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Member
two2
Posts: 12
Registered: ‎06-23-2009
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Consequences of defaulting on credit cards w/o bankruptcy

I have about $70,000 in Chase CC debt on 5 different cards (they kept buying companies and accounts). All are low int. until paid off, 2.9% to 5.9%. I hate to be in debt, but have paid off car loans with cash advances as well as some medical bills, college for stepdaughter that we can't really afford, new pool liner, new sewer line, etc. over the past few years. Also apartments with neg. cash flow (working too much trying to pay bills to put in the time). My wife just finished treatment for breast cancer: I missed some work and she missed a lot. We're making ends meet, but barely. Low int & pymts, so debt was manageable. No late payments, but going deeper in the hole each month this year. Today I recieved a notice for two of the Chase cards (bal about $31k) that the min pymt will increase from 2% to 5% of the outstanding balance. This will increase my pymts by $930 per month, which I don't have. I called Chase and explained my situation, and if all 5 increase it would raise my pymts by $2100/mo, which I definately can't pay. The rep told me that the new min was Chase's new policy, that I could not avoid the increase, and that the other 3 cards may increase later. I explained that they were getting their money on time every month, but that may end when the payments increase. She said told me that was up to me, but it would be on my credit report.

 

Long explanation, now to the question. My wife suggested, as apparently a friend of hers had done, call them and tell them you're not paying and they will eventually charge it off. I would hate to cheat anyone, and am the type that if I would borrow $10 from someone I would find them to repay it the next day, but Chase is creating an unavoidable default situation for me. With so much CC debt, student loans, and mortgages, I really couldn't get a loan now anyway, and I'm not planning to move anytime soon. If I just stopped paying on the entire $70,000: a. What could they do legally (liens, judgements, etc.) to compel me to pay? b. How long would this haunt me on my credit report? c.How would this affect my other credit cards that have small or no balances? Would existing credit lines be cancelled?

 

I don't think that bankruptcy is an option, because I have too many assets, but selling anything at this time would probably be at a loss. Before I go completely broke and lose everything trying to pay Chase, I'd like to know what my options are.

 

Thanks,

Tom

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Creditaddict
Posts: 21,693
Registered: ‎10-23-2007
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Re: Consequences of defaulting on credit cards w/o bankruptcy

they most likely are going to offer you payment arrangements at a fixed low apr and monthly payment after missing 1-3 payments. if you work with them you could avoid most damage of your credit.

Citi did this for me within 30 days of missed payment, I took the fixed offer and nothing bad even reported to credit.

It sucks to take this stand and hope they come around and offer to help you but they are leaving you no choice. 

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Member
two2
Posts: 12
Registered: ‎06-23-2009
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Re: Consequences of defaulting on credit cards w/o bankruptcy

Do I really need to miss a payment on purpose to get them to deal with me? I don't want to wait until I can't make the payments anymore.

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Creditaddict
Posts: 21,693
Registered: ‎10-23-2007
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Re: Consequences of defaulting on credit cards w/o bankruptcy

Unfortunately you are already seeing this to be true because they wouldn't help you at all when you called.

and if they do offer you payment options it will include what your behind, it's not like you will have to make a 2k payment and then your payments will be fixed at 300. AT LEAST in my experience the locked in offer was MUCH lower then I was currently paying and couldn't afford and they lowered my interest to 0%. not sure how great chase will be but it is in there best interest to work with you.. if they send it to collection and write the debt off they are selling it for pennies on the dollar, your offering to pay them in full if they will just lower your payments

Fico Scores: EQ- 653 Cap1., TU 696 Walmart, EX 695 Chase (11-05-14)
You will have to put up Electric Fence to keep me in the garden!
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Joey22
Posts: 22
Registered: ‎11-10-2008
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Re: Consequences of defaulting on credit cards w/o bankruptcy

[ Edited ]

I believe this increase to 5% minimum payments is due to the fact that you have "for the life of" balance transfer(s) on the account.  If so, call them and tell them you want to "amend" your fixed interest rates from what you were promised (2.99%, 3.99%, whatever) to 7.99%F for two years.  They will also re-set your minimum payment to 2% for two years or so.  At the very least, this will buy you some time. 

 

Even though you have done nothing wrong, and met all of their previous "conditions" for your fixed terms, Chase is known for these dirty tricks, and many people here had to modify their original "fixed for life" interest rates/payments to avoid the new 5% minimum payments.

 

Good luck

 

*edit*

original thread here

Message Edited by Joey22 on 06-23-2009 04:14 PM
Message Edited by Joey22 on 06-23-2009 04:20 PM
Member
two2
Posts: 12
Registered: ‎06-23-2009
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Re: Consequences of defaulting on credit cards w/o bankruptcy

Thanks for the replies, but what about my original question? What can happen to me if I tell them I'm not giving them another dime unless they keep the terms as they are?

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haulingthescoreup
Posts: 28,098
Registered: ‎04-01-2007
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Re: Consequences of defaulting on credit cards w/o bankruptcy

Well, at a guess, they will promptly drop your CL's to whatever your current balances are, making them report 100% util, and then close them. And perhaps every time you do make a payment, they'll drop your reported CL again, keeping you at 100%.

Not sure if CCC's do this on closed accounts, but they most certainly do on open accounts that they no longer want. It's called "chasing the balance."
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
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nicemann
Posts: 583
Registered: ‎03-12-2008
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Re: Consequences of defaulting on credit cards w/o bankruptcy


two2 wrote:

Thanks for the replies, but what about my original question? What can happen to me if I tell them I'm not giving them another dime unless they keep the terms as they are?


Well not even can they report it onyour credit report they can also go after you in court.  If they win, they could garnish your wages.  Not sure how far Chase will take it.

 

About 8 years ago I had a credit card with Chase.  Balance was about $2,500.  I did not pay it off.  In fact I stopped paying (had a situation, very long story).  After awhile they just charged it off.  Big difference in balances so I am sure it will be a little bit different.

 

Good thing is Chase gave me another chance.  About a year ago I got another credit card with them.  They gave me a $3,000 CL.  They even asked me abut the CO off when I applied.  I explained the situation and they said ok, things happen. That shocked me.

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Member
two2
Posts: 12
Registered: ‎06-23-2009
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Re: Consequences of defaulting on credit cards w/o bankruptcy

So basically the CCCs hold all the cards and we're at the mercy of whatever terms they decide upon? That doesn't seem fair or ethical. Doesn't the threat of losing 70 grand carry any weight? And what if I go through with the threat of not paying at all?
Established Contributor
Uniqua
Posts: 683
Registered: ‎04-05-2008
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Re: Consequences of defaulting on credit cards w/o bankruptcy

Honestly, I don't think your plan will work (speaking from experience with Chase that became down right ugly) and you may find yourself in a bad situation with them. It is really not up to you to determine what your minimum amount due shall be. Granted, should you default, they may work with you then to help you get caught up, but don't expect them to lower that minimum payment. Not to mention you run the risk of damaging your credit if you haven't already. Unfortunately, you may need to make some adjustments (spending, luxuries, etc.) or even taking on a second job so you can pay the minimum amounts on your CCs.

Wishing the best to you and your family!

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