How can I dig myself out of this credit card hole?

arniec — Sun, 16 Nov 2008 14:31:48 -0800

Given the current economy, would doing a "charge-off" on my credit cards be a reasonable option, and how would I go about doing it for my biggest benefit? Many years ago I had a college credit card that I couldn't afford to pay off. I finally asked about a charge-off on it; about 80% of the card's balance is as low as the company would go. Given that the balance was about $2000 I don't feel the charge-off was really worth it, so I didn't do it.

Soon after that, I bought my first house.

Now however I find myself in much worse credit card debt, nearing $30,000 over a span of 6 cards. The two highest cards have $8,000 balances, and then a few thousand on various other cards. Most of these cards are charging me 30% interest. I have taken a second job, well paying, just to pay off these cards but the interest rates are so high that I just can't seem to make a big dent. Working all of 08 putting all my 2nd job's money to the cards, not using the cards and I'm only in 3k less debt than I was.

I know of some people who told me that they were able to get cards charged off for pennies on the dollar without declaring bankruptcy. I told them it probably hurt their credit, but they were just happy to have the debt gone and credit scores recycle every 7 years anyway...

So I'm reminded of my charge-off experience and that they'd only go t 80%...if I could get even 50% on one of the $8k cards, I could pay that now and save myself so much in interest and use the snowball method to pay down the others...but when I tried last time they just wouldn't go that low.

Complication: My wife and I DO plan to move before the next 7 years, which would involve selling our current house and buying another, so I really DON'T want to nuke my credit where I can't move for 7 years.

Any suggestions on what to do here?

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How can I dig myself out of this credit card hole?