It is easy to get into the credit card game
It is easy to get into the credit card game. We had cards that had 0 to 5 percent interest rate. We would pay them off make double payments and had great standing with the credit card companies. We had cards for years then just overnight we got hit with 30 percent int. rates payment increases and cards cutoff or lower amounts that can be used.
This all came with no warning.
Our first mistake was taking from CDS and 401 k to pay them off and making home loans. All this did was threw us into a higher tax bracket and the income tax rate us alive. We decide to file bankruptcy and surprise the amount to pay back in bankruptcy was more than what we owed on the cards and payments higher each month.
If we had it do to over again we would cut a deal with the card companies, quit paying and wait for them to make you an offer usually half or less of the debt. Yes it may be counted as income but in the long haul the taxes on that for
one year is less than all the other options.
Card companies will not deal until you have not paid them for about 3-4 months then they will offer to settle for an amount give it a month or two and see if they send another offer if not then call them and take the deal
say you have 10,000 debt on one card they will usually offer you anywhere from 4500 to 6500 pay off .Now you may have to take the difference as taxable income . Most card companies will let you pay out the amount you settle for
Another card you owe 1000 on may settle for 300 to 500 again you claim the difference as income
This is better than taking a 401 k and being hit with a 10 percent penalty then jave it added as income throwing you in a higher tax bracket and then not having the 401 k for the future.