topic Re: Credit lines in Credit Cards

Credit lines

Anonymous — Sat, 03 Oct 2015 03:09:54 GMT

I've had perfect credit for 25 years never missed any payments. I currently have a total of 110k in credit card lines. If I stop paying my mortgage will my credit card banks lower my lines and/or suspend my accounts? I'd like to know how the credit card banks would react to missed mortgage payments and possibly foreclosure. Thx.

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 03:17:39 GMT

Nobody can say for sure but yes if your mortgage is reporting active lates adverse action on your revolving credit accounts would not surprise me at all. It would even seem likely. What is your current utilization % on your credit cards? I would say someone who has $0 credit card debt with 110k available and deliquent mortgage is exceedingly rare. Why not pay your motgage with your CCs? If you truly have lower utilization % your lenders might give you some more rope but you're probably still looking at adverse action

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 03:22:30 GMT

Your credit score will drop due to the missed payments and then it will take them forever to file the actual foreclosure, all the while your payments will report late every month until the foreclosure finally stops the bleeding. it is highly possible that some of your cards will balance chase you down when they do their regular soft pulls. I know some are more aggressive than others on this. Any way to refi while your credit is still good or try to sell the house? Even maybe take some money out of one of the cards until you can somehow get more funds? I know that's likely paying more interest but at least you won't ruin your credit and lose your house?

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 03:24:55 GMT

I've got 90k borrowed on credit cards all at 0%. I've been doing big credit card promos for several years on four different cards. If I stopped paying my mortgage do you think they would close my accounts? Or maybe lower the credit lines to just over my balances?

You asked why not pay my mortgage on credit cards? I will need to qualify for apartment the rest of my life. As a landlord taking my application, would you rather see a foreclosure and a perfect 20 year credit card history. Or would you rather see a paid off house and 20k in credit card defaults or settlements?

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 03:28:21 GMT

My income dropped from 65k to 22.5 k Ssdi. No way to refi and I don't qualify for loan mods. I have to decide between forclosure or credit card default. Can't stay in house on this income. assume I can't do a short sale. I have a heloc too.

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 03:37:22 GMT

I'm so sorry to read this OP. I don't know how old you are, but I'm thinking in this situation I might just file BK on both the house and the credit cards because it will ruin your credit no matter what choice you make but at least with the bk you can get out from under debt and open up your cash flow plus you can bounce back from that in a few years. But I'm no finance expert. I would usually never give that advice but obviously something pretty significant has happened in your life. Maybe someone else can give better advice.

Re: Credit lines

EW800 — Sat, 03 Oct 2015 03:37:33 GMT

When I went through a foreclosure and a CC settlement about 3-1/2 years ago, only Amex balance chased me down. All others left me alone, I assume because I was still making more than the minimum payments. Although Amex balance chased me down, I was able to get the CL back up again significantly about a year after the foreclosure was complete. I could see that the other CC companies were watching me though - soft pull account reviews like crazy, especially CapitalOne.

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 03:39:27 GMT

Also they won't close your accounts. The May balance chase you but they will likely keep your accounts open. If that helps.

Re: Credit lines

EW800 — Sat, 03 Oct 2015 03:41:37 GMT

@Anonymous wrote:
My income dropped from 65k to 22.5 k Ssdi. No way to refi and I don't qualify for loan mods. I have to decide between forclosure or credit card default. Can't stay in house on this income. assume I can't do a short sale. I have a heloc too.

If you have not already, you may want to go over to the Foreclosure area of this forum as well. There is a LOT of good advice there. You have a lot to think about, especially with the HELOC being involved as well and whether you are in a no-recourse state and or not, and so on.

Re: Credit lines

DeeBee78 — Sat, 03 Oct 2015 03:46:17 GMT

@Anonymous wrote:
My income dropped from 65k to 22.5 k Ssdi. No way to refi and I don't qualify for loan mods. I have to decide between forclosure or credit card default. Can't stay in house on this income. assume I can't do a short sale. I have a heloc too.

If I had that choice, I would choose to default on my cards. I'd rather have a roof over head than a piece of plastic.

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 03:46:35 GMT

Thanks everyone. It sounds like they might let me keep some credit cards even if I get foreclosed on. Thats good to hear.

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 03:52:06 GMT

Deebee, you said you would default on the cards. I would be defaulting on 20k of cards to get out of the house clean. Then I would get apartments. I would still have a roof over my head if I kept my perfect payments on the cards and got foreclosed on. I can't afford the house anymore.

If if you were an apartment landlord, would you rather see a perfect credit card history and a foreclosure? Or 20k in credit card defaults and a paid off sold house out clean? One other person said they would rather take someone with the foreclosure and good credit card history. So now I'm getting conflicting opinion.

Re: Credit lines

Kevin86475391 — Sat, 03 Oct 2015 03:53:07 GMT

I'm so sorry you're in this tough situation. Unfortunately it doesn't sound to me like there's a way out that can save your credit. Although I certainly hope someone else can come up with a viable solution for you.

The short answer is, yes, I think there's very little chance that your creditors won't begin closing your inactive accounts and balance chasing you down as soon as you begin missing mortgage payments.

My suggestion would be to try to get out of the house ASAP and to begin making other arrangements now before your credit takes a hit. Find an apartment and sign a lease now before you miss a payment. If you're going to change jobs try to do it right away so that if they pull your credit it, it'll be before you take the hit. I know that's much easier said than done because I'm sure this is a really stressful and exhausting, but I think you really need to try to steel yourself to make the most of the next couple weeks (or however long you have) before things escalate.

The reality is that you'll probably have to start over with your credit and expect to wait the full 7 years (10 if you do a Chapter 7 bankruptcy) before you re-establish your credit. It's terrible, but it's not the end of the world. You'll get through it.

Good luck.

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 04:08:28 GMT

That's interesting you mention signing an apartment lease now before Missing any house payments. What makes that decision tough is. I mght have still qualified for the apartment after missing 12 house payments and before the foreclosure. So by staying in the house for a year instead of an apartment I would have saved $8500. In sum, if I knew I could still qualify for the apartment after a year of missed house payments that would be the best choice because I would save about $8500 in free rent

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 04:12:38 GMT

@Anonymous wrote:
I'm so sorry to read this OP. I don't know how old you are...

He said he had a perfect credit history for 25 years so it's a good guesstimate that he's over 55; I would try to get some help with some organization. I wouldn't be surprised if there was some organization that can help him keep his home. There's nothing to lose to find free sources.

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 04:17:26 GMT

I'm 48. There is no way I can keep my house I am way short on income. My 22.5k Ssdi income is way too low for a loan mod they declined me.

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 04:24:19 GMT

@Anonymous wrote:
I'm 48. There is no way I can keep my house I am way short on income. My 22.5k Ssdi income is way too low for a loan mod they declined me.

If you aren't religious, I would go around and act religious and hopefully you'll fool someone to help you out to keep your home. You can be a zealot for a month. I am not joking; there are numerous rich and helpful people in the religious sector. Hey, it's survival of the fittest, so you can't just give up. Use your brains and brawn.

Re: Credit lines

Kevin86475391 — Sat, 03 Oct 2015 04:24:27 GMT

That's a really good point about living in the house until the foreclosure and saving on rent. I guess more than anything what I was suggesting is just getting all your ducks in a row as much as possible before the foreclosure. If you're going to stop making housing payments in the interim then it might also make sense to set aside as much as you can. That way when you are foreclosed on you can apply for an apartment and basically say, "I know my credit is shot, but I can pay for 6 months' rent upfront."

Re: Credit lines

NRB525 — Sat, 03 Oct 2015 04:31:17 GMT

OP, sorry to hear about the situation. It sounds like you have some difficult decisions to make.

As was pointed out earlier, one of the most critical pieces of information to know is, are you in a recourse state or a non-recourse state?

Also, does your state require a court order to finalize the foreclosure, or is it simply an administrative procedure that follows a set of steps the mortgage company can do?

If it is non-recourse, then you can likely live in the house with minimal cost.

If it is recourse, then you may be on the hook for some value you can provide.

Either way, likely best to get some advice from a local credit counselor, someone who is non-profit and not going to try to sell you something or "take care of your payments" for you and then run away with your money.

Re: Credit lines

Anonymous — Sat, 03 Oct 2015 14:34:39 GMT

I live in Illinois and it's a recourse state. They have to go through a judicial process to foreclose. They can also sometimes get deficiency judgments against you after foreclosure. I think I can be sued if I don't pay my 50k heloc too since I signed a promissory note. Helocs are usually recourse according to my google search. Thanks everyone for your concern and advice.