Credit Cards

[Chopped]

I have had a credit card for ten years now and the balance is about ten thousand. It was at 14% and now it's at 26% because of the new credit card laws Obama put in place. Because of that my credit card raise my interst rate. About six months ago they closed my account due to high balance.I have not been late in the ten years. Recently we had to shortsale our home, but I have kept current with everything else. My credit is now in the 500s due to the shortsale. 

     I have called and talked to the credit card company at least 30 times to go back to the 14% interest rate or take one of the interst payments away. They have told me over and over I have the best rate of 26% that they can't offer me anything and can't help me because I'm current with the account. it will take me 20 years, because we are only making the min.

     I don't want to stop paying, but with my credit being low. It might not matter any more. I would love some input or experiences you have had. I don't if I should stop paying and save my money to settle the debt later? Advise if this is a nightmare? Input  on good or bad things to do. Any other ideas on working with credit card people. Or stay current for 20 years. Thank you

[mrcrush20]

wow i am sorry to hear about what happned to you.. but i am confused as to what law (laws) would do this... allow a crediter to raise your rate ? did they rase the rate bc you became a higher risk consumer ? score droping to 500s ? or just rase it bc they can ? 

confused

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[Revelate]

Welcome to the forums, though I'm not sure this is the right board or even forum for this question.  If you're not able to make more than the minimum I'd try talking to a financial advisor.  Personally I think you'd be compounding the issue by letting the card go late and eventually charge off, and lengthening your recovery from the short sale.

If you have assets you can take a loan out against (car, etc) that weren't enough to keep you in the house, consider doing that.  If you can pickup a second income in your family, that's worthwhile too, even if it's simply part-time, an extra $100 or whatever a week can make a big difference.  Since you're out of your mortgage, can you find a cheaper place to live?  Personally I'd also start looking at what expenses I could strip out, even an extra $5 per day eating out for lunch adds up if you can put that towards the credit card balance.  I'd even see about taking a loan from a family member, even a few thousand would put you way ahead on the amortization curve even if you could only make the mimimum.  You probably have options.

If you're down to the difference between putting food on the table or not and nothing you can leverage, then that's one thing, but if you're not at that point, I don't think you're at the maybe second to last resort of just letting it default.  May be able to get help from one of the debt management programs as well which I think is a lesser of two evils on a credit report compared to a charge off.

Anyway I hope you can find a resolution to the issue somehow.

[compassion101]

Good advice from Revelate. Attempt all tries at a new family budget before considering things that will hurt your score long term. A c/o, BK, late payments, debt management program, all will affect you long term.

Also it seems typical that you cannot get a reduction in interest rate, most CCCs won't consider it unless you are already in delinquincy. They know that people will find a way most of the time, and if they don't only then might they reduce the interest rate.

[Wolf3]

I am guessing the shortsale of your home looks like a chargeoff on the credit report.    Adding a 2nd chargeoff will not make the score any worse.  If you can't find a way to pay this off in a few years.   Then I suggest you settle it out.   Learn how to do it yourself.   There is a lot more in our forums on this site for this.  In 20 years, you will have paid in $200K or more.   It is unreasonable to continue that burden.

[bribro]

Good advice from Relevate. Ideally you'd roll that debt over into something lower-interest (whether it be a HELOC [not an option for you I'm guessing], car loan, family loan, etc.) but this only works if you have the wherewithal to make those payments. What you don't want to do is roll that debt into a collateralized loan and then lose the collateral too.

Do you have any other credit cards you can BT into?

[cashnocredit]

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Wolf3 wrote:

I am guessing the shortsale of your home looks like a chargeoff on the credit report.    Adding a 2nd chargeoff will not make the score any worse.  If you can't find a way to pay this off in a few years.   Then I suggest you settle it out.   Learn how to do it yourself.   There is a lot more in our forums on this site for this.  In 20 years, you will have paid in $200K or more.   It is unreasonable to continue that burden.

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It's true that a short sale is extremely damaging. There is a discussion over on fico.com about whether FICO scores accurately reflect risk since short sales are negotiated and not the same as a foreclosure. Sadly, the stats suggest it is accurate. One in two people that have a short sale go on to default within the next two years supporting the idea that short sales indicate very high risk.

http://bankinganalyticsblog.fico.com/2012/08/are-short-sales-really-that-bad.html

[Revelate]

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Wolf3 wrote:

I am guessing the shortsale of your home looks like a chargeoff on the credit report.    Adding a 2nd chargeoff will not make the score any worse.  If you can't find a way to pay this off in a few years.   Then I suggest you settle it out.   Learn how to do it yourself.   There is a lot more in our forums on this site for this.  In 20 years, you will have paid in $200K or more.   It is unreasonable to continue that burden.

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I think it's more like 20K  Still a lot admittedly.

Anyway, while it might not be a problem for FICO purposes, I think it's a world of difference come underwriting.  A lot of people for whatever reason got into mortgages they couldn't afford.  It happens, to a non-trivial number of people, and that explantion will be accepted at face value to any loan officer in the next 10 years..  That's on the assumption it's the one and only blemish on the report; however, walking away from a 10K debt (and it'll probably rack up penalties and fees to around 13k+) and is going to be a much more difficult discussion.

There's a lot more towards any approval than just FICO score, and at some point the OP is likely going to need another car, or a shot at another house, and I just don't think that having an additional CO will make it anywhere near as rosy as it would be without the CO.

[trumpet-205]

If you want us to help you, list all of your debts right now (CC debt, car loan, etc).

[rootpooty]

what new credit card law did obama put into place?  this is news to me