Credit Cards and defaulting - what can they do?

[Zeste]

I am trying to figure something out. I have been on the phone with some of my credit card providers, trying to work out a plan so I can get them paid without it breaking my bank. They are very helpful, one operator even saying I should "Plead and beg with relatives to help me make the payments so I can stay on the payment program."

So, it got me thinking, credit rating destruction aside, what can Visa and Mastercard do to you if you don't/can't pay?

I know that there will be torches and pitchforks from both sides of the fence here. But moral and ethical (and credit rating) concerns aside, what actually happens if you just say "Fuck it, I am not going to pay you anymore?"

[Lyrical]

Originally Posted by Zeste

I am trying to figure something out. I have been on the phone with some of my credit card providers, trying to work out a plan so I can get them paid without it breaking my bank. They are very helpful, one operator even saying I should "Plead and beg with relatives to help me make the payments so I can stay on the payment program."

So, it got me thinking, credit rating destruction aside, what can Visa and Mastercard do to you if you don't/can't pay?

I know that there will be torches and pitchforks from both sides of the fence here. But moral and ethical (and credit rating) concerns aside, what actually happens if you just say "Fuck it, I am not going to pay you anymore?"

I don't know why you put credit rating aside in your thread, because having a bad credit rating is a big deal.

Lets see:

1- Mess up your credit rating for the next 7 to 15 years
2- Won't get financing on a home or car or any other big purchases for that timeframe
3- Some employers will look at your credit and not hire you over it (as if the job market wasn't already tough for some already)
4- You may not even be able to get insurance because they look at your score
5- When you do finally get financing, expect the rates to be high, so you have less money

[Eyashusa]

Have you thought about asking them to reduce the amount owed if you pay it off in one lump sum or in 3-6 months instead of indefinitely? I've seen that sometimes on loans but it probably totally fucks your credit rating as well. It's probably the same as defaulting too I guess...

[Hatorade]

What is some of my credit card companies mean? If you have more then one credit card you are doing it wrong. Get yourself a balance transfer card with a low interest rate and pay it down as fast as you can. If you owe like 10k or something and make about 30k a year you are doing it wrong. If you owe couple thousand then above will work just fine.

[Zeste]

Originally Posted by Lyrical

I don't know why you put credit rating aside in your thread, because having a bad credit rating is a big deal.

Lets see:

1- Mess up your credit rating for the next 7 to 15 years
2- Won't get financing on a home or car or any other big purchases for that timeframe
3- Some employers will look at your credit and not hire you over it
4- You may not even be able to get insurance because they look at your score
5- When you do finally get financing, expect the rates to be high, so you have less money

Well, here's the deal. My credit rating is already pretty bad. The place I work for as a contractor, they have a hard time making payrole, sometimes being 2-3-4 weeks late with money. So when they can't get money, I can't either. So all my bills go late. This has been happening for a while now. If that business folds, then my business folds, and there's very little chance I'll be able to get the same wage somewhere else, if I can find a job here at all.

I already own a home that I built that is very nice and should regain its equity some day. When I finished it, it cost me 300k and appraised for 400k. The market is destroyed here, and there's been alot of foreclosures in my neighborhood, so the value is way way way down. But that's fine since I don't need to sell it. Point being - I built this house to last me a good 20 years.


I'm not trying to just skip out on the debt and leave the country to live in China, but if/when my cashflow is crippled or stopped entirely, just paying mortgage and electricity will be hard enough.

Just trying to plan for the future, something I was terrible at. I live in what was 2005's "Fastest growing city in america!" and probably one of the hottest "buy it and flip it" real estate boom meccas in the country. Now? The city is fucking dying, businesses are being boarded up, foreclosure homes are at numbers that are some of the highest in the country. The whole city/county is just a glut of unemployed construction and real estate workers, who are no longer able to support the other businesses and places in town, which are just now starting to die off in startling numbers.

So no one really wants a website designer. It's trickling down... first construction workers took a huge hit the last 2 years or so. Then, as that died, local businesses died since the city is basically just a retirement mecca and a place for people to build nice houses. So when businesses and startups died, most of my clients who came me for websites and graphic design died too.

So, essentially, I am just trying to see what will happen when/if my 1 contract I have that supports my family dies out, and I am working at Target in the electronics section for 10 bucks an hour.

Roast me all you want, I feel just as guilty and ashamed as people think I should. I've paid all my debts faithfully all my life, but /shrug, I might as well be a custom home builder right now - it's gonna be a long, long time before my industry is on anything but life support.

[Lyrical]

Originally Posted by Zeste

Well, here's the deal. My credit rating is already pretty bad. The place I work for as a contractor, they have a hard time making payrole, sometimes being 2-3-4 weeks late with money. So when they can't get money, I can't either. So all my bills go late. This has been happening for a while now. If that business folds, then my business folds, and there's very little chance I'll be able to get the same wage somewhere else, if I can find a job here at all.

I already own a home that I built that is very nice and should regain its equity some day. When I finished it, it cost me 300k and appraised for 400k. The market is destroyed here, and there's been alot of foreclosures in my neighborhood, so the value is way way way down. But that's fine since I don't need to sell it. Point being - I built this house to last me a good 20 years.


I'm not trying to just skip out on the debt and leave the country to live in China, but if/when my cashflow is crippled or stopped entirely, just paying mortgage and electricity will be hard enough.

Just trying to plan for the future, something I was terrible at. I live in what was 2005's "Fastest growing city in america!" and probably one of the hottest "buy it and flip it" real estate boom meccas in the country. Now? The city is fucking dying, businesses are being boarded up, foreclosure homes are at numbers that are some of the highest in the country. The whole city/county is just a glut of unemployed construction and real estate workers, who are no longer able to support the other businesses and places in town, which are just now starting to die off in startling numbers.

So no one really wants a website designer. It's trickling down... first construction workers took a huge hit the last 2 years or so. Then, as that died, local businesses died since the city is basically just a retirement mecca and a place for people to build nice houses. So when businesses and startups died, most of my clients who came me for websites and graphic design died too.

So, essentially, I am just trying to see what will happen when/if my 1 contract I have that supports my family dies out, and I am working at Target in the electronics section for 10 bucks an hour.

Roast me all you want, I feel just as guilty and ashamed as people think I should. I've paid all my debts faithfully all my life, but /shrug, I might as well be a custom home builder right now - it's gonna be a long, long time before my industry is on anything but life support.

Its probably best to find a new job, and keep trying to pay your bills. The saying is that if someone bounces your check, its best to leave at that moment in time. They'll keep stringing you along.

[Zeste]

Originally Posted by Hatorade

What is some of my credit card companies mean? If you have more then one credit card you are doing it wrong. Get yourself a balance transfer card with a low interest rate and pay it down as fast as you can. If you owe like 10k or something and make about 30k a year you are doing it wrong. If you owe couple thousand then above will work just fine.

I am doing it so wrong, I'm ashamed to even talk about it.

Right now, I make around 50k a year before taxes, since I'm self employed. I probably take home around 42k. I've paid around 8000 in taxes the last 2 years.

Presently, I have 20k in unsecured credit card debt, 12k student loan, and 20k in a personally guaranteed SBA loan. The SBA and Student loan are good rates, but the SBA payment is huge. So that's what, 52k? Not to mention I got the SBA 2 years ago to try and expand my business, and instead the business just suffocated to death with the rest of the city.

The SBA and Student loan I have to pay, there's no way around it. The credits cards break down at 13k at 12%, and 8k at 30% since I was late. Late because my cashflow was stalled by outside sources (and I said above).

I have no idea if I can get a 20k credit card at a low interest rate, I doubt it now since my credit rating has gone down so much. My home has no equity available since the home values of my neighborhood are all in the toilet from tons of foreclosures surrounding us.



Don't send me to China yet, I'm not skipping out on anything. Like I said, I just am trying to figure a way out of this. I've sold everything I own of value except my AR-15 which is for sale, but no one is buying. I mean, I'm paying off debt that has been with me for 3 years now, back then it was easy since the local economy was good and I had work. As work slowly died, I kept just making minimum payments. Now, even minimum payments are getting tight.

And I get to have another baby with no health insurance!


I know I went full retard, and I full expect to pay some painful consequence, and am already starting to. The student loan and SBA can lien my house, so I gotta pay those first. But once I pay for the house and the bills, sometimes there's just nothing left for that month.

I know it's a full-retard situation, and I'm the retard at the helm of my financial retard ship.

[Zeste]

Originally Posted by Lyrical

Its probably best to find a new job, and keep trying to pay your bills. The saying is that if someone bounces your check, its best to leave at that moment in time. They'll keep stringing you along.

Well, the problem with that is I can't leave a 50k a year job for a 25k a year job, which I'd be lucky to get. It's hard to explain how Utah, especially southern utah works, but unless you were a (former) owner of a construction company building luxury homes, you're not gonna find a job that doesn't pay somewhere around 11 bucks an hour.

[Stil]

Not to doubt you or give advice where it isn't welcome, but how good a website/graphic designer are you? I don't know about the design half, but I know we're hiring pure developers still like candy- and telecommuting is not out of the question at all.

$50k in Utah might be enough to get you by comfortably- maybe even qualify as a "good job". $50k for a good web dev in Chicago is cheap as sin. Have you looked into that option yet?

[bofa]

As far as the credit cards go, have you bluntly asked them "what can we settle for". Not sure if it works the same but I owed 4 k in medical debt, told them I had no intention on paying unless they settled for 2k mailed the next day...it worked.

The SBA and student loan are a different ball of wax, and with 20k in CC debt I'm sure they can working something out. Granted you'll need to entice them with some big numbers and will have to pay them fast to get them to budge which, judging by the situation might be hard at this time.

For right now brother, you have to ride out this storm, try to stay as current as possible and when the economy does turn around, which it will, maybe consider selling your house if there's still enough equity knock out a big portion of this debt and have enough left over for a down payment on new, more affordable pad.

I don't know your monthly numbers in/out to see where you could trim some fat and allocate towards different debt. Also, how bad is bad with the credit rating? if you don't mind me asking

[bofa]

W hat type of corporation do you have setup with your business? LLC? As far as the student loans go, have you looked into an "income contingency repayment" ?


FinAid | Loans | Repayment Plans | Income Contingent Repayment

[Zeste]

Originally Posted by Stil

Not to doubt you or give advice where it isn't welcome, but how good a website/graphic designer are you? I don't know about the design half, but I know we're hiring pure developers still like candy- and telecommuting is not out of the question at all.

$50k in Utah might be enough to get you by comfortably- maybe even qualify as a "good job". $50k for a good web dev in Chicago is cheap as sin. Have you looked into that option yet?

I'm a very very good graphic artist and HTML/CSS developer. I do not program (php, asp, whatever). Actual programmers and backend people are probably a lot more appealing, since graphic design and front end isn't nearly as important as infrastructure.

50k in southern utah is fucking RICH OMG OMG OMG, especially now when the whole city is unemployed construction workers and dying restaurants and retail.. There's a 400 mile dead-zone north of here til you hit Salt Lake. I already work from home and would telecommute for anyone, anytime. To be honest, I've lived in the sticks my whole life and have no real idea how the big city and big city companies function.





To be honest, I made a bet with the SBA that business would continue, and it didn't. The payments on that will be about 500 a month for 5 years, starting august. That loan has to be paid.

The credit cards, one of them is my 2007 takes of 8000 dollars, and the rest is mostly bullshit and expenses after my dad died.


Maybe I'm going about it wrong. Maybe I'd be better off spending my time trying to telecommute and develop a very appealing design portfolio.



Also - the bank has the 10k credit card, and the 20k SBA. I just talked to them about settling, and they want me to send in a proposal letter. Said they may go as low as 70%. They stand to make a lot more money off the SBA, so maybe they'll negotiate it down where they can knock 3k off the credit card and take a payment, and that way I can at least keep the SBA paid and they don't have to take away my house for a 20k debt.

[Zeste]

Originally Posted by bofa

W hat type of corporation do you have setup with your business? LLC? As far as the student loans go, have you looked into an "income contingency repayment" ?


FinAid | Loans | Repayment Plans | Income Contingent Repayment

Business in a LLC, and both me and my wife signed "commercial guarantees" on the loan, meaning personal property is vulnerable if we default.

My student loan is just a federal stafford loan. But that is like 140 a month, I don't have a problem paying that. Just have 8 more years to do so.

And Bankrupty isn't an option for us for a few reasons, mainly that they could then seize my dead dads property and take it, which would leave my brother mighty angry at me....

[Bizanich]

Originally Posted by Zeste

I have no idea if I can get a 20k credit card at a low interest rate, I doubt it now since my credit rating has gone down so much. My home has no equity available since the home values of my neighborhood are all in the toilet from tons of foreclosures surrounding us.

No chance in hell in the current economic climate, sadly.

Have you tried a debt management service (not debt settlement)?

[TheCutlery]

Well, can always get another job, on top of the Target. I recommend UPS, check and see if you have a hub near you. I know this is about debt issues right now, but if you've got a baby on the way and no health insurance, UPS is a solid, solid bet. It is horseshit work, but it's 3-5 hours a day, for ~10ish an hour, M-F, and you get full paid health insurance, I believe (been 6 years since I was there), and they are ALWAYS hiring loaders/unloaders.

You just can't be having kids with no health insurance, that's bad times. You think you're fucked now, wait until the 30k hospital bills start rolling in. I know these guys are all giving you advice on taking care of the immediate wounds, but you still have a minefield left to negotiate here, might wanna be prepared for that. When everything fell apart in my life, UPS was the fallback option for me, twice. Got my family covered with health insurance, worked that PT until I could get back into something that paid enough and offered insurance to keep it covered. I have no idea what the fuck I would have done had I not health insurance when my daughter was born. I'd probably still be paying it off. Right now, I'd consider insurance the primary goal here...fuck debt for the time being, you're gonna have a shitload more of it if you don't get something in order quick.

I hated every goddamned minute of both times I was at UPS. It was hard, backbreaking labor in a sweltering, dusty warehouse, but it was only 4 hours a night, it was consistent, and it took care of one really major need.