#FraudRecovery #HELOC #FinancialAdvice #DebtHelp
Hey everyone, I find myself in a bit of a tough situation, and I’m hoping to get some clarity from those who are familiar with financial processes, especially around HELOCs and credit card debt consolidation. Here’s the gist:
Recently, I’ve fallen victim to a scam that led to about $24K in credit card debt. I didn’t see the red flags because I was too caught up in fear and urgency. Let me break it down for you:
- 🔹 I’m a 76-year-old retired RN living on just two monthly checks—my pension and Social Security.
- 🔹 My daughter initially got scammed, and due to her struggles with PTSD and chronic illness, I ended up taking on most of the financial burden.
- 🔹 I’ve been juggling multiple credit card payments, including 0% financing options, but now my savings are depleted, and my lifestyle has drastically changed.
- 🔹 After chatting with my bank, I’ve been advised to pursue a HELOC to consolidate and tackle my credit card debt, which comes with an 8% interest rate.
- 🔹 I’ve seen various opinions online, especially here on Reddit, but I’m looking for friendly, straightforward advice—sort of like how I used to explain medical terms to my patients!
Here are my main concerns:
- 💰 I know I won’t get a tax deduction for interest paid since I’m using the HELOC funds to pay off debt. But do I have to consider the money I pull from the HELOC as taxable income?
- 🔍 I feel an urge to pay down the debt as quickly as possible with the HELOC funds, but I’m wondering if that’s the right move. Are there pros and cons I should consider before diving in?
- 🔄 In hindsight, aside from avoiding scams, what could I have done differently to manage this debt better?
Dealing with debt and scams is incredibly stressful, especially at my age, and I’d love to get some insights from your own experiences or any tips you might have! What would you do in my situation? Share your thoughts! 😊
Using a HELOC to pay off your cards won’t create any taxable income. You’re just moving debt from one place to another.
An upside of using a HEL/HELOC to pay off cards is that it will lower your interest rate. A significant downside is that a HEL/HELOC is secured against your house. If you fall behind on payments they will probably foreclose you and leave you homeless.
You might want to look into bankruptcy instead of going this route. You could potentially wipe out the debt and keep your house/car. It would ruin your credit but at 76 with a house, you probably don’t need to rely on credit anymore.
Screw the credit cards. Just default and contact an attorney for bankruptcy. Don’t commit your house!
Sincerely, check out bankruptcy. With a good attorney, it’s a great solution for exactly this kind of debt-overload ratio.
Otherwise, check out the Ramsey method of paying off credit card debt. I disagree with plenty of his takes, but the credit card deserves some “credit”, pun completely intended
What was the scam? How did you end up with so much credit card debt? Can you chargeback any of the scams?
How long ago did this happen, did you actually conduct the transactions on the accounts? If not you should be trying to dispute and escalating, filing CFPB complaints against the banks, etc.
Depending on your state bankruptcy could make sense. Most retirement accounts are 100% protected in bankruptcy, but the issue is going to be the homestead exemption. Some states have very generous homestead while others are very modest.
Can you give more details?
Whose names were the credit cards in?
What is your income, your expenses, and your house value?
What does your daughter do for work, her income, and her expenses? Why are you paying for all this?
What is keeping her in Virginia vs a more poor friendly state? Virginia had Medicaid expansion are there other issues?
What is keeping your daughter from being scammed and wrapping you into it again?
Are you able to work in something like Walmart greeter or similar to supplement your income?
Based on the above we could guide more. In general with a paid off house I would explore bankruptcy options because what credit are you going to need in the next 7 years with a paid off house? Tying this debt to your house means you lose your house if if fall behind.
I see everyone here is suggesting bankruptcy but I think you’ve done the right thing with the HELOC.
I do have a couple of questions.
How long is the life of the HELOC and how long before you have to start paying principal?
How much balance is left on the original mortgage?
Assuming you’ve had the house/mortgage for more than 5 years and it’s a home worth well over 24k, you could potentially refinance the whole thing along with the HELOC
Might need to renew that license and come out of retirement for a year or 2
I recommend you speak with the counselors at Greenpath. It is a nonprofit that provides free counseling on debt, credit, and budgeting. They will not do a bankruptcy for you, but they can discuss the pros and cons. They can speak to you in everyday language. [https://www.greenpath.com/](https://www.greenpath.com/)
I’m financially illiterate but I’m so sorry to hear this. Hope all works out for you.