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I'm in a strange situation with close to $150,000 in open credit card debt and currently can't make the next payment. (While they were initially low-ish APR's. They are all at 16-27% APR or higher.)

I'm concerned that if I take on a regular job that paid in the $150,000 range, I'd have problems with taxes if I try to pay off my credit card debt? What salary would be needed to be able to pay taxes and also pay off this open credit card debt (assuming that it goes up by only 120% next year)?

(Living costs: ideally - $50k-$70k... in a pinch, I can work with close to 0, the usual "homeless in the office")

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    This question is based on a bunch of very strange assumptions. I find it hard to conceive that you currently have no job and $150k debt but can walk straight into a $150k (or more) job.
    – Vicky
    Commented Feb 12, 2019 at 7:27
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    also, we can’t possibly answer without a much broader perspective on your overall financial situation (living costs etc.), which would in turn make the question too narrow to be on-topic for this site.
    – Vicky
    Commented Feb 12, 2019 at 7:29
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    Increase by 120% means adding $180k for a total of $330k next year.
    – Lawrence
    Commented Feb 12, 2019 at 11:38
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    @Vicky money.stackexchange.com/questions/97782/…
    – ina
    Commented Feb 12, 2019 at 20:55
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    What problems with taxes? You earn money, pay the necessary taxes, then use what's left to pay down your debt. The two really aren't related.
    – chepner
    Commented Feb 12, 2019 at 21:17

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So you have 150k Debt with and APR of on average 20% and you wonder how long it will take you with a salary of 150k/a to pay it of am I right?

Roughly estimated I would say your netpay will then be 100k (assuming you live in the US, thats social security, taxes, ect.). Depending where you live you are able to sustain yourself at a cost of roughly 60k/a. The lower you can keep the cost the better. This means you can approximately pay 40k/a back. Which is 3.3k/m. With these parameters it is 7 years until you have payed it back.

1 Refinance

I suggest that you try to refinance the debt with a lower intrest loan. 20% is very high and it considerably adds to your debt. The intrest alone is 120k. If that is an option please consider it. (calculations are done with this tool.)

2 Sell some assets (if you have some)

A house, a nice car, stocks, collections, designer clothes. Sell your stuff that you no longer need to make additional money. If you have assets sell them, the probability that they make more than 20% return is pretty low. If you have expensive clothes or something that can easily be sold, consider that. The credit card money went somewhere so consider to sell that stuff again.

3 Cut cost as much as possible

Cut all unneccessary cost. Eat home or prepare food, do not eat out more that twice a month. You don't need an expensive car, if public transportation is an option consider it. You don't need an appartment alone, get a flat mate and share the rent. Keep health care and some insurance so if an emergency happens you can rely on them. Make a bugdet an calculate your cost of living and then optimize it. I have heard of a family of 4 who live on 66k in the US in a nice city. Alcohol and going out is pure waste of money. Starbucks is also waste of money, make a coffee at home and save 5-10 bucks every day. Which is then 300 bucks a month or 3.6 k/a or a hole year less paying off if you direct the 300 bucks towards paying off the debt. Do never underestimate the power of habits Every day 10 dollars can make the difference of a hole year less paying off.

4 Consider bancrupcy as an option

If nothing helps, admit it was a bad idea to take such large sums of credits with enormous rates and declare bancrupcy. Since I am not from the US and no lawyer I am not really an expert but from this quora post you can take the essentials. Basically Chapter 7 is what you are looking for. You sell all your assets (excluding one car, clothes, wedding ring, the essentials basically) than with the remaining money you pay the debtor and everything still open is gone. No debt for you from there on. Ah and a shitty credit score but I would recommend not taking too much credit anyways if you earn 150k/a.

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    Regarding bankruptcy: first, it's best to decide as soon as possible whether to pursue that avenue. Second, the OP should talk with a lawyer about what the options are, and whether it's better to declare before or after starting a new job.
    – Acccumulation
    Commented Feb 12, 2019 at 16:48
  • @Acccumulation Very good input, if you declare bancrupy than do it as fast as possible and I would seriousely consider seeing a lawyer.
    – Lucas Raphael Pianegonda
    Commented Feb 12, 2019 at 16:52
  • The problem is that these jobs are easy to get in certain metropolitan areas in the US, where the cost of living almost always requires a cc. Even if you do live very frugally!
    – ina
    Commented Feb 13, 2019 at 4:43
  • @ina If you don't see option 1 to 3 working than go see a lawyer and see if you can declare Chapter 7 bancrupcy. You'll pay 30 k in intrest a year, if you cannot at least pay off 40-50k a year your finances are done. Then bancrupcy is your only option left.
    – Lucas Raphael Pianegonda
    Commented Feb 13, 2019 at 6:46

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