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Consequences of defaulting on credit cards w/o bankruptcy

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Anonymous
Not applicable

Re: Consequences of defaulting on credit cards w/o bankruptcy

Thanks for the reply. Damaging my credit score is the least of my worries. As I said originally, I couldn't buy anything big now anyway. We've already cut spending and luxuries to try to pay for college, and there aren't $900 more in cuts to be made, let alone $2100. I can't pay these bills. I know I got myself into this mess, but Chase is going to drive many people into default. I can't be the only one.
Message 11 of 31
haulingthescoreup
Moderator Emerita

Re: Consequences of defaulting on credit cards w/o bankruptcy


two2 wrote:
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?

I'm being as gentle as I can be, but yes, once you got into that level of debt, you handed over all power to your creditors. When they extended credit, you promised to pay them back what you borrowed, at the terms that they dictate.

The only legitimate threat of non-payment that you have is to declare bankruptcy. Otherwise, if you don't manage to pay them back, you can look forward to a lifetime of harassment from collection agencies, process servers, and other fun folks.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 12 of 31
QueenBean
Regular Contributor

Re: Consequences of defaulting on credit cards w/o bankruptcy

I was able to settle mine for about 20 cents on the dollar.  Downside is a CO on your credit and a 1099 in the mail....but it is an alternative to BK
Message Edited by QueenBean on 06-23-2009 05:54 PM

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Message 13 of 31
Anonymous
Not applicable

Re: Consequences of defaulting on credit cards w/o bankruptcy

I just thought of something else: if I make a late pymt on any one of the 5, even to get them to talk, they will raise my interest rate to 27% on all of them. I think I'm screwed!
Message 14 of 31
Anonymous
Not applicable

Re: Consequences of defaulting on credit cards w/o bankruptcy


@Anonymous wrote:
I just thought of something else: if I make a late pymt on any one of the 5, even to get them to talk, they will raise my interest rate to 27% on all of them. I think I'm screwed!

 

Well, it sounds like you have known this day was coming (taking cash out to live on, pay cars, pools, etc).  For the amount of debt you have (as large as some people's mortgages), you very well face a potential lawsuit, especially if you have assets and income.

 

I would advise that you at least speak with a BK attorney about your options and not just "hope" that Chase doesn't sue you.  As you mentioned, your FICO is the least of your concerns now.  Now you need to get your financial life back, out of debt bondage.  A BK13 is 5 years of payments and 7 years on your credit.  $70k of CC debt, if you pay minimums, is a lifetime and default is huge interest, fees, potential suing you, garnishing wages, attaching assets in addition to your bad credit.

 

If you seek BK13 now and enter a payment plan BEFORE you default and CO, then your credit will be much less impacted and you will get a payment you can handle, pay your debts (you mentioned wanting to honor them) and have light at the end of the tunnel and debt free in 5 years.

 

Don't make an "uniformed" decision.

Message 15 of 31
Anonymous
Not applicable

Re: Consequences of defaulting on credit cards w/o bankruptcy


@Anonymous wrote:
Thanks for the reply. Damaging my credit score is the least of my worries. As I said originally, I couldn't buy anything big now anyway. We've already cut spending and luxuries to try to pay for college, and there aren't $900 more in cuts to be made, let alone $2100. I can't pay these bills. I know I got myself into this mess, but Chase is going to drive many people into default. I can't be the only one.

Are you still paying college bills for your stepdaughter?

Message 16 of 31
Anonymous
Not applicable

Re: Consequences of defaulting on credit cards w/o bankruptcy

I have never been in debt before the past few years. I bought a larger house with my wife and stepdaughter seven years ago, and got married four years ago. My wife got almost $2000 per month Social Security then, and worked, and spent every penny. A few years ago the SS ended, and she will not contribute to the household bills except for food. She says that she doesn't have the money. I did not use credit "to live on", actually. No fancy electronics, vacations, etc. Our house had a pool when we bought it. The liner went bad, so we had to replace it or it would have caved in if we left it empty, or we could have filled it with dirt and had a garden with a concrete deck around it. It's 11 ft deep on the deep end, and the liner was $6000. Our township installed sewers and required us to tap in: $9000 doing the work myself. Paid off my truck loan because the interest was cheaper: $11,000. Paid off some credit my wife had at higher interest from before we were married (dumb idea): $16,000. Did some needed repairs to our home and some improvements to apartments. All this instead of getting home equity loans and separate loans for business improvements with higher interest and payments. As I said, at 2.9% to 5.9%, the payments and interest were manageable. Pay on time, rates are good until paid off.

 

I married her mother a year before my stepdaughter started college. Her father had died when she was eight, which is why they got the Social Security. I assumed that she would go to school basically for free. Not so. They use the income of the household she lives in to award financial aid and grants (and do not subtract debts from income). Guys from work and my own brother-in-law pay nothing for their children's college because they live with their mothers. FAFSA says we are expected to pay $15,000/yr, we pay about $27,000 (mostly loans) because the school didn't come up with as much aid as they led us to believe. I didn't have a say in the school choice. She has one more year, and may go a 5th at another school to get a teaching degree. I'll be making pymts another 7 or 8 years. The bills that the loans don't cover: cash advance.

 

Last August, stepdaughter fainted and broke her jaw in 3 places, cracked and knocked out some teeth. Ins covered jaw. Dental work (still ongoing) cash advance.

 

This Feb, wife got breast cancer. Copays and deductibles. Missed work (no paid time off for either of us). Money is tight, but even with high CC debt, my net worth is over $250k, so I can't go bankrupt. Now is not a good time to sell anything, and I don't feel I should be put into default because Chase doesn't like that I haven't made a late pymt like they expect you to when they give you a good rate "until paid off".

 

Staying single would have been way cheaper. Divorce would be worse financially, I imagine. Bankrupcy is not an option, so I'll probably have to try to sell something at a loss to make the minimum payments.

Message 17 of 31
Anonymous
Not applicable

Re: Consequences of defaulting on credit cards w/o bankruptcy

What you need to do is first: stop paying. Until you do this you will get no response from them. When you pay on time you get no help this is how it is. When you stop paying your file will go to their in house collections department and they will start calling you. It depends on the bank it could be imidiatley after you missed a payment it could be weeks later. Explain your situation to them and just let them know that you have lost much of your income and you cannot afford not just their payments but most of your other debt. Also let them know that your attorneies have advised you to go with a chapter 7 bancryptcy protection (which clears all your debts). Credit card loans are unsecured so ccc have only limited options to go after you once you stop paying and in fact the only two things they can do is sell your debt to a collection agancy which will pursue you or they can sue. In fact one way or another if Chase does not sue the collection agency can and might. But before it goes to court the matter can be settled directly with the Chase collection department. Once you have already told them that you are getting ready to file for bancruptcy protection they will most likely offer you a deal. So if you owe 70K if I was you I would offer them no more than 5K and u know what they will know that if they don't take it they might not get anyting once your loans are discharged in bankruptcy court. The bad side to this is that if this works most likley they will send you and the IRS a 1099 Misc income form for the difference between the 70K and 5K or 65K which you will have to pay income tax on. Hope this helps Chase did the same thing to me and I wrote a letter to Jamie Dimon to complain about the constant reduction of of CL on my cards. After a few conversatons with his secretary (never got to talk to him) they gave me like $600 refund (such BS) but I have to agree with people on here.,......Chase are very sneaky and most likley one of the worst banks out there.
Message 18 of 31
Anonymous
Not applicable

Re: Consequences of defaulting on credit cards w/o bankruptcy

Seems like you feel the need to drive your credit and life into the ground for your wife and step-daughter.  That needs to stop ASAP.

You have choices here.  Learn to say 'NO".  Tell your step daughter she needs to get a full time J O B.  What is this crazy talk

about paying for an extra year of schooling???? 

Message Edited by swanky on 01-27-2010 02:21 PM
Message 19 of 31
creditwherecreditisdue
Senior Contributor

Re: Consequences of defaulting on credit cards w/o bankruptcy

This thread is very old.
Message 20 of 31
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