So, we have $160,000 of Credit Card Debt

Hi Scott,

Love reading your column each week, and this has taken me way too long to write to you. My husband and I earn $147,000 between us and have got into serious debt over the years through bad business decisions and other reasons. We have our own home with a mortgage of $346,000, and two investments properties -- on one of them we owe more than what it is worth now, and the other we could sell outright (valued $150,000). We have credit card debt of $160,000 and two personal loans of $70,000. What should we do?

Thank you

Denise

Hi Denise,

Most people who write to me need a little plastic surgery with their credit cards -- you need a total brain transplant! You’ve got $230,000 in personal debts, so you’re essentially tied to the railway tracks while the train thunders down the hill. It’s now or never.

I’d sell the investment property, but make sure you allow for any capital gains tax (CGT). Use it to pay off the bulk of your credit cards. Then I’d lodge a hardship variation for each of your remaining debts -- aim to negotiate a freeze on your repayments for six months. Use that six months to work three jobs so you can come out of the blocks with a fighting chance. Toot! Toot!

Scott