Maria Overcomes Two Leading Causes of Credit Card Debt

Featured Client Profile: Medical Issues, Maria C.

Between divorce and her mother’s cancer treatment, Maria need help to overcome a $35,000 credit card debt problem.

It’s a common myth that credit card debt is usually caused by reckless or irresponsible spending. But the truth is that the most common causes of credit card debt are situations that someone didn’t invite and couldn’t avoid. Major life events like divorce, layoffs and medical challenges are all leading causes of debt problems for many consumers in the U.S.

Maria C. faced not one of these challenges, but two in the same year. The result was $35,000 in credit card debt spread out over 15 cards. Saddled with credit damage caused by her divorce, Maria turned to Consolidated Credit to regain stability, so she could get a fresh start.

Maria’s challenges with debt started with a divorce…

“Just prior to all this, things were good. I had a great job in the pharmacy where I’d worked since high school. We had a nice townhouse and two luxury cars. But my husband at the time ended up leaving us when I was 7 months pregnant, so I basically lost everything except my little girl. I lost my husband, my townhouse, and we had to turn the car in for voluntary repossession due to the divorce.”

Voluntary repossession is when you surrender a vehicle or piece of property that’s being used as collateral on a secured loan. This is most common with cars and auto loans. Unfortunately, the fact that you surrendered the vehicle voluntarily doesn’t prevent you from facing the credit score damage caused by repossession. The repossession will still appear as a negative item on your credit report for seven years, damaging your credit score in the process.

“My world was flipped upside down. I went from all that to being divorced and living with my parents as soon as she was born.”

Then Maria covered the medical bills for her mother’s cancer treatment…

Shortly after she moved back in with her parents, Maria’s mother faced a third bout with cancer.

“I wasn’t going into debt for careless spending or anything. With cancer, her insurance either didn’t pay or the surgeries were going to cost more. It was a matter of does she not get the treatment, or do I put it on my card.”

“I didn’t hesitate for one second to put everything she needed on my card – all her treatment, all her medication, everything. I even covered their mortgage because my dad was out of work taking care of her. And I would do it all over again, a hundred times over if I had to.”

Maria realized she was treading water with her bills…

“I never got to the point where I wasn’t paying my bills. Everything was getting paid, but it was tight. I knew I needed to analyze the situation and figure out how I was going to continue paying, and not at such a high cost thanks to my percentage rates.”

Maria’s interest rates were in the high 20s. At that amount, more than two-thirds of every minimum payment Maria made went to cover interest charges. As a result, her balances never seemed to go down. She was just treading water and getting nowhere.

“It was really frustrating. One credit card had a minimum payment of $24 and service fees of $26. I was only making minimum payments because that’s all I could afford to do. But even though I was paying, the needle never moved.” 

Maria’s brother was the one to offer her a solution…

“I needed to be able to get a fresh start. My brother and his wife had just completed a debt management program with Consolidated Credit, so they recommended it to me.”

Maria called Consolidated Credit for free credit counseling to see if she qualified for a debt management program. She did, so the certified credit counselor helped her find a monthly payment she could afford. The credit counseling team negotiated with her creditors to reduce interest charges and stop additional fees.

“All I could think about was that in doing this program, I’d be done with it and out of debt by the time my daughter turned three.”

Maria’s on her way to a fresh start, even before her last payment…

“I remarried, we have a baby on the way and we even bought a house. My credit had plummeted when I had the voluntary repo from my divorce. But right now my credit is great. We were able to get a mortgage and we’re in the process of closing on our home.”

Maria says she was surprised that she was able to get the mortgage approval, given that she’s still enrolled in the program. Two of her old account were recently closed.

“It didn’t look good that there were closed accounts that had money on them, but our lender and underwriter were able to see that we were in a debt management program and the accounts were being paid off. Once the baby gets here, our debt will be reduced and we can use that money for the baby. It’s turned out really well for us.”

Maria says her mother’s cancer has gone into remission, too. She has no regrets about going into debt to cover the medical bills. If credit card debt is what it took to get her mom healthy, she’d pay those bills a thousand times over. She encourages anyone facing a similar situation to reach out and get the help they need.

As much as Maria loves the program, she has no intention of coming back…

“My new husband doesn’t have a single credit card. He doesn’t owe anyone. That didn’t help us get the new mortgage, but since we already got approved, I think I’ll be taking his lead. We’ll celebrate my last debt management program payment by cutting up the other cards that I didn’t put in the program and zeroing them out before we close the accounts. I don’t want to do this program again. I loved it, but I don’t want to do it again.”