topic Re: Conclusion ... Credit card Default - Does it matter? in General Credit Topics

Credit card Default - Does it matter?

Anonymous — Tue, 03 Nov 2009 15:20:57 GMT

My credit cards have reduced my available credit to leave me with very little available credit to use. I am current on my credit cards. I am thinking, since they are all unsecured debt, to just close them and default on them even though I can pay them. But I do not know the financial nor the legal impact of doing that. I really do not care about my FICO score now that my need for credit has dropped. And I really don't care about having any more credit cards - I can always get a secured credit card for use on routine expenses like gas and lunch out. So my request for your responses are to address your thoughts about credit card company recourse on me if I simply tell them to cancel the cards and that I am not paying anymore. I understand the unsecured debt goes off my FICO anyways in five years providing I make no further payments nor promise to pay in the future. Please tell me about the credit card financial and legal recourses if I default (or offer a reduced payoff as the alternative to them). By the way, I have four cards with 39k in debt with interest ranging from 0% to 13.5% and I am retiring with ample income. Thank you, and I plan on acting on this matter during November.

Re: Credit card Default - Does it matter?

MarineVietVet — Tue, 03 Nov 2009 16:41:17 GMT

@Anonymous wrote:
My credit cards have reduced my available credit to leave me with very little available credit to use. I am current on my credit cards. I am thinking, since they are all unsecured debt, to just close them and default on them even though I can pay them. But I do not know the financial nor the legal impact of doing that. I really do not care about my FICO score now that my need for credit has dropped. And I really don't care about having any more credit cards - I can always get a secured credit card for use on routine expenses like gas and lunch out. So my request for your responses are to address your thoughts about credit card company recourse on me if I simply tell them to cancel the cards and that I am not paying anymore. I understand the unsecured debt goes off my FICO anyways in five years providing I make no further payments nor promise to pay in the future. Please tell me about the credit card financial and legal recourses if I default (or offer a reduced payoff as the alternative to them). By the way, I have four cards with 39k in debt with interest ranging from 0% to 13.5% and I am retiring with ample income. Thank you, and I plan on acting on this matter during November.

I really do not care about my FICO score now that my need for credit has dropped. And I really don't care about having any more credit cards - I can always get a secured credit card for use on routine expenses like gas and lunch out

If you trash your FICO scores there is no guarantee you will be able to obtain any type of card in the future. Why take that chance?

I understand the unsecured debt goes off my FICO anyways in five years providing I make no further payments nor promise to pay in the future.

I'm not sure where you got this information. Here is how and when derogs drop from you CR, and are thus no longer included in FICO scoring.

Monthly delinquencies under an OC account drop at 7 years from their individual date of delinquency. FCRA 605(a)(5). The date of first delinquency (DOFD) has nothing to do with these drop-off dates. They drop from their own individual dates. So look at each prior OC reported monthly derog date, and simply add 7 years.

If the OC subsequently reports their account as a charge off, that is a totally different and additional post to your CR. Their post as a charge-off will remain in your CR for 7 1/2 years from the DOFD on the OC account, which is the first 30-day delinquency you had on the account, and disregards any later 60/90+ delinquencies that followed. That is one single date-certain, and cannot be reset. FCRA 605(c).

If the OC then refers the account for collection, and a CA posts to your CR, the drop-off date of their collection reporting is the same as that of a CO. It is 7 1/2 years from the same DOFD on the OC account, and the CA cannot reset this date. Again, FCRA 605(c).

I understand about being upset with having credit limits reduced but if you are determined to close all of them I would pay off the accounts first. That way there could be no possible legal recourse for the CC issuers. I would give all this careful thought before acting.

Re: Credit card Default - Does it matter?

Lel — Tue, 03 Nov 2009 16:47:30 GMT

How do you justify not paying your debt just because your credit limits were reduced? You acknowledge that you can pay them, you state that you have ample retirement income, and your interest rates are far from unreasonable.

You are not alone in having your credit limits decreased. It's happened to millions of people across the country.

Re: Credit card Default - Does it matter?

donkort — Tue, 03 Nov 2009 17:16:16 GMT

Frankly, it would be a most unproductive move to default on anything. You never know what might happen in the future.

More ... Credit card Default - Does it matter?

Anonymous — Tue, 03 Nov 2009 20:19:25 GMT

Just to clarify my original post given the responses. I really do not care about whether it is 5 or 7 or 7.5 years for bad reporting to get off my record. FICO is only valuable to get credit - I don't. Here is second clarification: I can pay my 39k in credit cards over 10 years at 1k a month. THat is 120k to keep the credit card managers happy (interpret it as their bonus arrives) over ten years. Or, I can take that 1k a month to pay cash for 120 cruises in those ten years. In the year 2019 (ten years), I would have the same financial result. That would leave a clean FICO score once again and either have no cruises or 120 of them. It seems an easy choice but I am doing my homework - PLEASE - what are the financial or legal recourses the credit card companies would have against me since the cards are all unsecured by anything. I am a home owner (three of them rented with position cashflow), have two paid off trucks, and have cash in the bank. Thank you for your inputs on the credit card recourse questions. Cheers! (By the way, I think so many of us got screwed so badly from the credit card and bank companies that I have absolutely zero compassion for them. I feel terrible for the many of us that were ruined by them.)

Re: More ... Credit card Default - Does it matter?

Anonymous — Tue, 03 Nov 2009 20:33:18 GMT

they can sue you and garnish your wages.

lord, save us from such

Re: More ... Credit card Default - Does it matter?

XAVIERSMAMA — Tue, 03 Nov 2009 20:34:19 GMT

Legally your CC company can enforce all the default clauses in your original contract. The big three being default interest rate, arbitration/court judgements, and garnishments. All of which will increase the amount you owe substantially. Seeing as how you are in the financial position to pay these off, I doubt the CC companies will not pursue these options to recoup their $. I think what most posters are stating is that though you may not need credit now and your FICO score may not be important to you, no one knows what the future holds so why damage your credit if you don't have to? You are correct in that the debt is unsecured so there is no collateral that they can take back, but you did enter into a contract to repay the money that you borrowed, so you can roll the dice and hope that they don't come after you in the 7-7.5 years until it falls off, but given the amount you owe and your financial situation, I think they will take every legal action they can to get their money back. Hope this helps.

Re: Credit card Default - Does it matter?

MarineVietVet — Tue, 03 Nov 2009 21:06:46 GMT

I'm not sure why you are wasting all of our time. Why are you concerned about legal recourses when you seem so determined to renege on legitimate debts? It's not just you though who will be affected.

If you follow through with this plan, the CC companies aren't just going to absorb the $39,000. They'll recover this loss, in the form of annual fees, interest rate increases, reduced rewards programs, etc. Everyone will pay for your decision.

Are you concerned about that? Somehow I think not.

This is my final comment. It's time to move on to more important things.

(My apologies to the mods if I went too far).

Re: Credit card Default - Does it matter?

haulingthescoreup — Tue, 03 Nov 2009 23:51:33 GMT

+1

I have all sorts of respect/ sympathy/ empathy/ you name it for people who struggle to stay on top of their credit. Some might have gotten in trouble due to financial disaster; some might have just plain screwed up. When they're determined to repay, and they get rate-jacked, I am indignant with them.

But if you think you're going to find a lot of sympathy here when you announce that you're going to welsh on legitimate debts (my apologies to any who trace their roots to the ancient kingdom of Wales), which you are perfectly capable of paying, you're probably on the wrong forums.

Re: More ... Credit card Default - Does it matter?

Anonymous — Wed, 04 Nov 2009 00:30:02 GMT

@Anonymous wrote:
Just to clarify my original post given the responses. I really do not care about whether it is 5 or 7 or 7.5 years for bad reporting to get off my record. FICO is only valuable to get credit - I don't. Here is second clarification: I can pay my 39k in credit cards over 10 years at 1k a month. THat is 120k to keep the credit card managers happy (interpret it as their bonus arrives) over ten years. Or, I can take that 1k a month to pay cash for 120 cruises in those ten years. In the year 2019 (ten years), I would have the same financial result. That would leave a clean FICO score once again and either have no cruises or 120 of them. It seems an easy choice but I am doing my homework - PLEASE - what are the financial or legal recourses the credit card companies would have against me since the cards are all unsecured by anything. I am a home owner (three of them rented with position cashflow), have two paid off trucks, and have cash in the bank. Thank you for your inputs on the credit card recourse questions. Cheers! (By the way, I think so many of us got screwed so badly from the credit card and bank companies that I have absolutely zero compassion for them. I feel terrible for the many of us that were ruined by them.)

They could easily sue you. Should they choose to do so and ultimately obtain a judgment, it would be easy for them to put liens on all your real estate and, if they so desire, force a sale of one or more of them.

With the same judgment, they can attach your wages and even force your tenants to pay their rent to your judgment creditor. They couldalso seize your bank account(s).

They can use the judgment and probably take at least one of your vehicles.

If you attempt a fraudulent conveyance or otherwise try to hide assets or refuse to disclose assets after being served a subpoena, you can be jailed for contempt of court.

That is what they could do. The question you need to ask yourself is, "Do I feel lucky?"

Re: Credit card Default - Does it matter?

Scamp — Wed, 04 Nov 2009 00:47:52 GMT

haulingthescoreup wrote:
+1

I have all sorts of respect/ sympathy/ empathy/ you name it for people who struggle to stay on top of their credit. Some might have gotten in trouble due to financial disaster; some might have just plain screwed up. When they're determined to repay, and they get rate-jacked, I am indignant with them.

But if you think you're going to find a lot of sympathy here when you announce that you're going to welsh on legitimate debts (my apologies to any who trace their roots to the ancient kingdom of Wales), which you are perfectly capable of paying, you're probably on the wrong forums.

No worries, HTSU!

And +2 on the other stuff.

(edited to remove a wayward smiley)

Message Edited by Scamp on 11-03-2009 04:47 PM

Re: More ... Credit card Default - Does it matter?

Anonymous — Wed, 04 Nov 2009 15:13:51 GMT

uk1981 wrote:
Just to clarify my original post given the responses. I really do not care about whether it is 5 or 7 or 7.5 years for bad reporting to get off my record. FICO is only valuable to get credit - I don't. Here is second clarification: I can pay my 39k in credit cards over 10 years at 1k a month. THat is 120k to keep the credit card managers happy (interpret it as their bonus arrives) over ten years. Or, I can take that 1k a month to pay cash for 120 cruises in those ten years. In the year 2019 (ten years), I would have the same financial result. That would leave a clean FICO score once again and either have no cruises or 120 of them. It seems an easy choice but I am doing my homework - PLEASE - what are the financial or legal recourses the credit card companies would have against me since the cards are all unsecured by anything. I am a home owner (three of them rented with position cashflow), have two paid off trucks, and have cash in the bank. Thank you for your inputs on the credit card recourse questions. Cheers! (By the way, I think so many of us got screwed so badly from the credit card and bank companies that I have absolutely zero compassion for them. I feel terrible for the many of us that were ruined by them.)

To the contrary, in the year 2019, if you go forward with your plan of default, you're likely to still have judgments on your credit reports (they may decide to wait a few years to file suit), and you're likely to be out of far more money than you would have paid, had you just paid your debts in the first place. After all, collection costs, court costs, and legal and adminstrative fees will be added onto the original debt plus the default interest. You'll pay, one way or the other, and your attempt to stick it to the banks will not nearly be worth your efforts.

You may not have any compassion for the banks, but you might definitely want to spare yourself a lot of pain.

Re: Conclusion ... Credit card Default - Does it matter?

Anonymous — Wed, 04 Nov 2009 17:49:34 GMT

I appreciate the 12 (to date) replys on the questions concerning credit card company recourse on deliberate credit card default. I did not ask for nor receive any 'warm fuzzys' but I did conclude that I may be on the right track. The best reply was that the credit card companies may sue me in a couple of years after running up the default interest charges so that would therefore cause me much pain later on. I'll take that chance... Any one credit card company would have to be nuts (in my opinion) to sue someone (for say 10k) when it costs them multiples of that in lawyer and associated legal fees. I could see a law suit for say 100k but not 10k. Also, what does an unsecured debt mean to you? It means to me there is nothing behind it except fear of higher fees. Enforcement is thru fear like forums such as MyFico. The operative word is unsecured. And my objective is gaming - what is the financial impact if I take pathway number 1 or take pathway number 2. I wanted to reduce risk which I define as the product of the probabilty of something happening and the consequence if I lost after it happened. It appears, after 12 replys to the orignal question, that only one person brought it up as something I should really consider. And I am doing just that - I need to find a lawyer to determine the legal meaning of unsecured debt as it pertains to the issues here. I am thinking it is a paper tiger (looks bad but credit card companies can doing nothing but pound sand). If my thoughts prove correct then a phone number changeout as unlisted and buying a secured credit card are the remaining requirements before calling Carnival and Holland Cruiselines. I am looking at the entire issue as a business decision - whether it fits someones idea of right and wrong is not relevant to me. As far as personal ethics are concerned - I think if it is legal then it is ethical. [Removed] Cheers! And I do appreciate the replys given. They have influenced my thoughts on the actual value of this Forum in general.

I again apreciate the following comment made earlier: .... "if you go forward with your plan of default, you're likely to still have judgments on your credit reports ... You'll pay, one way or the other, and your attempt to stick it to the banks will not nearly be worth your efforts. " I just do not see it that way and that is why I will pay for an expert legal opinion (in cash that I would have paid to a credit card, if confirmed). Thanks all!

Message edited to remove political commentary. Please read "5 Things We Don't Talk About" before posting again. ~LilMirth

Message Edited by LilMirth on 11-04-2009 12:49 PM

Re: Conclusion ... Credit card Default - Does it matter?

Anonymous — Wed, 04 Nov 2009 17:32:02 GMT

you are incorrect about how much a ccc will be willing to sue you over. it's far less than $100,000. you cannot possibly owe someone $39,000 and expect them to say, whatevs....

also, you claim to be a landlord and i'd imagine you expect your tenants to pay and when they don't you evict them or do you just let them stay until they owe you $100,000? your logic is flawed all over the place.

maybe it doesn't matter to you, but i'd consider the spiritual ramifications as well as the legal ones. imagine the single mom working her tail off to pay her her bills while you think you get a free ride? who's the better human?

i'm assuming you're quite young and don't understand yet that nothing, absolutely nothing, not even gov't healthcare, is free.

Re: Conclusion ... Credit card Default - Does it matter?

marty56 — Wed, 04 Nov 2009 17:40:13 GMT

FICO scores are not just people looking for credit. Opening a new bank account, rent apartment, cable TV, cell phone, utlities, auto insurance and even jobs all look at your credit report. I also suspect in the future that hospitals will also look at credit if you need their service.

Re: Conclusion ... Credit card Default - Does it matter?

Anonymous — Wed, 04 Nov 2009 17:59:36 GMT

uk1981 wrote:
I appreciate the 12 (to date) replys on the questions concerning credit card company recourse on deliberate credit card default. I did not ask for nor receive any 'warm fuzzys' but I did conclude that I may be on the right track. The best reply was that the credit card companies may sue me in a couple of years after running up the default interest charges so that would therefore cause me much pain later on. I'll take that chance... Any one credit card company would have to be nuts (in my opinion) to sue someone (for say 10k) when it costs them multiples of that in lawyer and associated legal fees. I could see a law suit for say 100k but not 10k. Also, what does an unsecured debt mean to you? It means to me there is nothing behind it except fear of higher fees. Enforcement is thru fear like forums such as MyFico. The operative word is unsecured. And my objective is gaming - what is the financial impact if I take pathway number 1 or take pathway number 2. I wanted to reduce risk which I define as the product of the probabilty of something happening and the consequence if I lost after it happened. It appears, after 12 replys to the orignal question, that only one person brought it up as something I should really consider. And I am doing just that - I need to find a lawyer to determine the legal meaning of unsecured debt as it pertains to the issues here. I am thinking it is a paper tiger (looks bad but credit card companies can doing nothing but pound sand). If my thoughts prove correct then a phone number changeout as unlisted and buying a secured credit card are the remaining requirements before calling Carnival and Holland Cruiselines. I am looking at the entire issue as a business decision - whether it fits someones idea of right and wrong is not relevant to me. As far as personal ethics are concerned - I think if it is legal then it is ethical. [Removed] Cheers! And I do appreciate the replys given. They have influenced my thoughts on the actual value of this Forum in general.

I again apreciate the following comment made earlier: .... "if you go forward with your plan of default, you're likely to still have judgments on your credit reports ... You'll pay, one way or the other, and your attempt to stick it to the banks will not nearly be worth your efforts. " I just do not see it that way and that is why I will pay for an expert legal opinion (in cash that I would have paid to a credit card, if confirmed). Thanks all!

I think that you've probalby misunderstood (perhaps even willfully) the explanations of the potential consequences of your actions that have been offered so far. Sometimes, the two most difficult things to accept can be 1) responsibility and 2) the truth. In light of this, I think that seeking the competent advice of a lawyer is your best bet. And, because it appears that you've gotten the advice that you've sought, or at least extrapolated the advice that you desired, I'm locking this thread.