Consolidate or not?

[DJ123]

I have $80,000 in CC debt over 4 cards and have not missed any payments yet with interest rates ranging from 11% to 18%. Since my credit is still good, I have the opportunity, and have been approved, for an $80,000 debt consolidation loan with an 11.75% rate for 7 years. The new loan will save me a few thousand in interest and lower my payment a little. But I am concerned about the following.

My income has changed recently and I may not be able to always make the new loan payment. Likewise, I may be missing some credit card payments in the near future for the same reason. So I guess I am wondering if it is a better strategy to remain current on as many CCs as I can and negotiate with 1 or 2 CC companies to salvage my credit rather than to possibly default on the larger $80k loan? Incidentally, I have never called my credit companies and asked the higher rate ones to lower my interest rate. I plan to do this, but even if I am successful, I may not be able to make all of my minimum payments.

The short version of my question is whether defaulting and negotiating on 4 different and smaller CC debts is better than defaulting on one big one.

Thanks

 

[justalayman]

This is not a legal question

Just an FYI though; if you are late on payments to a credit card there are often penalty interest rates. Any negotiated lowering of the interest rate may be short lived.

Some credit cards are able to raise your rates based on your credit score (which will surely go down if you miss payments) or negative credit issues or income changes (makes you a greater credit risk) (even with the other accounts).

 

[adjusterjack]

A third option is to quit paying on all the cards, accumulate a few thousand dollars and file bankruptcy.

I think you are already heading for financial disaster so why keep throwing good money after credit card companies who aren't likely to give you the time of day when you ask for relief.

 

[DJ123]

I am not above that either, but at least with a slightly lower payment with consolidation, I may pay it off in 7 years. However, I feel like the lender of the $80k more likely to sue than 4 credit card compaines with $20k.
Thanks

 

[HRZ]

the devil may be in the details of the proposed new loan ? in general if one could repackage 80k averaging say 15% to 80 at 11.75 % thats better ...but I just gotta be nervous about the details of the new loan until checked ...especially the lenders options and State for jurisdiction in case you "stumble " downstream

 

[DJ123]

HRZ
Its a fixed loan with no prepayment penalty. I am in California. It is from LightStream. What should I be looking for in the details?
Thanks

 

[HRZ]

IM not worried about prepayment...are there any whopper rate jumps or acceleration issues if you a late?

 

[DJ123]

EVENTS OF DEFAULT: You will be in Default under this Agreement if any one or more of the following things happen:
(1) you fail to make any payment on the loan within 30 days after a payment is due;
(2) you do not fulfill your obligation set forth in the "Use of Proceeds" section of this Agreement;
(3) you make any materially false statements in applying for this loan;
(4) you initiate or another party initiates against you any bankruptcy or insolvency proceedings;
(5) you breach any other obligation set forth in this Agreement;
(6) you default on any other indebtedness now owing or which may hereafter owe us, our assignee or successors in interest; or
(7) this Agreement ceases to be in full force and effect at any time and for any reason.
OUR RIGHTS UPON DEFAULT: If one or more of the Events of Default above happen, we may enforce our rights in accordance with applicable law and we may demand immediate payment of all amounts owed under this Agreement and file suit for or otherwise pursue collection from you of all remaining unpaid sums. We acknowledge that under the laws of your state we may have the burden of proof regarding default events (2) through (7) above, and you may have a period of time to cure any Event of Default before we may demand immediate payment of all amounts owed under this Agreement. If legal action under this Agreement occurs, except as specifically addressed in the Arbitration Provision of this Agreement, you agree to pay all costs of collection that we or our assignee or successors in interest incur, including attorneys' fees and expenses of legal actions (to the maximum extent permitted by applicable law).