service.