hey guys, i've got a problem. i ran up a credit card this past year b/c i wasn't working and had to use it to make other payments. well, i've been working lately but only part time. although the income is helping out, i was falling behind on my cc payment. the minimum just got to the point where it was pay them or starve. and it's been a few months since i've paid them. anyhow, today i got a call from a representative telling me they are willing to settle if i can come up with half of the balance by next week. and there's no way i can do that. i know i am responsible for it. i still make payments on their other card b/c i can afford the minimum. this is MBNA, by the way. just not this one. my question is how much can they legally do if i don't pay? i know it'll be on my credit report and sent to a collection agency. i don't really have any assets (except my car, but even that doesn't feel like one). what is it that i should worry about most?
They'll turn you over to a collection agency and bug the hell out of you. They'll put it on your credit report. That's basically it. You can request that they close your account and reduce your payments down to what is affordable for you. If you negotiate in good faith, they'll work with you because they want to get something. They'll try to push you to pay more, but just say, "X is all I can afford."
If this is really a lot of money, you might consider file for chapter 11, but you probably need some legal advice from a lawyer. Anyway, good luck, losing your job really sucks.
If you settle with them for less than the full balance, it still goes down as a negative on your credit report.
Filing bankrupcy over credit card debt accrued over one year? How bout get a second job and pay it off?
I remember somebody here recommending something, I think a debt consolidation or management or something. I think I've seen those commercials, they say they're none profit, I don't know how that works, or maybe my memory is fuzzy. But I think that's for multiple debts, so it might not make sense for you. I'm pretty sure there was someone here who did that once and they talked pretty positively about how it helped them out.
Oski - i know the ones you are talking about. but yea, i think they may be for multiple debts. plus, i always have this thought that they make just make things worse than they are. i don't know. aces, i'd take that negative. if i had what they were asking for i wouldn't be in this predicament b/c i'd be paying my monthly amount. unless my situation changes for the better sometime soon, i guess i'm SOL and so are they. more so me than them, i guess. thanks for all your input.
I've been through a credit/debt management program and it was excellent. It was actually a benefit to my credit compared to struggling with payments AND it reduced the amount of my payments significantly. Mine will be paid off in the next couple of months. However, you are correct that it is generally for multiple debts. Not sure how much you have on the card, but your best bet is to go to them directly, explain the situation and ask them to reduce your payments in exchange for closing the account. You'll have to battle with them a bit over it, but just tell them what you have and pay them what you can.
Actually, I think the best bet is to pay the credit card in full, it wont have nearly the detremental effects to his credit. Plus, its the right thing to do. I dont know what kind of part time work you are doing, but where I live, there is a lot of part time work available. It might be wise to pick up a second job.
I juggle my credit card debt by moving it between the various 0% intro balance transfer rates. I've managed to get my debt down from $25k to ~18K in the past few months. 2 more years and I'm hoping to be debt free for the first time that I can remember! Then I'm going to go and get in debt by six figures and buy a house.
I'm using Debtserve. I have been able to buy a new car with a .09% APR while in the program. I will be completely debt free in about 18 months.
Thats aweful for your credit too. I would keep an eye on your score before you apply for a mortgage. There is a big difference in mortgage payment for even small changes APR of your loan. It may be better to pay a few percentage points on your credit card (rather then keep shifting it around) then have to pay a few percentage points on a mortgage.
It makes little to no difference at this point*. By now, the company has almost certainly marked it as a charge-off, meaning that they have written the loss off as unrecoverable. That does not mean that you are absolved of the debt, however. If you blow them off, they will sell the debt (if they haven't already) to a third party for pennies on the dollar. The third party will then pester you to settle the debt for anything they can get. Meanwhile the credit reporting bureaus have already had their way with your credit rating. You are probably in the bottom five percent of credit scores by now. Whether the debt is paid in full or in part makes no difference at the point the creditor agrees to close the account in a charge-off situation. The asterisk is a caveat. If MBNA still owns the debt and you can negotiate with them to mark the account "Pays As Agreed" rather than as a charge-off, it will be worth it to pay it in full (that's probably the only way they will make such an agreement). Any previous delinquencies (30, 60, 90, 120, and 180 days) will still be reported on your report and impact your score, but the coup de grace can sometimes be avoided. Otherwise, it is not really in your best interest to settle the full amount; rather, pay whatever you can afford to pay and get the account closed ASAP. The damage is already done and basically you are in for a long, long, long wait for your score to improve, so the sooner you get this thing closed, the sooner the clock starts ticking towards the day it falls off your credit report. Negative marks like this stay on your report for up to seven years, and roughly a third of your credit score is based on payment history.
BK, Can't you write the companies after you pay off the cards and ask them to help you out? Or is that only when they don't sell off your debt? I've been extremely lucky in my racking up of large debt that I've never missed a payment, had a late payment, or been over the limit for more than one billing cycle. The only problem I have currently is that I can't get credit, but that's a good thing.
Can you be more specific about "help you out"....? What types of circumstances are you thinking of...? I would try to answer this but it's very subjective.... need more info. The scenario I'm describing is a quid pro quo deal-- "I will settle for the full amount if you don't take a concrete dildo to my credit report". Once you've paid, I guess you could write the companies but they have considerably less incentive to help you at that point. Likewise after they've charged you off; at that point your debt is off their books, so they don't really care if they see dime one of it. They'd prefer to of course but they lack incentive to make a deal.
It's been over a year since I was talking with the car salesman (yeah, I know) about it and he basically said that once you pay off a debt that was negatively affecting your credit report for whatever reason, you could ask the creditor to ask the credit bureau to make a note that it was paid off and to take off any negative marks related to that debt. I'm sure the guy had no idea what he was talking about though. He seemed pretty shady. Imagine that.
Yes I'm sure. If you settle with them for less than the outstanding balance, it will be listed on your credit report as such and it will lower your credit score. Not as much as an outright default, but still a fairly significant negative.
