Credit Card Debt
- Thread starter sore
- Start date
Isn't regular monthly payments what you are supposed to be doing under the Credit Card agreement?
So what is there for them to be negotiating? What are you going to offer them other than what they already have?
Just make the minimum payments called for on the statements!
Perry
So what is there for them to be negotiating? What are you going to offer them other than what they already have?
Just make the minimum payments called for on the statements!
Perry
That is one tough climb...lenders are just happy to collect the minimum payment you make from now until eternity. I would say better start doubling or tripling your payment. Other than that, look for those credit consolidation stuff but I think your credit score will drop if you go into those.
Yes, they will either lower interest rates and work with you. Or, if the situation is very dire, they should stop paying altogether. The debt will then go into collection, and they will usually negotiate a better deal, since they'd rather get something back than nothing. This assumes that your family member has nothing to lose, and does not care about credit at this point to obtain a mortgage or loan.
See if your family member can get a loan or line of credit with a lower interest rate. Assuming they have been making all their payments on time they should have a good credit history and be able to. Failing that ask the credit card companies to lower the rate. You're more likely to be able to get them to lower the interest rate than the actual balance.
But that's addressing the symptoms. The disease is they are spending beyond their means. If you find a better interest rate and lower the payment they will likely go run up the balance further until even the reduced payments are difficult to meet.
Gotta solve the spending problem first.
Paying them off as fast as possible is the best way to avoid interest. If that's not possible, a consolidation loan would be 2nd best. Once they go into default, your credit rating is screwed. Then, you can make a consumer proposal, offering to make payments at a lower rate. Last option is bankruptcy. But that really screws your credit rating. After 7 years, you can slowly start building up credit rating again, but you'd be screwed in getting a car loan or even booking a hotel or renting a car.
your family member is solely responsible for the debt unless you co-signed? Now if has gone already to collections you can negotiate but their credit is already ruined for a few years. If it hasn't gone to collections but just in arrears then good on you for trying to help out and you can negotiate with the CC company but again...they always win. Your biggest issue is, will the little fucker do it again?
Without knowing the payment history for these cards, or the credit history of the person, that is an impossible question to answer, because both of these are taken into account. With this much debt, although not really that bad, and your asking this question, that tells me that they have issues there. That being said, there is only one way to find out and that is to call and ask. As TFZL1 has said, they may have to go into a Consumer Proposal, which isn't good for ones credit rating.
sore, expect you could cosign a line of credit for your relative, and transfer the credit card debt into the line of credit at a lower rate. Would want to see the CC cut up.
You can offer to settle with them for a lower amount but it will reflect on your credit. If you go this route, write them a letter with your offer.
This^^^^^having done some banking in my career, your best option is to finance it another way at a lower rate, and get rid of the cards. If you went to the bank and asked for a loan to pay off higher interest debt, they are ok with it....to them its just a loan.
As a matter of fact it might improve your credit rating if you make all the payments on time.
I wouldn't co-sign or connect yourself in any way. Chances are, if they irresponsibly collected this much cc debt, they'll do it again.
I cannot relate. Never had debt in my life. Paid for my first car with cash. Could have paid for my first home with cash and I'm not rich. Grew up poor in fact. Make above avg income but nothing extraordinary. Live within your means.
If you are smart with money, you can make a good financial decision by getting a new low interest credit card and transfer balance on that card, so that you pay little to no interest. Further more you can get a couple of such cards (not sure if they have 0 interest cards for 24 months in Canada) but I'd do that to pay off the debt for the next year or two that too interest free. This is a similar scheme applied by Manny to buy multiple properties. Its wise but youd need to live off cash for this to work. No credit!
Many people get their eating, drinking and spending habits from their family members. In my family if you did not have the money you did not buy it on credit. I have only paid one interest payment in my life, I was late 1 day on the deadline to pay off my monthly credit card statement and they charged me $5.
As for the OPs family members credit problem there are only a few choices. Talking to a credit counselor is your first option. If the problem is severe then maybe bankruptcy of making an agreement with the creditors is the best choice. If there is a possibility to return to solvency then the best bet is to get away from the credit card companies and have a lower interest way to pay off debt. Like getting a consolidation loan.
As for the OPs family members credit problem there are only a few choices. Talking to a credit counselor is your first option. If the problem is severe then maybe bankruptcy of making an agreement with the creditors is the best choice. If there is a possibility to return to solvency then the best bet is to get away from the credit card companies and have a lower interest way to pay off debt. Like getting a consolidation loan.
I have had clients with these issues especially after the 2008 crash and in Phoenix the huge decline in home prices, job losses, small business owners going under with lines of credit they owed or guranteed for their corporatoins etc.
I am assuming our U.S. situation is the same or similar as in Canada.
VISA or MC is not who you contact its the issuing bank that takes the loss if any and who you negotiate with. It is unlikely you will get any relief unless at least 90 days late.
Once behind on payments there is almost no hope of a consolidation loan or getting a new credit card with lower interest rates, and not everyone has rich relatives to help.
Debt consolidation is mostly a scam. So many reports that they collect their high fees first and little goes to the cc company. Usually this will not delay collection efforts. There are a few non-profit agencies that can help with basic budgeting skills etc.
I don't know in Canada, but in the U.S. after 180 days past due the bank that issued the card has to write it off as bad debt. That is simply an accounting entry, they can still go after you. The best time to get the best reduction or extended terms is closer to the 180 day mark so the bank doesn't have to take an accounting loss.
I know at one point BofAmerica was settling for 20% on some accounts. 50% settlements were also common.
Sometime after 180 days the bank will either sell the debt for pennies on the dollar or have their own lawyers who may file for a judgement which can be enforced by taking your car, bank accounts or anything else of value that can be found.
A collector can go after your until the Statue of Limitation (SOL) expires. The limitation period varies between provinces, though most have a period of two or six years. In B.C., Ontario, Newfoundland and Labrador, unsecured debt is extinguished after the limitation period ends, provided the consumer doesn't make a payment or acknowledge the debt in writing. In the U.S. six years is common.
The SOL usually does not expire if they get a judgment - in some states has to be renewed every 5 years or so, do not know the Canadian situation.
When you are deliquent you may be called every day or hour by the bank or collection company. This can be avoided by a phone account such as VOIP where you can send calls from specific numbers to an error or disconnected message before you phone rings.
Obviosly the key is not to get into this situation, but in the U.S. after the 2008 "deep recession" especially with the collapse of home values so many underwater, the 50%+ decline in stock markets and massive job losses this was a much more common issue in the U.S., than in Canada which wasn't hit as badly economically as the U.S.
I am assuming our U.S. situation is the same or similar as in Canada.
VISA or MC is not who you contact its the issuing bank that takes the loss if any and who you negotiate with. It is unlikely you will get any relief unless at least 90 days late.
Once behind on payments there is almost no hope of a consolidation loan or getting a new credit card with lower interest rates, and not everyone has rich relatives to help.
Debt consolidation is mostly a scam. So many reports that they collect their high fees first and little goes to the cc company. Usually this will not delay collection efforts. There are a few non-profit agencies that can help with basic budgeting skills etc.
I don't know in Canada, but in the U.S. after 180 days past due the bank that issued the card has to write it off as bad debt. That is simply an accounting entry, they can still go after you. The best time to get the best reduction or extended terms is closer to the 180 day mark so the bank doesn't have to take an accounting loss.
I know at one point BofAmerica was settling for 20% on some accounts. 50% settlements were also common.
Sometime after 180 days the bank will either sell the debt for pennies on the dollar or have their own lawyers who may file for a judgement which can be enforced by taking your car, bank accounts or anything else of value that can be found.
A collector can go after your until the Statue of Limitation (SOL) expires. The limitation period varies between provinces, though most have a period of two or six years. In B.C., Ontario, Newfoundland and Labrador, unsecured debt is extinguished after the limitation period ends, provided the consumer doesn't make a payment or acknowledge the debt in writing. In the U.S. six years is common.
The SOL usually does not expire if they get a judgment - in some states has to be renewed every 5 years or so, do not know the Canadian situation.
When you are deliquent you may be called every day or hour by the bank or collection company. This can be avoided by a phone account such as VOIP where you can send calls from specific numbers to an error or disconnected message before you phone rings.
Obviosly the key is not to get into this situation, but in the U.S. after the 2008 "deep recession" especially with the collapse of home values so many underwater, the 50%+ decline in stock markets and massive job losses this was a much more common issue in the U.S., than in Canada which wasn't hit as badly economically as the U.S.
First of 15K is not that bad.
Totally agree see if you can get a line of credit so that the interest is much better.
Start looking for ways to spend less.
Is a part time job on top of their day job possible?
Do they have anything of value they would be willing to sell if so use kijiji or ebay. Pawn shops are the worst.
Totally agree see if you can get a line of credit so that the interest is much better.
Start looking for ways to spend less.
Is a part time job on top of their day job possible?
Do they have anything of value they would be willing to sell if so use kijiji or ebay. Pawn shops are the worst.
Maybe hard to relate. 15K is not much, unless you don't have it. People mule drugs for less.
If you can't pay off $15,000 you got issues. Assuming each credit card has an interest rate of 20%, that's only $3,000 interest a year. Even if you paid $100/week towards it, it would probably be gone in 5 years.
Lesson learned. Don't spend what you don't have.
Lesson learned #2. For people who can't control themselves, at least do it with a line of credit. An LoC has an interest rate of somewhere around Prime to Prime +1-5%. Much better than paying 20% to VISA or MC.
Yet some reason, people don't take advantage of their bank's LoC. Even when I got my first job and moved out, Royal Bank gave me $30,000. I then got another one at CIBC. I ditched the Royal one so everything is at my CIBC and got a second one. Never used them aside from the first time I moved out to but starting gear. Paid it off, and never used it again. But a LoC is the best emergency fund you can have. I think my LoC is Prime +3% totaling close to $100k. If I went through the hassle of negotiating, I could probably get it for Prime or Prime +1%.
Credit cards should only be used if you can pay it off at the end of the month. At worst, you carry a small manageable balance you can pay off the following month or two.
If it will snowball into something bigger and longer, go with LoC.
Lesson learned. Don't spend what you don't have.
Lesson learned #2. For people who can't control themselves, at least do it with a line of credit. An LoC has an interest rate of somewhere around Prime to Prime +1-5%. Much better than paying 20% to VISA or MC.
Yet some reason, people don't take advantage of their bank's LoC. Even when I got my first job and moved out, Royal Bank gave me $30,000. I then got another one at CIBC. I ditched the Royal one so everything is at my CIBC and got a second one. Never used them aside from the first time I moved out to but starting gear. Paid it off, and never used it again. But a LoC is the best emergency fund you can have. I think my LoC is Prime +3% totaling close to $100k. If I went through the hassle of negotiating, I could probably get it for Prime or Prime +1%.
Credit cards should only be used if you can pay it off at the end of the month. At worst, you carry a small manageable balance you can pay off the following month or two.
If it will snowball into something bigger and longer, go with LoC.
