defaulting on credit cards

[Anonymous]

I may have to default/let my credit cards go.  Just to pay the minimum monthly payment is hitting close to $300 a month and because of it I'm not able to keep up all my other bills.  (electric, phone, etc)  I've already gone through the cutting out all un-necessary expenses.  I've talked to one creditor about lowering my monthly payment.  I'm trying to re-finance my car. 

Is it better to just let them all go?  Should I try to contact them to work out something first?  Should I try to at least keep one of them? 

I hate to do this but don't see any other options.  My monthly income has dropped about $350 and my house payment is going up in January and my income is going down due to my medical insurance going up at work. 

I've already recovered from bad credit one time and know what is involved and really hate to do this but when it means we don't have food to eat or electricity in the winter I'm not sure what else I should do. 

[Creditaddict]

Sorry to hear... I would try to work with all of them, but the chances of them working with you before you have missed a payment is very unlikely.  But if you work with them before your 30 days late, it won't even hit your credit.

[waqaszm1]

i understand where you are coming from. lately, i have also experienced a significant reduction in income, but luckily my balances were not high. i split my cards in two categories, store cards and visa/mc/disc/amex cards. for the store cards, i paid off the cards which had really low balances little by little and when they reached a zero (0) balance, i cut up the cards so that i would not be tempted to use them again while leaving the accounts open to help with utilization.

as for the visa/mc/disc/amex cards- i am seriouly confused. i went thru a divorce in '08 - '09 that really messed up my finances. being an idiot, i got into another non-sense relationship and now this too i am afraid is headed for disaster, but this time i am trying to be careful. if i have to **bleep** my cards, i will dump hsbc, and probably bofa.

i will try my best to keep paying barclays, amex, discover, capitalone, and a local credit union. i will keep them so that when i rebound, atleast i will have good history with them to perhaps warrant a new accounts.

hsbc, and bofa - i dont care about ever getting cards with them again.

[Anonymous]

Well I'm not sure that is worth it because by then you get hit with fees etc for being late/over limit.

Does anyone truly have any luck with creditors lowering the payments?  I've got several low cards I'm tempted to just forget about like Capital One, Credit One, etc  but I also have NFCU which I would hate to **bleep** over because they were the first to give me credit after I got my credit cleaned up. 

I just don't see any other options.  I've been juggling/struggling for months now and to make ends meet last month and avoid my electric being cut off I had to take out a loan from one of those loan shark type places which is making my financial situation even worse.

[Creditaddict]

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@Anonymous wrote:

Well I'm not sure that is worth it because by then you get hit with fees etc for being late/over limit.

Does anyone truly have any luck with creditors lowering the payments?  I've got several low cards I'm tempted to just forget about like Capital One, Credit One, etc  but I also have NFCU which I would hate to **bleep** over because they were the first to give me credit after I got my credit cleaned up. 

I just don't see any other options.  I've been juggling/struggling for months now and to make ends meet last month and avoid my electric being cut off I had to take out a loan from one of those loan shark type places which is making my financial situation even worse.

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As soon as you get into an arrangement with them, the fees and all that stuff will stop and a lot of times they will waive the first one

[Anonymous]

So it's better to try to work wtih all of them??  Do I just contact them and ask to cancel the card and then make payment arrangements?

[Anonymous]

Is there anywhere you can cut back? When they cut hours at work, I took it as a sign doors will be closing soon (They did 1.5 months later). I made cuts, I did not and do not run the A/C or Heater (It's cold right now, even in Florida and hot as an oven when it's not cold). Turn off cable/internet and enjoy rabbit ears with open wifi. Inscribe from blockbuster, but still see my one movie a month at the $5 movie theater. Then most importantly, I went through everything I had and ask everyone I know if they had anything they do not want anymore. I pretty much have a huge garage sale on eBay, brings in $46x.xx last month and this month so far is $627.xx. While I am searching for a job like crazy, I still pay my bills and had my name taken off the lease according to our agreement in the lease (But new management refuses to follow through). Heck, I may even take up a part time job in delivering pizza if I can find a cheap van (Not going to deliver pizza in a 63 Ford).

I am just listing what I am doing for ideas for you, there are options and I would do everything possible to make sure everything is paid. I would call the companies up first and ask if anyway possible to have minimum payment reduced until things get better, then I will pay X amount when things do. I would show them if I was you that your trying and do not want to default.

[Anonymous]

I appreciate all the advice/suggestions.  I've already done all I can to cut back on stuff that we don't need.  We have a pretty lean budget to start with.  I'm currently working OT but that won't show up on my check until the end of the month.  We never eat out.  We don't buy clothes, go on trips, go out anywhere really so there is not a lot to cut.  I've sold some stuff on eBay/Craigslist and have more stuff I plan to sell.  Sold some old gold jewelry but all this is getting me is $100-$200 here and there which gets us caught up a bit and then the next month we are in the same place. 

My hours weren't cut back but I was receiving extra income each month that nearly covered my car payment that I won't be receiving now.  Then with my house payment going up (my house payment is only $383 so I don't think we are living beyond our means as rent is easily $500-$600+ even for a cheap place) and my income going down due to my health insurance going up at work I think things are going to be worse not better. 

I was asking for the best way to deal with the credit cards. 

[Anonymous]

Hi savvyguy! Welcome to the FICO forums. I'm sorry that you've joined us under trying circumstances, but I'm glad that you found us all the same.

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@Anonymous wrote:

Well I'm not sure that is worth it because by then you get hit with fees etc for being late/over limit.

Does anyone truly have any luck with creditors lowering the payments?  I've got several low cards I'm tempted to just forget about like Capital One, Credit One, etc  but I also have NFCU which I would hate to **bleep** over because they were the first to give me credit after I got my credit cleaned up. 

I just don't see any other options.  I've been juggling/struggling for months now and to make ends meet last month and avoid my electric being cut off I had to take out a loan from one of those loan shark type places which is making my financial situation even worse.

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I don't have to tell you that you should avoid default like the plague. If, at all possible. Unfortunately, you won't be able to just forget about any credit card that you stop paying. A short walk through our Rebuilding forum will reveal the ugly truth that Capital One (for example) will almost always sue you before the SOL expires. You'll end up paying more than you owe now. You could be sued, and garnished.

But, I understand your situation. Have you read the FTCs Knee Deep in Debt? That's a good starting place for researching your options. Like Creditaddict already mentioned, it doesn't seem that lenders are willing to work with you until you're already missing payments. But, that shouldn't stop you from trying, and trying again... and again, if need be. Also, have you talked to NFCU about the possibility of a consolidation loan? <-- Not something to consider lightly, and you'll need to have the discipline not to accumulate balances that you can't PIF, along with your monly installment payment if this is feasible.

You mentinoned in your first post that you've cut out everything that you could, but I'd strongly suggest that you have another look, and cut deeper if there's any possible way. Is a 2nd or 3rd job a possibility? You're a homeowner, have you considered taking in a renter... or, moving out of your home, renting it out, and finding less expensive housing? Is there anything you can sell?

ETA: I was typing while you were posting, so I see that you've already made deep cuts in your budget & considered the cost of renting vs. staying in your home.

[Anonymous]

Ahh, well if no where to cut then I do not know. I will keep an eye out on this thread as should others. Because many people may be in the same boat in near feature. Your also right on rent, mind is $812.50 a month for a 2/2. Rent is not cheap in Florida and moving is not truly an option (well hard). Is there anyone you can hound that owes you money (I am, she owes $700+)?

(Before anyone asks why I applied for credit, all the recent ones I received is in a sock locked up)