Dealing with Credit Card Companies (?)

**boosami** · 02-17-2009, 07:01 AM

Originally posted by cbaxter View Post

What is the best way to contact the CC and discuss options? I am not in a position to settle any of the accounts right now, but I do want to continue to pay on them.

What do you mean "options?" Really the only reason to contact the credit card companies would be to ask them to lower your rate, ask to defer a month's payment, or to settle. Changing the rate won't affect your minimum payments much if any, and a deferral will just postpone things. As you said yourself, you're in no position to settle currently.

You may be able to move some debt around on your cards and other trade lines and lower the overall minimum payment so you can stay afloat for now... If you list out your trade lines, balances, and APRs people here can help you. Of course, the preference would be to analyze your entire budget, which you should have figured out soon.

**LuxLiving** · 02-18-2009, 02:30 PM

Are you doing anything to earn extra income so that you are able to stay current with your payback plan?

**cbaxter** · 02-20-2009, 02:08 PM

My Debt Picture

Currently I have around 77k on six credit cards. The rates go from 3.99% up to 35%, with most around the low to mid 20%.

In 2005 I had landed an 80k a year job overseas and was debt free. I came home and purchased a moderate home for 130k and because I was not a full year on the job and to get 2 mortgages. The two of them average right around 1.1k a month.

Long story short, I took too much time off and by the time I was ready to go back the assignment was eliminated. Thinking I could get on another assignment I just kept spending and the credit card companies were too happy to give me credit.

Needless to say I never got back overseas and currently I'm only making around the mid 30's. That is with a fulltime and part time job.

So, now I've reached survival mode and started with DA, which will stop the bleeding, but that is not going to stop what is inevitable, which is not being able to pay the minimum due.

I have already written letters to four cards with the highest rates using the template off of bankrate.com, but I just did that and would not anticipate a response this soon.

I might be able to do some balance transfers if that route is a dead end, but still don't know if that will be enough.

I guess when I asked for options, I meant strategies. I spoke to a debt consolation advisor and was told to stop making payments across the board and bank the money for six months and then start to see if I could settle with a couple of them and go from there. I was just wondering if that is the best route.

His reasoning was it is only a matter of time anyway before it all catches up with me and to plan on having bad credit for about 3-4 years, but it would beat bankruptcy.

Any thoughts?

**cbaxter** · 02-20-2009, 02:48 PM

I guess what I'm asking is?

I guess what I'm asking is:

Do I stop paying them flat?
Do I pay some (that I can) and not others?
Do I just send what I can every month evenly?
At what point do I ask to settle or negociate?

**swanson719** · 02-20-2009, 06:17 PM

There are three lines of thought generally with CC companies. First rule is that CC debt get's paid last, after literally every other bill.

If you're going to keep paying, you can do one of two things.

1) Take the 77K over 6 cards, figure out what percentage is owed to who, and pay them that percentage of your available income that's left to pay CC debt. Everyone gets paid a little, but probably no one all the way.

2) Pay all of what you have left on the highest interest rate card and knock it out. This frees up more money immediately because you're not trying to make a minimum on that card anymore. When you pay interest, think of it as if you were being paid interest. You pay the most on whatever has the highest, so you want to get rid of that first.

And if you decide to not pay the CC debt or just can't, choose to not pay the CC with the highest interest rate. After 180 days of delinquency on CC's, the companies will usually sell it as default to a collections company. The collections company will almost always settle for 50 cents on the dollar. So rather than trying to keep up with 35% interest rates, which you're barely getting ahead on, if you let that one go, then settle with a collections company, you're covered.

Oh - and drop the Debt Consolidation company immediately. You're paying them to do something you can do yourself. The forums on here give you all kinds of free advice, the same you'd pay for from a company. And as far as them negotiating your rates, if you call and annoy the CC companies as much as they do you, they will eventually do something to help you.

Note: The first option is the least likely to ding your credit. You'll still get hit for not making the minimum, but not so bad as if you were to let one go into default.

Also, you had to have spent the 77K on something. So twas I you, I'd be selling whatever that something was and paying off the credit cards. Dave Ramsey's Total Money Makeover would probably be a great book for you. It helped me. He has a financial peace series with a CD of it being called "Credit Sharks in Suits". Also, look up the Fair Debt Collections Practices Act and become familiar with it. It is your friend.

And being military, I have to give this pitch. If you're under the age of 42, you can join. I wouldn't if I was married, but you didn't mention it. Bonus's are sky high right now. Officer pay is $2,200 a month to start, not counting housing and meal plans. Enlisted is less, but has higher bonus's. If you were to join the navy as a nuclear guy, you could easily see a $60K bonus to join, make about the same as you do now, do 5 years on a submarine, get out and walk into a job making upward of $100K. All you need is a high school diploma. Your debt would be almost completely gone in one foul swoop, and you'd make enough over the next 2 years to get rid of the rest and put a lot in savings. The last 3 years would come close to paying off the house. How much danger is there on a submarine? Really now.

**cbaxter** · 02-21-2009, 09:35 AM

Thank you for your reply and information. The 77k went into home repair/remodeling along with making up the difference when I fell short on the monthly living expenses while waiting to go back overseas. There is really not much to sell, believe me I look around every day.

I do not have a debt consultant. I spoke with one and asked about how their program worked and basically it was; I stop paying all the CC bills and depoist the money in an account they control and they would then settle with the creditors. And like you said; I can do that myself without paying them.

If I keep paying on the CC even though it's not the minium will that keep it from going to collections? Wouldn't it be better to go to collections and deal with them?

Also, I've read that when you agree to settle that part of the agreement is the company or collections mark the debt as "PAID IN FULL" rather then "SATISFIED". Is this information correct?

**neatdesign** · 02-21-2009, 07:14 PM

Originally posted by cbaxter View Post

If I keep paying on the CC even though it's not the minium will that keep it from going to collections? Wouldn't it be better to go to collections and deal with them?

I can't really comment on the negotiation issue, but if you pay even one penny less than the minimum amount due, you'll receive the same penalties than if you made no payment at all. You'll still get late payment fees, you'll still run the risk of getting a higher penalty APR, and you'll still run the risk of your account being put into collections.

~ Jenney

**Rainelli** · 02-22-2009, 04:54 PM

I think the better thing to do here is to pay them on time to avoid the penalties.

**cbaxter** · 02-23-2009, 05:52 AM

I wish I had that option, but next month I don't think I will.

Dealing with Credit Card Companies (?)