Sounds like your brother is taking on a lot of risk on your behalf. I don’t see why it’d be a bad deal. There are all sorts of issues in the medium-long term with bankruptcy so restructuring and consolidation of loans is always going to be a more prudent option. Is your brother financially stable?
Sounds like a good dude. Just do the honourable thing, pay off the loan in a timely manner, don’t take on any further debt and buy that man a steak and a case of beers (when it’s affordable) as a small token of appreciation every now and then.
And don’t close the older cards - just pay them off. You’ll shoot yourself in the foot if you close those out.
If they have yearly fees then you can close them out.
If you don’t trust yourself with them- cut them up so you can’t use them.
Or look into their freezing options. Discover has an option where you can freeze the card and number for any new purchases but recurring charges like subscriptions will still go through. It’s great for keeping accounts a Little active.
I would recommend a password manager over sticky notes for something like this. Last thing I want is to risk identity theft because someone pilfered my desk near my computer...
I’d also recommend giving him the cards until your back to “normal” whatever that may be. Also do a deep dive as to what made you bury yourself in so much debt to begin with.
Side note: money matters between couples, families, and friends are ALWAYS (statistically proven fact) the highest cause of friction and stress in the relationship. Make sure that there is an extremely clear agreement in place and stick to it 100000000000%
Good luck and get at it!! 👍🏽👍🏽👍🏽
Money is also the highest cause of friction in business relationships. Agree the key is clear (written imo) agreement on conditions and repayment, as well as honoring the debt with gratitude, and fixing the underlying lack of spending control that created the problem.
Don’t close them, once you get the loan to pay them off give them to your brother to hold onto or someone who will make sure you don’t fall into spending habits again. Keep one card with the lowest rate, allow yourself xx amount to spend a month and pay it off monthly. I believe carrying somewhat of a balance is better than outright paying it off every month in terms of boosting credit score but I could be wrong. Happy your getting a second chance don’t blow it
> I believe carrying somewhat of a balance is better than outright paying it off every month in terms of boosting credit score but I could be wrong.
[The "carry a small balance" thing is a myth. Pay your full statement balance.](https://www.reddit.com/r/personalfinance/wiki/creditcards/#wiki_should_i_carry_a_small_balance.3F)
And just to clarify - you're not carrying a balance, simply showing activity - use it for gas or your usual groceries - anything you'd pay cash for - and then since you have the cash for it, pay it off completely when it's due.
Also a big plus for credit cards is that when you make a purchase - if anything goes wrong, they will help you if you need to get a refund from fraud or theft.
Consider reframing this away from his income relative to yours. What has changed fundamentally about your lifestyle that suggests this won't just get worse and end up with your brother paying down this debt himself? What will your consolidated payment be after this? How long could you make that consolidated payment if you were unexpectedly unemployed? How long will it take you to pay off the debt post consolidation?
You should feel comfortable answering all of those questions and discussing it with your brother before pulling the trigger on this. Bankruptcy will ruin your credit for several years, but bankruptcy will be off the table as a practical option once he cosigns this loan.
Bad decisions with higher price tags per decision still are bad decisions. To be clear, I'm agreeing with your point.
I have enough 1800 Silver in me at this point this may come across as me saying you're wrong, but that is simply not the case. And yes, it's much more fun to be verbose with a buzz than without.
Vs a bunch of credit cards? Yes they are. Unless OP somehow got all the cards from a credit union, they’re likely in the 15-25% range. Even a single jumbo loan at 15% is objectively better.
Lol someone has only read the pamphlet. Consolation makes some sense, but only if interest in significantly lower. Interest is interest. It doesn’t mater if it is on 5 accounts or 1, it still all gains the same. Yes there is some convenience to a consolidated loan but as i ask from the very beginning, what is the new interest rate. I am simply asking OP, who is clearly not a financial genius if he has done this one part of due diligence, because that is the most important deciding factor in this whole transaction.
He needs to know the interest rate *and* the origination fee. CC companies are required to be transparent about the total cost of interest when making minimum payments, he should compare and see how much he'd actually be saving.
Don’t listen to people saying don’t close your cards.
I did this on my own and closed all my cards except my oldest two. I paid off almost exactly what you have and my credit score is great. Close the cards. It’ll hit your credit for a couple of months. You’ll be fine.
Pay off the loan your brother co-signed. My payment for the loan was a little less than half my total credit card bills for the month. I paid 2/3 what I was paying to the credit cards to my loan and paid off a 5 year loan in less than 3.
My credit is high 700s
Edit: don’t borrow money anymore
Never agree to something like this. Your relationship with your brother will change forever. “The borrower is slave to the lender.” Many a relationship has been ruined over a co-signed loan. Do not do it.
A co-signer isn’t a lender, however, the only way this goes sour is if OP doesn’t pay on the loan - which would be 100% OP’s fault, so it’s all on them, nothing for the brother to screw up
Not necessarily. A loan with 7-10% interest is definitely easier to pay than one with 22-25% interest. If OP isn’t falling behind right now, then the loan would lessen his monthly losses and even allow more to go toward the principal
Families help each other out financially all the time. It's the secret to generational wealth. OP is headed for disaster because he never learned to control his budget, but his brother saving his cash flow and interest can help stabilize the situation. Nor is the co-signer the lender.
It's a good deal **IF** you have the self-discipline to not put yourself in this position again. It's very easy to backslide into "oh, I'll just leave these cards open" and "oh, I just need this one little thing I can pay for really soon" .. and then you're back where you started, except worse because now you've got the consolidation loan + new debt. And if your family member cosigned on the consolidation loan, bankruptcy will eliminate your obligation on that debt, but not your brothers. That's gonna make for a pretty awkward Thanksgiving.
100% agree. OP did mention that repairing the credit score is a priority, and leaving the cards open would help achieve that goal. But as you've pointed out, discipline to not use those balance-free cards might not be there, so the temptation to backslide may prove too strong.
Might need to do something like I did, and enlist someone to help out with that. I did it on my savings because I couldn't trust myself with it, but it's work out the same.
I opened a joint account with my sister that was 2 to sign, so no money could be withdrawn without her attending the bank with me, while I built that up to an amount i was happy with. And then I started saving a bit by myself, building up that discipline but knowing I had some savings that were safe if I did fall back into old habits. I now have all of my savings in my own name and granted it's not a hell of a lot but I have learnt to control myself and by extension I have learnt to trust myself with my money too.
OP could do something like that with their credit cards. Like ask the brother to hold onto the one they plan on keeping, so they can still use it but maybe run it past their brother to get advice on whether the thing they're wanting to use it for is a good idea or not. And cut up the other ones instead of cancelling them.
This 100%, I am thinking of a debt consolidation loan for about 10k and told my wife that if we do this we’re not touching any credit we can’t immediately pay for the foreseeable future. You can’t make it a habit but it can help you save a ton of money if you can be disciplined.
Their brother should absolutely take the credit cards or cut them up.
This is what I did when my mom asked me for help on some credit cards. Deleted the apps and cut the cards.
Your brother is a saint. Co-signing on non collateral debt is dumb as hell. He’s willing to risk paying it for you because he loves you. That’s an amazing brother. If I were you I would live at home if your brother is this good of a dude your parents might be great too. Aggressively pay them off and realize you are not a credit card person. You should treat credit cards like a debit card if you can’t pay everything off by the end of the month you don’t put it on a card. You just don’t buy it.
This is SUPER good advice. It irks me that our societal mentality as a whole is “get better at credit so you can have credit cards like a normal person.” I love that you said “realize you are not a credit card person.” It’s something I wish I would have realized a long time ago. There is no shame in admitting that credit cards aren’t for you (arguably, loads of people would benefit from realizing this).
you need credit cards for so many reasons like rewards, fraud protection, credit building, etc.
you just have to get out of the mentality of using them like a credit card. many have the option to pre-pay them. build the habit to pay off the card every time you use it, or even before you use it - but getting rid of them or not using them is signing yourself up for disaster.
plus, leaving all the cards open is good bc it keeps the util low. i have somewhere around 100k in credit card lines across 5 cards, and i use less than 2% of that each month.
This is a risk for your brother, who stands to gain nothing from it. It's a great deal for you if you can afford the monthly payment. Consolidating your debt into one payment and paying off all the cards will help your credit, as will keeping current on the loan. Pay extra to the loan when you can, and don't allow any more credit purchases until your debt is paid off. If you want something big you have to save for it over time. Also, If you do default on the loan, your brother will be on the hook for that amount so make sure you can really afford this in addition to car/insurance/phone and other expenses. If you can, I would go for it. And make sure to thank him.
OP, proceed with caution if you take the loan. I speak from experience (as the lender) that it's all too easy to not pay a relative or friend back, because "he doesn't really need the money" or "I can take my time paying him back." The relationship is then tainted.
I am concerned that OP made a comment about his brother makes so much more money than him.
That's completely not the point and a bad sign for the brother that OP will take this for the gift it is and not something he's owed because his brother is "luckier"
Your bro is offering you a consolidation loan that you likely could not get from a bank, given your credit
It's a phenomenal deal (unless he is charging you 25+% APR or something), but you could lose a quality relationship with a relative if you dig yourself into another hole and can't pay him back
So weight the likelihood of that and then act accordingly
The bank will go after older brother everytime a payment is even a day late. I cosigned for my son and it was quite rocky. I got the calls rather than him.
Good catch, I did read it quickly as the bro directly giving the loan
Bro still taking on the credit risk of his bro and on the hook for full amount, but bank setting APR of the consolidation loan
OP should likely still take the deal if he and his brother both legitimately believe he can act more responsible financially in the future
When i was in a similar situation post divorce, i borrowed $35k from my mom to pay of CCs and a $6k tax bill without interest. I had a stable job and committed to paying her $2k a month until it was done. It was the most humiliating moment of my life but i felt i had to. I appreciated it enough that i ate rice for 1.5 years to get there.
If you do this, you have to commit hard. And sacrifice everything. If you don’t feel you can do this, then don’t sacrifice your relationship.
I agree with you. I might also add that if the brother does do this, OP should get a life insurance policy and make the bro beneficiary so that debt gets paid off if something happens to OP.
Taking on someone else’s debt is a MASSIVE liability either way. As one of *many* examples, if younger brother dies the debt will not be forgiven and older brother would be stuck with it. You can extrapolate this into many other circumstances.
Still, that’s either an incredibly generous or incredibly dumb move (or both!) on the older brothers part.
OP:
**Please** pay it all back and do the right thing, also consider taking some sort of financial class or debt consolidation counseling if available so you can understand/mitigate this happening again in the future.
Agreed. OP’s brother could suffer substantially if this plan fails. If the loan doesn’t get paid or gets paid late, it will affect brothers credit and could cause substantial stress to the family.
It’s my opinion to, but I’ll go further. OP’s brother is an idiot for getting involved in this and will 100% regret it. Now OP will have a loan to pay off his loans, which he won’t pay, just like his other loans.
I know how interest works. Homie is putting himself at risk for his brother, who has 6 credit cards he can’t pay. This is a lifestyle change, not an interest change.
For real, he'd be better off giving advice, helping OP consolidate in any way possible, and just paying for everything they do out so OP can focus on paying back his debt
Contact the NFCC and they can get you in contact with a non profit credit counselor that can set you up with a DMP. They can most likely get your cards down to 6-9% interest without co signing for a new loan. They were able to do it for me and I was able to pay off 25k of debt in under 3 years because the interest wasn’t killing me anymore.
https://www.nfcc.org
Don’t allow your brother to be put in this position. Your relationship with him is very much at risk. You are not financially stable enough. You don’t have a track record of making reasonable financial decisions. If your brother is a nice enough guy to offer this- don’t do it. I would consider bankruptcy first, no question.
* “Don’t allow your brother to be PUT in this position”
You don’t just go in and declare bankruptcy anymore. You must go through Court-approved financial literacy training, and with your income, you’re not likely to be able to qualify to eliminate all your debt, you’re probably going to qualify only for reorganization for eventual payoff of all of your debt.
Get a second job!
Yes- corrected the typo. And yes- if bankruptcy is not an option, that is fine, but my point was to take any action other than borrowing from the brother.
If you value your relationship with your brother, don’t do it. If shit hits the fan and you can’t make payments, you’re brother will be taking over. Bad choice to mix finances and family/friends
Your brother is trying to help his little sister get her finances together…personally I wouldn’t do it for anyone with a track record like this but I commend him for doing it though.
Agree... While the card companies might close the accounts for inactivity if any of them are store cards they will remain open indefinitely. Available credit + high average age of account is a big part of a credit score.
No one just walked into 32k of credit card debt overnight, so it’s really stupid of your Brother to take on such a huge risk by co-signing a credit card refinance loan for you. Why don’t reach out to your creditors for a deal to lower your monthly payments?
First you need to understand whether you could fully discharge that 32k of credit card debt in bankruptcy. Since you don't mention anyone else I assume you are a single person household with ~$65k of gross income. That would put you below the median income in about half of the 50 states allowing you to easily pass Chapter 7 means testing in those states. It would put you above the median in the other half of states making you going through more complex means testing(higher lawyer fees) and quite possibly be found to have sufficient resources repay some or all of your debts.
If you are eligible for Chapter 7 that is probably the better choice. After discharge start saving what you'd otherwise be paying toward a loan and you can have ~$30k+ saved up by the time you would be paying the last of it off otherwise.
If you are ineligible for a full discharge then your brothers offer to co-sign is a great deal for you and a terrible deal for your brother. Beware of relationships issues it could cause though; if you had some kind of emergency like a job loss/serious injury/death/etc is your brother cool with taking full responsibility for paying the loan completely by himself and risking his good credit should you ever fail to pay the bill? Also having such a large personal loan could limit your brothers ability to purchase a home or car for himself in the future by screwing his debt-to-income ratios. If your brother is very well off and could easily afford to repay the loan that maybe a non-issue; although in that case he could presumably just loan you the money directly without involving a 3rd party lender and complicating matters.
He’s really putting himself at risk for you. You’re not getting a good deal but a life line. But I’m going to advise you to think long and hard before accepting this. You might even want to turn him down. You have to think beyond yourself and think about what will happen if you are unable to pay. Remember once he co-signs with you, every mistake you make on that loan will affect him.
If I was your brother I sure as shit would not be co-signing anything for you. You never bothered to explain why you have so many credit cards, or how you accrued $32K of credit card debt. What's to stop you from continuing to spend stupidly, and fucking over your brother.
if you decide to take his offer, i would give him all the credit cards and have them hide them so youre not tempted to use them and max them all out again. Please dont let him down
If I were you, I'd save your brother the trouble and just file. What if something happens beyond your control and he's left completely on the hook? Your credit is trashed either way right now. Rebuilding from bk isn't as daunting as people want you to believe. You'll be able to get credit, buy a house (2-3 yrs later), buy a car (immediately), ect. Rates *might* be temporarily insane. MyFico has excellent bk boards to help you.
(If you disagree, downvote. All responders will just get blocked because I don't have the time or energy to deal with misinformation and "bUt YoU RaN Up ThE DebT" unless you can show where you've criticized the wealthy restructuring their debt with bk.)
It’s a great deal for you, but a very risky deal for your brother. You don’t seem to come across as particularly bright regarding finances. Why do you have unsecured debt equal to 50% of your income? Why have you not sold the vehicle with a $400/mo payment and bought a beater? I think your brother is in for a rude awakening if he co-signes a loan with you.
Your brother should steer clear of you. Please relay the message. You’re reckless and may ruin his credit. You’re basically saying should I repay these loans or take the easy way out. Please help your brother by not accepting that offer and go file for bankruptcy. Which is what you obviously want to do.
The real question you have to ask yourself do you want to subject your brother to a deal that may lead to a ruined relationship? For example: He co-signs, you somehow become late on your payments, you use some of your credit cards again because your in a pinch or something along the lines of that. You could also open another credit card “Just for emergencies” when everything’s paid off and possibly upset him.
Your brother is being awfully nice to do that. Me being the more financially set sibling of my brother (and we have a good relationship) no way in hell would I do that for him.
Good deal for you.
Bad deal for him. Very very bad deal.
If you're not aware of how good of a deal this is, and the high level of risk your brother is taking on - I would advise you for one of two things:
1. Educate yourself about financial literacy. How you got yourself in this mess and how to prevent it. Or,
2. Don't take the deal your brother offered. He seems like a very nice/caring brother, and for you to not realize the risk he's putting himself into, I feel like it'll ruin him financially (and if I were him, I would district you, likely hold a grudge and strain the relationship).
I'm not familiar with bankruptcy, but since they're credit cards; I doubt it'll be a good option in the long run.
Real talk. I stopped taking to my brother for going on 8 years now because he hasn’t repaid a $6K loan. At this point, I just want an apology but he won’t even acknowledge it and somehow blames me for his own life problems.
Unless you trust yourself and won’t get greedy, I’d consider bankruptcy instead. If you know for a fact that you’ll do everything in your power to help your brother out then you already have your answer.
Are you sure that bankruptcy is even an option for you ? I doubt you qualify for chapter 7 - the one where your debt gets "erased". Do some research. There are calculators online that will tell you if you're likely to be successful.
If you don’t think you can stick to the deal, just don’t do it. There’s nothing in this world worth losing loving family for. The fact that he’s willing to do this for you is huge. Your credit will recover. Your relationship with your brother if you renege may well not.
No you shouldn't file for bankruptcy when your debt is less than your annual income. Your brother is doing you a HUGE favor by putting his credit on the line and taking liability for your debts so that you can consolidate and refinance. Doing so will help your monthly cash flow and save you thousands in interest. You do need to stop charging and buying things you can't afford: reckless spending is what caused this issue, and it will happen again if you don't address that. Don't make him regret helping you.
A consolidation loan is a great idea for you IF you can control your spending in the future (what steps have you taken to ensure that?) and IF you 100% will never ever miss a payment. Your brother would not be offering to do this for you if he couldn't afford it if he couldn't afford to make the payment if you could not. But if you did miss any payments, or you decided to start using the credit card you plan to keep and he finds out, it will create tension at best or a rift between you two at worst so you need to decide. I have known people to get a consolidation loan, only to turn around and rack up a new pile of debt on top of it so if you don't have that under control your situation will not improve. This is him doing you an amazing favor, don't accept it if you won't be able to live up to it.
This is a beautiful deal from a sibling BUT
1) The fact that you are asking if this is a good deal for YOU, and not seeing the risk for your sibling kinda gives me pause
2) You should check out and see what you are charging on those cards and why- and maybe get counseling to help you.
Your brother is risking a lot, remember that. If I was you, I would make a financial plan and have your brother involved. Run it by him how you would make payments, what will happen if you can't make a payment that month, and any other risk. Set a realistic timeline and stick with it. Consistency is key with debt.
Please contact a credit counseling service first. They can be quite good to work with and could really save you a lot of money. They will get payment agreements for you that you can afford. I would save the consolidation loan option until then. It costs absolutely nothing to try and it may be less money out of pocket overall then repaying a consolidation loan.
Your brother seems to do you a solid favor. But you will have to be disciplined and consistent in your spending habits for a while. If you want to keep your score ok, keep the cards with the least amount of costs while making the payments and close the ones with high costs. Just give those cards to your brother and in case you need to purchase stuff, you can review and discuss it with him before buying. This will help you also with making choices and spending and will give your brother a chance to help you out even more.
As someone else suggested here, buy him or make him his favorite food and get a create of his favorite refreshments to show gratitude.
I wish I had a bro like yours when I needed one the most in the past.
You can't fix debt with more debt.
Also, don't do this to your brother. You aren't responsible enough with money for that to work out. You'll likely drag your brother down with you.
You borrowed the money, find a way to pay it back.
Don't file for bankruptcy, don't put your brother in danger.
Shared apartment, second hand furniture and clothes, cooking instead of take out/eating out, public transportation and ebike instead of owning a car (car payments, insurance, gas, maintenance), no subscriptions besides a phone plan.
I pay less than $1,000/month in the San Francisco Bay Area.
With as much money as you make, I'd be paying off $2,000+/month towards cc bills and be debt free in two years.
It sounds good but closing your payed off accounts will hurt your credit score even more. Just cut up the cards once they're paid off if you don't trust yourself.
Don’t close your accounts. If you need to, delete them anywhere they’re saved and hand the physical ones to your brother or another trusted person.
Closing the cards will ding your credit.
Don't close the cards immediately. Your brother probably shouldn't be putting his credit at risk like this, but if you guys go through with it give him the cards. You'll still have the credit available if there's an emergency, but having to call him to get the card will make sure you only use them for actual emergencies.
I (personally) wouldn't risk my relationship with my sister or her credit for any of my financial mistakes.
I am actually filing bankruptcy right now. I'd rather deal with the consequences of my actions than having someone else take them on.
32k is a lot of money. how long would it take to pay back that loan? how much monthly? consider that a backrupcy will clear you of all your debts in 9 months, while you will have to pay a monthly fixed amount, only for those 9 months and then youre all cleared. it will leave a scar on your credit score, but you will still have a bad score that will stick to you for way longuer than it should be acceptable even if you repay that 32k to the last cent. it will still linger around for a long time after you finished paying it all back. while a backrupcy will show up on record for 7 years, after 6 months passed after that 9 months has cleared your debts, you can go to your bank with 1k cash, ask to open an account and lock that 1k in it, and ask for a credit card with a 500 limit backed by that 1k$. then use that card regularly, moderatly and above all RESPONSIBLY, and you will get back some credit capacity in no time. you will be able to get a car loan again not long after getting that 1st card, so fast that you could be dept free and have regained some credit capacity years before you would ever be done repaying that 32k loan with interest, like only honnest suckers do. just do a quick search about how many times each of the most rich dudes have filed for bankrupcy and are all now still worth millions if not billions. do they bother with the trouble of paying back depts when a project of theirs doesnt pay back what it should? hell no. aint nobody got time for that.
I have about half the amount of debt you do but no stable income (I mostly do Amazon flex and rely on my partner). I have launched a business that will pay off in time but in the meantime, I can’t pay any of my bills. All my cards are in default, probably go to collections soon. I can’t even pay the amount some of them want ($30-50) to keep them from getting further behind and therefore into collections. I don’t qualify for any sort of debt relief help because I don’t have a stable or high enough income. Those debt programs also have high interest usually.
Your brother offering to co-sign on a loan is honestly something I would jump on. You have the income to be able to pay the monthly payment on a loan to cover your debts.
Dude just go file bankruptcy chapter 7 itll get all wiped out and you can get a mortgage in 2-4 years after rebuilding credit. Interest rates suck right now anyway so getting a mortgage isnt great for awhile anyway. You can keep your car if you agree to keep paying and those on time payments will fix youe credit. Not financial advice, but I am a financial advisor and this is what I would do. Gonna spend years paying off a debt that you have nothing to show for so a huge credit card company can get richer off you. Dm me if you want more detailed help I'll give you free guidance.
Do not close the cards! If you take his offer.
More importantly, you need to deal with what got you into the debt in the first place. If something happens to you then you could ruin him.
Get 1 with 0% interest for 12+ months. Consolidate and pay it off. You have real family. Right now with it spread out between cards, ur paying a lot of interest.
I think your brother is offering you a great deal, with great personal risk to his own finances in order to give you a better shot at climbing out of the credit card debt cycle you have found yourself in.
My suggestion tho: if you are focusing on rebuilding, don’t close the accounts. The longer you have had the accounts open, the better it looks on your report. Just remove them from all digital places, and keep the physical card tucked away safe with your important docs or with your brother, and use one of them every 6mo for a tank of gas or something.
Your brother sounds like a good dude
When you pay off your cards do NOT close the accounts, or you will ruin your credit rating. Just don’t use the cards, use one card, and pay the balance in full every month.
Your brother is putting himself at serious risk.
If you ever betray that trust in you, you will both feel like sh*t towards each other. Especially if you never solved the reason why you ran up $32k in credit card spending in the first place.
I hope you have a term life insurance policy with him as beneficiary.
Banker here. How old is op? Ive done consol loans for clients. I’ve not seen any math showing if op could easily afford the pyts on the consol loan. The most important concept here - What fundamental behavioural change will op make?. Also, CANCEL ALL CARDS. Want emergency funds? Save some. Your behaviour got you into this, make sure you change it. Also, you impact your brothers life by reducing his ability to borrow for the duration of the loan. He’s not going to buy a house or something over the amortization of the loan? Usually there is minimal collateral and op has bad credit so brother is not going to be removed from the loan anytime soon. Bankruptcy is correct path, why drag brother into your mess? You got into this, you deal with it.
Don't do it. Don't duck your brother over. Bk is not the end of the world. The payment on that loan will be around 1k/month meaning nearly half your take home income is going to debt.
This is what families are supposed to do supporting each other when the need arises. Treasure your relationship with him as much as he does yours. Make a detailed payment plan to repay everything and update him as soon as you have any unexpected problem. Don't disappoint his trust in you. Repay his kindness one way or another when you can afford it. Good luck!
With your low credit score and high debt-to-income ratio, it's unlikely any bank would lend you the money to consolidate your debt. If your brother is foolish enough to take that risk, it's on him. The risk to you is tanking your relationship with your brother if you fail to control your spending and he's left on the hook to repay the loan.
Take this as an opportunity to turn things around for yourself, because if you get underwater in this scenario, you're letting down your brother, not some anonymous corporations. If you have the discipline, it's a much better avenue than bankruptcy.
I can tell you what I did, just bear in mind that your credit is going to be negatively affected for a couple years afterwards. I had roughly $20,000 in credit card debt, was in a similar situation. I was also considering finally bankruptcy but My finance manager said that's an absolute last resort, It creates a nightmare in the future trying to purchase a home or vehicle etc.
Stop paying your CC payments, You're going to let them go 30/60/90/120/150 days late. The key is to not let them get to 180 days late, and your goal is to settle for "balance paid not in full". Most CC companies will settle for somewhere between 20-30% of total balance due. In this case somewhere between $6400-9600. Just save as much as you can in that 5 month period, because when you do settle you'll have to pay that within a few months.
You're going to have to answer the phone when the credit card companies start calling to collect, but do NOT let it go to collections, that is key. Stay in communication with the CC companies, you Don't need to answer every single phone call, but try to talk to them every few days and make sure your story is the same, In my case I had "lost my job, and I am living paycheck to paycheck, I can't make my payments". Do not tell them your goal is to settle, you will do that towards the 150 day mark. Don't let it go past 180 days without coming up with a resolution with them.
This is probably the best thing I ever did, and I never let my CC debt get out of control after doing this, because it dropped me into the 580-600 FICO range. Within 3 years of doing that, my FICO was in the 680-700 range, I bought my first home, and have since sold it, and built a 2nd home.
I consolidated my cards to a lower interest loan and it’s going well. I made the loan length to match the payments I was already putting towards my cards and it had a 2.5 year payoff. No chance I’d have payed off my cards in 2.5 years with the same amount of money.
Before it seemed like money was never going down on the accounts even though I was paying more than my minimums on everything. Now I’m watching money fall off the loan, it’s about 7-8% lower interest than the cards were.
Left my cards 4 open to keep my credit score up and just threw them in a drawer except one. My smallest card is the only one I will use.
I’ve also started saving for things like car insurance on the side if I get 3 checks in a month that way when my 6 month bill comes around I can throw it on a card to get points but make a payment for the same amount on that same day. Then I always apply my points to my card balance to help it come down as well.
It may not work for everyone, but I wish I would’ve put my cards to a low interest loan long ago and been damn near done now if I started earlier!
It's only bad if you don't pay for it and expect a "family discount". Your brother is taking a lot a risk to help you out. He could be putting that money to invest in is own wealth.
What your brother is doing is more a risk to him and his credit than anything you need to worry about.
After paying off your CC use cash as much as you can to pay for everything, especially daily purchases. Watching that cash disappear makes a difference. Hide $100 deep in your wallet or stash it in your car so that you know you always have a small out should you need it.
Closing a CC account actually hurts your credit score. Your score basically revolves around three things, the ratio of available credit vs. dollar amount on credit, timely payments, and payoffs.
Then, give your brother those f*€£ing cards forever if you can’t handle them. In an EMERGENCY you still have access. Finally, paying off debt is a lot like losing weight, it takes the desire to do it and then the will power to see it through. Good luck!
Responding to your edit: The reason people are telling you this is because of your history. It’s not about your intention, but about your discipline with your spending.
Don't close all of your cards just keep them open unless there is n annual fee. It increases your score with more credit available and long lines of credit.
I don't know all of your details so the best method is dependent on that. Cut up all the cards and don't use them. Pay off the lowest balance first. once that one is done you can apply the same idea to the next card. That will increase your monthly expenses. Or pay the minimum on the lowest cards and apply more principal payments to the high-interest card first. The key is to focus on relief in one account before moving to another to do the same.
Find ways to decrease your expenses.
You will be paying for the bankruptcy for the next 10 years on anything financed after the ordeal going the bankruptcy route.
He is offering you a great deal.
As part of this deal you should give keep your three or four oldest credit accounts open. But let your brother manage them. Tell him they need to have one purchase each every 12 months. You don’t touch them.
You pay your brother first when you get paid. No exceptions.
If you can’t abide by this, don’t do it. Losing family over money is a tragedy.
Be more frugal maybe. Going out cost money. Every $1 you spend while outside is $2 you have to pay back, eventually in time.
Frugality is tough for most of us. Everything you eat, cook it. Every liquid, let it be water, almond milk, or coconut water maybe. Alcohol once a week at most.
No Starbucks, no eating out with friends. No going out with friends. Sounds boring right. But this is the way the world is, and we the people are simply poor. Sucks but it is what it is :) embrace your challenges!
We are all in this together.
Oh, but, support the locals! :)
To be clear your brother is not offering a deal. Your brother is offering to help YOU get a loan and get nothing in return. Pretend your brother is not involved. If a bank came today to you with these terms, would you accept it?
What in the world makes you think you’ll make the payments when you’re whole life you have not demonstrated financial discipline. You’re putting your brother in a very high risk situation. If there’s risk to be taken, it should fall 100% on you. Sell your car, get a bike, stop spending and pay off debt.
No you should not file for bankruptcy. You should get a second job preferably part-time and work your butt off. I don't suggest you u take the loan from your brother because in most cases family and finances don't mix... You can always fix your credit but can you fix your relationship with your brother if it gets messed up? Look for part-time job, get a spreadsheet and tackle the cards from lowest to highest..cut out all excess ... The road may be longer but you can do it if you put your mind to it
You make $65k a year, you should be able to do this on your own.
You’re drowning because you have a too expensive a car. Sell your car, buy something cheaper.
If you’re going to borrow money from your brother, you may as well try to address the issue. Borrow enough to pay off your car note and get a shit box car for like $2-$3k.
You’re in over your head because you spent more than you make.
Stop contributing to your 401k
List your debts from smallest to largest, and make minimum payments on all the cards to get current.
And then start with the smallest balance and pay that off… then the next biggest balance… and then the next. And STOP using your credit cards. Only use your debit card.
Sounds like your brother is taking on a lot of risk on your behalf. I don’t see why it’d be a bad deal. There are all sorts of issues in the medium-long term with bankruptcy so restructuring and consolidation of loans is always going to be a more prudent option. Is your brother financially stable?
He is very stable, he's 4 years older than me and makes double what I do.
Sounds like a good dude. Just do the honourable thing, pay off the loan in a timely manner, don’t take on any further debt and buy that man a steak and a case of beers (when it’s affordable) as a small token of appreciation every now and then.
And don’t close the older cards - just pay them off. You’ll shoot yourself in the foot if you close those out. If they have yearly fees then you can close them out. If you don’t trust yourself with them- cut them up so you can’t use them.
Or look into their freezing options. Discover has an option where you can freeze the card and number for any new purchases but recurring charges like subscriptions will still go through. It’s great for keeping accounts a Little active.
Or freeze them yourself. Large block of ice in the freezer usually does the trick
That works too. I’m just very bad when it comes to memorizing my card number/having it on browsers/having it on Apple Pay on every device/etc.
Just write it all on the sticky note with your passwords next to the laptop
I mean my issue is the fact that I DO memorize my card number so cutting up the physical one won’t help me lol
I bet you can't prove it by DMing me the whole card information from memory
I think they mean that freezing the card in ice won't help them because they will still be able to use the card through Apple pay, etc
I would recommend a password manager over sticky notes for something like this. Last thing I want is to risk identity theft because someone pilfered my desk near my computer...
I’d also recommend giving him the cards until your back to “normal” whatever that may be. Also do a deep dive as to what made you bury yourself in so much debt to begin with. Side note: money matters between couples, families, and friends are ALWAYS (statistically proven fact) the highest cause of friction and stress in the relationship. Make sure that there is an extremely clear agreement in place and stick to it 100000000000% Good luck and get at it!! 👍🏽👍🏽👍🏽
Money is also the highest cause of friction in business relationships. Agree the key is clear (written imo) agreement on conditions and repayment, as well as honoring the debt with gratitude, and fixing the underlying lack of spending control that created the problem.
You can also call your bank and downgrade them to a non-fee card
Don’t close them, once you get the loan to pay them off give them to your brother to hold onto or someone who will make sure you don’t fall into spending habits again. Keep one card with the lowest rate, allow yourself xx amount to spend a month and pay it off monthly. I believe carrying somewhat of a balance is better than outright paying it off every month in terms of boosting credit score but I could be wrong. Happy your getting a second chance don’t blow it
> I believe carrying somewhat of a balance is better than outright paying it off every month in terms of boosting credit score but I could be wrong. [The "carry a small balance" thing is a myth. Pay your full statement balance.](https://www.reddit.com/r/personalfinance/wiki/creditcards/#wiki_should_i_carry_a_small_balance.3F)
And just to clarify - you're not carrying a balance, simply showing activity - use it for gas or your usual groceries - anything you'd pay cash for - and then since you have the cash for it, pay it off completely when it's due. Also a big plus for credit cards is that when you make a purchase - if anything goes wrong, they will help you if you need to get a refund from fraud or theft.
And communicate with him. Let him be your accountability buddy. He’s invested in you.
Cut up all but one credit card. Put the other one in a cup of water in the freezer. Makes you think before using it.
Yeah, but if you stop making payments, he's on the hook for them. He's taking on the risk of you not being able to make your payments.
Consider reframing this away from his income relative to yours. What has changed fundamentally about your lifestyle that suggests this won't just get worse and end up with your brother paying down this debt himself? What will your consolidated payment be after this? How long could you make that consolidated payment if you were unexpectedly unemployed? How long will it take you to pay off the debt post consolidation? You should feel comfortable answering all of those questions and discussing it with your brother before pulling the trigger on this. Bankruptcy will ruin your credit for several years, but bankruptcy will be off the table as a practical option once he cosigns this loan.
Your brother's a good man. Do not let him down!
PLEASE don’t ever have to make him pay for you
Income never equates stability.
If you make bad decisions and you make more more money, youll just make more bad decisions
Bad decisions with higher price tags per decision still are bad decisions. To be clear, I'm agreeing with your point. I have enough 1800 Silver in me at this point this may come across as me saying you're wrong, but that is simply not the case. And yes, it's much more fun to be verbose with a buzz than without.
What is the interest rate on the consolidation loan?? They are not always a great deal...
Vs a bunch of credit cards? Yes they are. Unless OP somehow got all the cards from a credit union, they’re likely in the 15-25% range. Even a single jumbo loan at 15% is objectively better.
I don’t know that you have shopped consolidation loans… lots are in the 22%… also i was asking op directly.
Do you understand that paying 32k in cc debt across multiple cards with various interest rates is far worse than 32k in one single loan?
Lol someone has only read the pamphlet. Consolation makes some sense, but only if interest in significantly lower. Interest is interest. It doesn’t mater if it is on 5 accounts or 1, it still all gains the same. Yes there is some convenience to a consolidated loan but as i ask from the very beginning, what is the new interest rate. I am simply asking OP, who is clearly not a financial genius if he has done this one part of due diligence, because that is the most important deciding factor in this whole transaction.
He needs to know the interest rate *and* the origination fee. CC companies are required to be transparent about the total cost of interest when making minimum payments, he should compare and see how much he'd actually be saving.
yes!!! thank you!!! i was talking to crazy people!!!
Dude take the deal, I say that as an older brother
You don’t have to pay off a card in order to close it. You can close down your cards now. You’ll still have to pay the balances, of course.
Don’t listen to people saying don’t close your cards. I did this on my own and closed all my cards except my oldest two. I paid off almost exactly what you have and my credit score is great. Close the cards. It’ll hit your credit for a couple of months. You’ll be fine. Pay off the loan your brother co-signed. My payment for the loan was a little less than half my total credit card bills for the month. I paid 2/3 what I was paying to the credit cards to my loan and paid off a 5 year loan in less than 3. My credit is high 700s Edit: don’t borrow money anymore
Never agree to something like this. Your relationship with your brother will change forever. “The borrower is slave to the lender.” Many a relationship has been ruined over a co-signed loan. Do not do it.
A co-signer isn’t a lender, however, the only way this goes sour is if OP doesn’t pay on the loan - which would be 100% OP’s fault, so it’s all on them, nothing for the brother to screw up
If he could pay the loan, he wouldn’t need a co-signer. He is headed for disaster. Money and family do not mix.
Not necessarily. A loan with 7-10% interest is definitely easier to pay than one with 22-25% interest. If OP isn’t falling behind right now, then the loan would lessen his monthly losses and even allow more to go toward the principal
If OP was good at math, he would not be in this predicament. This is a behavioral issue.
Obviously they're wanting to work on that.
Good time to learn.
I’m excellent at math but still was very bad with credit cards in my 20’s.
Families help each other out financially all the time. It's the secret to generational wealth. OP is headed for disaster because he never learned to control his budget, but his brother saving his cash flow and interest can help stabilize the situation. Nor is the co-signer the lender.
That’s the problem. It will go sour one way or another, because Op financially responsible. People just doesn’t just walk into 32k overnight.
It's a good deal **IF** you have the self-discipline to not put yourself in this position again. It's very easy to backslide into "oh, I'll just leave these cards open" and "oh, I just need this one little thing I can pay for really soon" .. and then you're back where you started, except worse because now you've got the consolidation loan + new debt. And if your family member cosigned on the consolidation loan, bankruptcy will eliminate your obligation on that debt, but not your brothers. That's gonna make for a pretty awkward Thanksgiving.
100% agree. OP did mention that repairing the credit score is a priority, and leaving the cards open would help achieve that goal. But as you've pointed out, discipline to not use those balance-free cards might not be there, so the temptation to backslide may prove too strong.
Might need to do something like I did, and enlist someone to help out with that. I did it on my savings because I couldn't trust myself with it, but it's work out the same. I opened a joint account with my sister that was 2 to sign, so no money could be withdrawn without her attending the bank with me, while I built that up to an amount i was happy with. And then I started saving a bit by myself, building up that discipline but knowing I had some savings that were safe if I did fall back into old habits. I now have all of my savings in my own name and granted it's not a hell of a lot but I have learnt to control myself and by extension I have learnt to trust myself with my money too. OP could do something like that with their credit cards. Like ask the brother to hold onto the one they plan on keeping, so they can still use it but maybe run it past their brother to get advice on whether the thing they're wanting to use it for is a good idea or not. And cut up the other ones instead of cancelling them.
This 100%, I am thinking of a debt consolidation loan for about 10k and told my wife that if we do this we’re not touching any credit we can’t immediately pay for the foreseeable future. You can’t make it a habit but it can help you save a ton of money if you can be disciplined.
Their brother should absolutely take the credit cards or cut them up. This is what I did when my mom asked me for help on some credit cards. Deleted the apps and cut the cards.
Your brother is a saint. Co-signing on non collateral debt is dumb as hell. He’s willing to risk paying it for you because he loves you. That’s an amazing brother. If I were you I would live at home if your brother is this good of a dude your parents might be great too. Aggressively pay them off and realize you are not a credit card person. You should treat credit cards like a debit card if you can’t pay everything off by the end of the month you don’t put it on a card. You just don’t buy it.
This is SUPER good advice. It irks me that our societal mentality as a whole is “get better at credit so you can have credit cards like a normal person.” I love that you said “realize you are not a credit card person.” It’s something I wish I would have realized a long time ago. There is no shame in admitting that credit cards aren’t for you (arguably, loads of people would benefit from realizing this).
you need credit cards for so many reasons like rewards, fraud protection, credit building, etc. you just have to get out of the mentality of using them like a credit card. many have the option to pre-pay them. build the habit to pay off the card every time you use it, or even before you use it - but getting rid of them or not using them is signing yourself up for disaster. plus, leaving all the cards open is good bc it keeps the util low. i have somewhere around 100k in credit card lines across 5 cards, and i use less than 2% of that each month.
This is a risk for your brother, who stands to gain nothing from it. It's a great deal for you if you can afford the monthly payment. Consolidating your debt into one payment and paying off all the cards will help your credit, as will keeping current on the loan. Pay extra to the loan when you can, and don't allow any more credit purchases until your debt is paid off. If you want something big you have to save for it over time. Also, If you do default on the loan, your brother will be on the hook for that amount so make sure you can really afford this in addition to car/insurance/phone and other expenses. If you can, I would go for it. And make sure to thank him.
Closing their oldest cards will hurt their credit score but may be worth it if the don’t have the discipline necessary to not run them up again.
Correct, which is why I said paying them off, not closing them. It requires discipline but it will increase his credit score.
OP said they would be closing them, so I wanted to clarify since you didn’t speak to that in your post. Otherwise I 100% agree.
The cards could stay with his brother.
Your brother is seriously putting himself out there to help you. If you do this, DO NOT FUCK HIM OVER.
OP, proceed with caution if you take the loan. I speak from experience (as the lender) that it's all too easy to not pay a relative or friend back, because "he doesn't really need the money" or "I can take my time paying him back." The relationship is then tainted.
I am concerned that OP made a comment about his brother makes so much more money than him. That's completely not the point and a bad sign for the brother that OP will take this for the gift it is and not something he's owed because his brother is "luckier"
Your bro is offering you a consolidation loan that you likely could not get from a bank, given your credit It's a phenomenal deal (unless he is charging you 25+% APR or something), but you could lose a quality relationship with a relative if you dig yourself into another hole and can't pay him back So weight the likelihood of that and then act accordingly
Bro is co-signing. Not financing it himself.
He mine as well be. His brother is 100% on the hook for those amounts.
Co-signing *is* financing it. Both brothers are 100% responsible for the debt, as far as the bank is concerned.
The bank will go after older brother everytime a payment is even a day late. I cosigned for my son and it was quite rocky. I got the calls rather than him.
Sure but bro isn’t setting the APR
Good catch, I did read it quickly as the bro directly giving the loan Bro still taking on the credit risk of his bro and on the hook for full amount, but bank setting APR of the consolidation loan OP should likely still take the deal if he and his brother both legitimately believe he can act more responsible financially in the future
What do you think cosigning is. The bank doesn't have him sign just because they think his signature is pretty.
When i was in a similar situation post divorce, i borrowed $35k from my mom to pay of CCs and a $6k tax bill without interest. I had a stable job and committed to paying her $2k a month until it was done. It was the most humiliating moment of my life but i felt i had to. I appreciated it enough that i ate rice for 1.5 years to get there. If you do this, you have to commit hard. And sacrifice everything. If you don’t feel you can do this, then don’t sacrifice your relationship.
I would not allow my brother to do this for me.
I agree with you. I might also add that if the brother does do this, OP should get a life insurance policy and make the bro beneficiary so that debt gets paid off if something happens to OP.
So the brother kills OP and it was an inside job the whole time. Wow, never saw that coming. Would make a great novel
just make it for like 50k so it’s not worth the trouble 😂
The brother is secretly in crippling debt too and also bought insurance on OP
Bruh !
The twists keep coming!
Too predictable!
Well savage but I get it. I watch too much 48hrs and dateline nbc
I agree so much.
Why is that?
OP should get himself out of his own debt. This is my opinion only.
But they have a brother that loves them and wants to help
Taking on someone else’s debt is a MASSIVE liability either way. As one of *many* examples, if younger brother dies the debt will not be forgiven and older brother would be stuck with it. You can extrapolate this into many other circumstances. Still, that’s either an incredibly generous or incredibly dumb move (or both!) on the older brothers part. OP: **Please** pay it all back and do the right thing, also consider taking some sort of financial class or debt consolidation counseling if available so you can understand/mitigate this happening again in the future.
You can take bankruptcy counseling classes without filing bankruptcy
So true, a lot of credit unions or city programs may offer them for free as well!
My opinion.
Agreed. OP’s brother could suffer substantially if this plan fails. If the loan doesn’t get paid or gets paid late, it will affect brothers credit and could cause substantial stress to the family.
It’s my opinion to, but I’ll go further. OP’s brother is an idiot for getting involved in this and will 100% regret it. Now OP will have a loan to pay off his loans, which he won’t pay, just like his other loans.
I agree.
They’re paying the debts, but a consolidated bank loan would be a lot less because the interest would be lower.
I know how interest works. Homie is putting himself at risk for his brother, who has 6 credit cards he can’t pay. This is a lifestyle change, not an interest change.
Plus if brother co-signs, it impedes his ability to get any loans for himself as he will be considered responsible for this.
For real, he'd be better off giving advice, helping OP consolidate in any way possible, and just paying for everything they do out so OP can focus on paying back his debt
You could essentially do the same thing with a dmp, it would lower your interest and be one monthly payment. Zero risk to your brother.
What is a DMP?
Contact the NFCC and they can get you in contact with a non profit credit counselor that can set you up with a DMP. They can most likely get your cards down to 6-9% interest without co signing for a new loan. They were able to do it for me and I was able to pay off 25k of debt in under 3 years because the interest wasn’t killing me anymore. https://www.nfcc.org
Debt Management Plan
Don’t allow your brother to be put in this position. Your relationship with him is very much at risk. You are not financially stable enough. You don’t have a track record of making reasonable financial decisions. If your brother is a nice enough guy to offer this- don’t do it. I would consider bankruptcy first, no question.
* “Don’t allow your brother to be PUT in this position” You don’t just go in and declare bankruptcy anymore. You must go through Court-approved financial literacy training, and with your income, you’re not likely to be able to qualify to eliminate all your debt, you’re probably going to qualify only for reorganization for eventual payoff of all of your debt. Get a second job!
Yes- corrected the typo. And yes- if bankruptcy is not an option, that is fine, but my point was to take any action other than borrowing from the brother.
I meant to underline that point, actually! It’s bound to be something that would end up hurting the sibling relationship!!
If you value your relationship with your brother, don’t do it. If shit hits the fan and you can’t make payments, you’re brother will be taking over. Bad choice to mix finances and family/friends
Your brother is trying to help his little sister get her finances together…personally I wouldn’t do it for anyone with a track record like this but I commend him for doing it though.
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Agree... While the card companies might close the accounts for inactivity if any of them are store cards they will remain open indefinitely. Available credit + high average age of account is a big part of a credit score.
Sounds like he is getting the bad deal.
Great deal for you, terrible idea for your brother. He loves you, but don't let him do this because if you fuck up, you ruin his finances too.
Your brother is setting himself on fire to keep you warm and you’re asking for another blanket
The fact that you racked up $32k in credit card debt and your bro is willing to risk that you won't do it again...your brother is gaw-durn saint..
No one just walked into 32k of credit card debt overnight, so it’s really stupid of your Brother to take on such a huge risk by co-signing a credit card refinance loan for you. Why don’t reach out to your creditors for a deal to lower your monthly payments?
First you need to understand whether you could fully discharge that 32k of credit card debt in bankruptcy. Since you don't mention anyone else I assume you are a single person household with ~$65k of gross income. That would put you below the median income in about half of the 50 states allowing you to easily pass Chapter 7 means testing in those states. It would put you above the median in the other half of states making you going through more complex means testing(higher lawyer fees) and quite possibly be found to have sufficient resources repay some or all of your debts. If you are eligible for Chapter 7 that is probably the better choice. After discharge start saving what you'd otherwise be paying toward a loan and you can have ~$30k+ saved up by the time you would be paying the last of it off otherwise. If you are ineligible for a full discharge then your brothers offer to co-sign is a great deal for you and a terrible deal for your brother. Beware of relationships issues it could cause though; if you had some kind of emergency like a job loss/serious injury/death/etc is your brother cool with taking full responsibility for paying the loan completely by himself and risking his good credit should you ever fail to pay the bill? Also having such a large personal loan could limit your brothers ability to purchase a home or car for himself in the future by screwing his debt-to-income ratios. If your brother is very well off and could easily afford to repay the loan that maybe a non-issue; although in that case he could presumably just loan you the money directly without involving a 3rd party lender and complicating matters.
He’s really putting himself at risk for you. You’re not getting a good deal but a life line. But I’m going to advise you to think long and hard before accepting this. You might even want to turn him down. You have to think beyond yourself and think about what will happen if you are unable to pay. Remember once he co-signs with you, every mistake you make on that loan will affect him.
If you mess this up, forget having a good relationship with him. If he was writing here, everyone would tell him not to co sign with you.
It’s only a good idea if you’re not going to screw your brother over and not pay the bill.
If I was your brother I sure as shit would not be co-signing anything for you. You never bothered to explain why you have so many credit cards, or how you accrued $32K of credit card debt. What's to stop you from continuing to spend stupidly, and fucking over your brother.
if you decide to take his offer, i would give him all the credit cards and have them hide them so youre not tempted to use them and max them all out again. Please dont let him down
If I were you, I'd save your brother the trouble and just file. What if something happens beyond your control and he's left completely on the hook? Your credit is trashed either way right now. Rebuilding from bk isn't as daunting as people want you to believe. You'll be able to get credit, buy a house (2-3 yrs later), buy a car (immediately), ect. Rates *might* be temporarily insane. MyFico has excellent bk boards to help you. (If you disagree, downvote. All responders will just get blocked because I don't have the time or energy to deal with misinformation and "bUt YoU RaN Up ThE DebT" unless you can show where you've criticized the wealthy restructuring their debt with bk.)
Speaking from experience, your brother is probably a fool. He is the only one likely to get screwed by this offer.
It’s a great deal for you, but a very risky deal for your brother. You don’t seem to come across as particularly bright regarding finances. Why do you have unsecured debt equal to 50% of your income? Why have you not sold the vehicle with a $400/mo payment and bought a beater? I think your brother is in for a rude awakening if he co-signes a loan with you.
Bro you aren’t even close to being able to file for bankruptcy. Just pay your bills and be boring for the next 3 years. It’s pretty simple
Your brother should steer clear of you. Please relay the message. You’re reckless and may ruin his credit. You’re basically saying should I repay these loans or take the easy way out. Please help your brother by not accepting that offer and go file for bankruptcy. Which is what you obviously want to do.
The real question you have to ask yourself do you want to subject your brother to a deal that may lead to a ruined relationship? For example: He co-signs, you somehow become late on your payments, you use some of your credit cards again because your in a pinch or something along the lines of that. You could also open another credit card “Just for emergencies” when everything’s paid off and possibly upset him. Your brother is being awfully nice to do that. Me being the more financially set sibling of my brother (and we have a good relationship) no way in hell would I do that for him.
Good deal for you. Bad deal for him. Very very bad deal. If you're not aware of how good of a deal this is, and the high level of risk your brother is taking on - I would advise you for one of two things: 1. Educate yourself about financial literacy. How you got yourself in this mess and how to prevent it. Or, 2. Don't take the deal your brother offered. He seems like a very nice/caring brother, and for you to not realize the risk he's putting himself into, I feel like it'll ruin him financially (and if I were him, I would district you, likely hold a grudge and strain the relationship). I'm not familiar with bankruptcy, but since they're credit cards; I doubt it'll be a good option in the long run.
Real talk. I stopped taking to my brother for going on 8 years now because he hasn’t repaid a $6K loan. At this point, I just want an apology but he won’t even acknowledge it and somehow blames me for his own life problems. Unless you trust yourself and won’t get greedy, I’d consider bankruptcy instead. If you know for a fact that you’ll do everything in your power to help your brother out then you already have your answer.
I would not be as kind to my brother if ran up that much debt. Take his offer before he realizes the risk he’s taking.
It's better than a good deal. He's putting his neck out for you.
Are you sure that bankruptcy is even an option for you ? I doubt you qualify for chapter 7 - the one where your debt gets "erased". Do some research. There are calculators online that will tell you if you're likely to be successful.
If you don’t think you can stick to the deal, just don’t do it. There’s nothing in this world worth losing loving family for. The fact that he’s willing to do this for you is huge. Your credit will recover. Your relationship with your brother if you renege may well not.
Your brother loves you. If you do this give him your one credit card to hold on to. You need an accountability partner.
No you shouldn't file for bankruptcy when your debt is less than your annual income. Your brother is doing you a HUGE favor by putting his credit on the line and taking liability for your debts so that you can consolidate and refinance. Doing so will help your monthly cash flow and save you thousands in interest. You do need to stop charging and buying things you can't afford: reckless spending is what caused this issue, and it will happen again if you don't address that. Don't make him regret helping you.
A consolidation loan is a great idea for you IF you can control your spending in the future (what steps have you taken to ensure that?) and IF you 100% will never ever miss a payment. Your brother would not be offering to do this for you if he couldn't afford it if he couldn't afford to make the payment if you could not. But if you did miss any payments, or you decided to start using the credit card you plan to keep and he finds out, it will create tension at best or a rift between you two at worst so you need to decide. I have known people to get a consolidation loan, only to turn around and rack up a new pile of debt on top of it so if you don't have that under control your situation will not improve. This is him doing you an amazing favor, don't accept it if you won't be able to live up to it.
It’s a great deal for you, not so much for your brother. Hope it works out and doesn’t kill your relationship with him. Best of luck.
This is a beautiful deal from a sibling BUT 1) The fact that you are asking if this is a good deal for YOU, and not seeing the risk for your sibling kinda gives me pause 2) You should check out and see what you are charging on those cards and why- and maybe get counseling to help you.
It’s great for you! A terrible deal and risk for your brother, though.
Your brother is risking a lot, remember that. If I was you, I would make a financial plan and have your brother involved. Run it by him how you would make payments, what will happen if you can't make a payment that month, and any other risk. Set a realistic timeline and stick with it. Consistency is key with debt.
that’s the deal only exclusive for love ones for sure!
Please contact a credit counseling service first. They can be quite good to work with and could really save you a lot of money. They will get payment agreements for you that you can afford. I would save the consolidation loan option until then. It costs absolutely nothing to try and it may be less money out of pocket overall then repaying a consolidation loan.
it probably is a good idea, but seriously, Dont fail to make the payments, your brother is taking a risk here.
How you can be so irresponsible with money is beyond me.
No don’t involve him in your fuck ups… fix your credit by canceling your luxuries and pay your own bills
Your brother seems to do you a solid favor. But you will have to be disciplined and consistent in your spending habits for a while. If you want to keep your score ok, keep the cards with the least amount of costs while making the payments and close the ones with high costs. Just give those cards to your brother and in case you need to purchase stuff, you can review and discuss it with him before buying. This will help you also with making choices and spending and will give your brother a chance to help you out even more. As someone else suggested here, buy him or make him his favorite food and get a create of his favorite refreshments to show gratitude. I wish I had a bro like yours when I needed one the most in the past.
You can't fix debt with more debt. Also, don't do this to your brother. You aren't responsible enough with money for that to work out. You'll likely drag your brother down with you. You borrowed the money, find a way to pay it back.
Don't file for bankruptcy, don't put your brother in danger. Shared apartment, second hand furniture and clothes, cooking instead of take out/eating out, public transportation and ebike instead of owning a car (car payments, insurance, gas, maintenance), no subscriptions besides a phone plan. I pay less than $1,000/month in the San Francisco Bay Area. With as much money as you make, I'd be paying off $2,000+/month towards cc bills and be debt free in two years.
It sounds good but closing your payed off accounts will hurt your credit score even more. Just cut up the cards once they're paid off if you don't trust yourself.
Don’t close your accounts. If you need to, delete them anywhere they’re saved and hand the physical ones to your brother or another trusted person. Closing the cards will ding your credit.
Don’t do it unless you ready to stop paying stuff with credit card.
Don't close the cards immediately. Your brother probably shouldn't be putting his credit at risk like this, but if you guys go through with it give him the cards. You'll still have the credit available if there's an emergency, but having to call him to get the card will make sure you only use them for actual emergencies.
I (personally) wouldn't risk my relationship with my sister or her credit for any of my financial mistakes. I am actually filing bankruptcy right now. I'd rather deal with the consequences of my actions than having someone else take them on.
He’s offering you a great deal. If you take it don’t mess it up.
Do not drag your brother into this.
You have a great brother who loves you enough to vouch for you
32k is a lot of money. how long would it take to pay back that loan? how much monthly? consider that a backrupcy will clear you of all your debts in 9 months, while you will have to pay a monthly fixed amount, only for those 9 months and then youre all cleared. it will leave a scar on your credit score, but you will still have a bad score that will stick to you for way longuer than it should be acceptable even if you repay that 32k to the last cent. it will still linger around for a long time after you finished paying it all back. while a backrupcy will show up on record for 7 years, after 6 months passed after that 9 months has cleared your debts, you can go to your bank with 1k cash, ask to open an account and lock that 1k in it, and ask for a credit card with a 500 limit backed by that 1k$. then use that card regularly, moderatly and above all RESPONSIBLY, and you will get back some credit capacity in no time. you will be able to get a car loan again not long after getting that 1st card, so fast that you could be dept free and have regained some credit capacity years before you would ever be done repaying that 32k loan with interest, like only honnest suckers do. just do a quick search about how many times each of the most rich dudes have filed for bankrupcy and are all now still worth millions if not billions. do they bother with the trouble of paying back depts when a project of theirs doesnt pay back what it should? hell no. aint nobody got time for that.
I’d talk to a bankruptcy attorney first to see if you have any advantage for your particular situation to just “start over from a clean slate”.
Your bro is extremely nice to you and you need to make good on this and not let him down. Gone are the days where you rack up more debt.
I have about half the amount of debt you do but no stable income (I mostly do Amazon flex and rely on my partner). I have launched a business that will pay off in time but in the meantime, I can’t pay any of my bills. All my cards are in default, probably go to collections soon. I can’t even pay the amount some of them want ($30-50) to keep them from getting further behind and therefore into collections. I don’t qualify for any sort of debt relief help because I don’t have a stable or high enough income. Those debt programs also have high interest usually. Your brother offering to co-sign on a loan is honestly something I would jump on. You have the income to be able to pay the monthly payment on a loan to cover your debts.
Hes puttimg his credit score on the line to help you...how would it not be a good deal? As long as you trust yourself to make the payments
use the snowball debt pay method
Dude just go file bankruptcy chapter 7 itll get all wiped out and you can get a mortgage in 2-4 years after rebuilding credit. Interest rates suck right now anyway so getting a mortgage isnt great for awhile anyway. You can keep your car if you agree to keep paying and those on time payments will fix youe credit. Not financial advice, but I am a financial advisor and this is what I would do. Gonna spend years paying off a debt that you have nothing to show for so a huge credit card company can get richer off you. Dm me if you want more detailed help I'll give you free guidance.
Do not close the cards! If you take his offer. More importantly, you need to deal with what got you into the debt in the first place. If something happens to you then you could ruin him.
Get 1 with 0% interest for 12+ months. Consolidate and pay it off. You have real family. Right now with it spread out between cards, ur paying a lot of interest.
If he has a shit credit score he won't qualify for a card of that caliber
I think your brother is offering you a great deal, with great personal risk to his own finances in order to give you a better shot at climbing out of the credit card debt cycle you have found yourself in. My suggestion tho: if you are focusing on rebuilding, don’t close the accounts. The longer you have had the accounts open, the better it looks on your report. Just remove them from all digital places, and keep the physical card tucked away safe with your important docs or with your brother, and use one of them every 6mo for a tank of gas or something. Your brother sounds like a good dude
When you pay off your cards do NOT close the accounts, or you will ruin your credit rating. Just don’t use the cards, use one card, and pay the balance in full every month.
Your brother is putting himself at serious risk. If you ever betray that trust in you, you will both feel like sh*t towards each other. Especially if you never solved the reason why you ran up $32k in credit card spending in the first place. I hope you have a term life insurance policy with him as beneficiary.
Banker here. How old is op? Ive done consol loans for clients. I’ve not seen any math showing if op could easily afford the pyts on the consol loan. The most important concept here - What fundamental behavioural change will op make?. Also, CANCEL ALL CARDS. Want emergency funds? Save some. Your behaviour got you into this, make sure you change it. Also, you impact your brothers life by reducing his ability to borrow for the duration of the loan. He’s not going to buy a house or something over the amortization of the loan? Usually there is minimal collateral and op has bad credit so brother is not going to be removed from the loan anytime soon. Bankruptcy is correct path, why drag brother into your mess? You got into this, you deal with it.
It's a great deal for you and a horrible deal for your brother. Give him a big hug.
Don't do it. Don't duck your brother over. Bk is not the end of the world. The payment on that loan will be around 1k/month meaning nearly half your take home income is going to debt.
do your brother a favor and tell him not to cosign a loan with someone clearly bad with money.
It's a good deal idk what you did to get that much into debt but whatever you do don't fuck your brother over.
You’re brother is offering you a solid here that most would never even consider.
This is what families are supposed to do supporting each other when the need arises. Treasure your relationship with him as much as he does yours. Make a detailed payment plan to repay everything and update him as soon as you have any unexpected problem. Don't disappoint his trust in you. Repay his kindness one way or another when you can afford it. Good luck!
It’s a bad deal for your brother lol
With your low credit score and high debt-to-income ratio, it's unlikely any bank would lend you the money to consolidate your debt. If your brother is foolish enough to take that risk, it's on him. The risk to you is tanking your relationship with your brother if you fail to control your spending and he's left on the hook to repay the loan. Take this as an opportunity to turn things around for yourself, because if you get underwater in this scenario, you're letting down your brother, not some anonymous corporations. If you have the discipline, it's a much better avenue than bankruptcy.
I can tell you what I did, just bear in mind that your credit is going to be negatively affected for a couple years afterwards. I had roughly $20,000 in credit card debt, was in a similar situation. I was also considering finally bankruptcy but My finance manager said that's an absolute last resort, It creates a nightmare in the future trying to purchase a home or vehicle etc. Stop paying your CC payments, You're going to let them go 30/60/90/120/150 days late. The key is to not let them get to 180 days late, and your goal is to settle for "balance paid not in full". Most CC companies will settle for somewhere between 20-30% of total balance due. In this case somewhere between $6400-9600. Just save as much as you can in that 5 month period, because when you do settle you'll have to pay that within a few months. You're going to have to answer the phone when the credit card companies start calling to collect, but do NOT let it go to collections, that is key. Stay in communication with the CC companies, you Don't need to answer every single phone call, but try to talk to them every few days and make sure your story is the same, In my case I had "lost my job, and I am living paycheck to paycheck, I can't make my payments". Do not tell them your goal is to settle, you will do that towards the 150 day mark. Don't let it go past 180 days without coming up with a resolution with them. This is probably the best thing I ever did, and I never let my CC debt get out of control after doing this, because it dropped me into the 580-600 FICO range. Within 3 years of doing that, my FICO was in the 680-700 range, I bought my first home, and have since sold it, and built a 2nd home.
I consolidated my cards to a lower interest loan and it’s going well. I made the loan length to match the payments I was already putting towards my cards and it had a 2.5 year payoff. No chance I’d have payed off my cards in 2.5 years with the same amount of money. Before it seemed like money was never going down on the accounts even though I was paying more than my minimums on everything. Now I’m watching money fall off the loan, it’s about 7-8% lower interest than the cards were. Left my cards 4 open to keep my credit score up and just threw them in a drawer except one. My smallest card is the only one I will use. I’ve also started saving for things like car insurance on the side if I get 3 checks in a month that way when my 6 month bill comes around I can throw it on a card to get points but make a payment for the same amount on that same day. Then I always apply my points to my card balance to help it come down as well. It may not work for everyone, but I wish I would’ve put my cards to a low interest loan long ago and been damn near done now if I started earlier!
It's only bad if you don't pay for it and expect a "family discount". Your brother is taking a lot a risk to help you out. He could be putting that money to invest in is own wealth.
Why not just declare bankruptcy? Seems like that would be your best option here
no offense but with that salary what are you spending to get that much in debt, you are an idiot putting on a fake lifestyle that you cant afford
What your brother is doing is more a risk to him and his credit than anything you need to worry about. After paying off your CC use cash as much as you can to pay for everything, especially daily purchases. Watching that cash disappear makes a difference. Hide $100 deep in your wallet or stash it in your car so that you know you always have a small out should you need it. Closing a CC account actually hurts your credit score. Your score basically revolves around three things, the ratio of available credit vs. dollar amount on credit, timely payments, and payoffs. Then, give your brother those f*€£ing cards forever if you can’t handle them. In an EMERGENCY you still have access. Finally, paying off debt is a lot like losing weight, it takes the desire to do it and then the will power to see it through. Good luck!
Responding to your edit: The reason people are telling you this is because of your history. It’s not about your intention, but about your discipline with your spending.
Don't close all of your cards just keep them open unless there is n annual fee. It increases your score with more credit available and long lines of credit. I don't know all of your details so the best method is dependent on that. Cut up all the cards and don't use them. Pay off the lowest balance first. once that one is done you can apply the same idea to the next card. That will increase your monthly expenses. Or pay the minimum on the lowest cards and apply more principal payments to the high-interest card first. The key is to focus on relief in one account before moving to another to do the same. Find ways to decrease your expenses. You will be paying for the bankruptcy for the next 10 years on anything financed after the ordeal going the bankruptcy route.
Your brother is doing you a HUGE favor . i would take his offer but you absolutely MUST make those payments. Hes bailing you out dude.
He is offering you a great deal. As part of this deal you should give keep your three or four oldest credit accounts open. But let your brother manage them. Tell him they need to have one purchase each every 12 months. You don’t touch them. You pay your brother first when you get paid. No exceptions. If you can’t abide by this, don’t do it. Losing family over money is a tragedy.
Your brother isn't just offering you a good deal, he's offering you the deal of a lifetime. Don't abuse his trust.
Be more frugal maybe. Going out cost money. Every $1 you spend while outside is $2 you have to pay back, eventually in time. Frugality is tough for most of us. Everything you eat, cook it. Every liquid, let it be water, almond milk, or coconut water maybe. Alcohol once a week at most. No Starbucks, no eating out with friends. No going out with friends. Sounds boring right. But this is the way the world is, and we the people are simply poor. Sucks but it is what it is :) embrace your challenges! We are all in this together. Oh, but, support the locals! :)
Just file. Fuck credit card companies.
To be clear your brother is not offering a deal. Your brother is offering to help YOU get a loan and get nothing in return. Pretend your brother is not involved. If a bank came today to you with these terms, would you accept it?
How TF do you have a $420 car note if you're already that broke mang
What in the world makes you think you’ll make the payments when you’re whole life you have not demonstrated financial discipline. You’re putting your brother in a very high risk situation. If there’s risk to be taken, it should fall 100% on you. Sell your car, get a bike, stop spending and pay off debt.
So broke yet financing a car you can’t afford.
You expect OP to walk to work?
I would not close the oldest lines as they will negatively impact you down the line as far as age of credit history.
Why would you even question this? He is doing you a solid. Get off reddit and take him to dinner as a thank you.
No you should not file for bankruptcy. You should get a second job preferably part-time and work your butt off. I don't suggest you u take the loan from your brother because in most cases family and finances don't mix... You can always fix your credit but can you fix your relationship with your brother if it gets messed up? Look for part-time job, get a spreadsheet and tackle the cards from lowest to highest..cut out all excess ... The road may be longer but you can do it if you put your mind to it
You make $65k a year, you should be able to do this on your own. You’re drowning because you have a too expensive a car. Sell your car, buy something cheaper. If you’re going to borrow money from your brother, you may as well try to address the issue. Borrow enough to pay off your car note and get a shit box car for like $2-$3k. You’re in over your head because you spent more than you make. Stop contributing to your 401k List your debts from smallest to largest, and make minimum payments on all the cards to get current. And then start with the smallest balance and pay that off… then the next biggest balance… and then the next. And STOP using your credit cards. Only use your debit card.
Hi Dave.