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My father and I together have 5 credit cards, and 3 loans. Each credit card is of a high APR. The loans have a descent APR.
Our balance on the 5 credit cards are over 60,000 USD.
Our balance on the loans are about 4,000 USD.
I have a descent credit score, but I have alot of debt.
Every month I pay alot of interest with the credit cards.. It’s very overwhelming.

I need advice on how to manage all this. Our income is very limited. I have a part time job as I’m a student. I earn about 500 dollars a month. My father earns about 5000 to 6000 a month.

What are some possible solutions to cut down my credit card debt?
A debt consolidation loan? How would I get that? Which creditor is good for that?
I’ve also heard something about negotiating with the credit card companies, how does that work?

2 Thoughts on Financial Help! Should I apply for a debt consolidation loan? Or should I negotiate with creditors?
  1. Reply
    just me
    August 21, 2011 at 10:40 am

    Negotiate with creditors. Just found out by the loan agent at my bank that a debt consolidation loan will lower your credit score, and also to never let a financial institution know you are getting a loan to pay off a loan it goes on your report as suck and also lowers your score. Say it is for vacation, to fix the car, house whatever just not that it is to pay another bill.

  2. Reply
    August 21, 2011 at 11:40 am

    There are a few options:

    1. You can go the credit counseling route. There are tons of Govt approved counselors, make sure you go through them, to prevent getting scammed. Here is a link to list of counselors approved by the Govt, by State:

    A reputed counselor can basically look at your finances and work out a payment plan, so you can send just one monthly check to them, which they distribute to your creditors; they can also negotiate lower rates with your creditors, and also provide you with other money management suggestions. Here is what all a counselor can do for you:

    2. If you prefer to do this yourself, you can try and get a consolidation loan from your local banks or credit unions. But since your balances are that high, I doubt if you can secure such a huge loan, with a decent rate. One option may be a secured consolidation loan, where you put up a collateral, but you have to make the choice if you wish to put an asset of yours (like home or vehicle) under risk, to resolve your credit card issues. Here are some ideas on where you can get consolidation loans:

    3. Last option is settlement, but since you haven’t missed payments, and your dad’s income is on the higher side, you may not qualify for this. It is typically for those that are several months in default, and are unable to manage on a day-to-day basis. Again, a counselor may advise what the best course of action is, so I suggest you fix up an in-person appointment with one who is closest to you. All the best.

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