Forclosure, should I pay credit card debts?

**creditcardfree** · 09-08-2009, 12:53 PM

Have contacted the credit cards?

My friend had her rate increased because she was one day late. The first time ever. Because she truly believes this, she told them she would have to file bankruptcy, if they didn't lower her rate back down. After more than an hour on the phone they lowered it back down. She is able to make the payments.

A credit card company isn't going to get anything or very little if she file bankruptcy so they worked with her. Again, she has good credit, makes payments on time and always has. It's worth talking to them about.

What kind of support are you providing family members?

**arthurb999** · 09-08-2009, 12:57 PM

It's tough... but I think you need to stop supporting other people and worry about yourself because you can't afford it.

I would imagine without your support, they would be forced to make it happen for themselves... I am assuming you're not talking about your wife

**creditcardfree** · 09-08-2009, 12:59 PM

Originally posted by arthurb999 View Post

It's tough... but I think you need to stop supporting other people and worry about yourself because you can't afford it.

I would imagine without your support, they would be forced to make it happen for themselves... I am assuming you're not talking about your wife

I was thinking the same thing. You said it much better!!

**jonbme** · 09-08-2009, 01:16 PM

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**arthurb999** · 09-09-2009, 07:07 AM

Maybe your parents need part time jobs at night if thier businesses are slowing... delivering pizza is always an option (flexible hours). I don;'t see the construction business picking up anytime soon... perhaps he should go work for someone else for a while.

Your sisters school debt isn't a result of the economy and you should let her work that out... if she racked up 100K in debt to get a degree in art history or someting... I don't think you can fix that.

There really isn't an option on the cc's... you can afford to pay them...

Bottom line - it's your decision. If you want to support them... fine... after that and the cc's... don't expect to have any money in the bank... and don't compain about it... because it is your decision.

**jonbme** · 09-09-2009, 07:28 AM

I did not ask, nor do I want your advice on how to treat my immediate family members. I don't care what you would do in the supposed situation you have painted in your mind of how things are in my life.

I was asked, so I answered. That was my mistake, since it has nothing to do with the original question.

**arthurb999** · 09-09-2009, 07:35 AM

To your original question... if you stop paying you will eventually get sued and because you make enough to pay them (based on YOUR income and expenses), you will owe the balance and interest/penalties and wages could get garnished. You could stop paying them and hope to do a lump sum settlement (but you need about half of the debt in cash to do the 1 time payment). Your credit is already shot from the foreclosure.

They jacked up your rates because they probably pulled your credit and saw the foreclouser and realized your a huge risk. Also, banks need to make up for all the people walking away from upside down properties out there...

I understand your frustration and my response wasn't meant to tell you how to treat your family but sometimes a hard look is needed.

From my view and most likely the view of the banks, you are looking for a way to snake out of paying your debt. You already did it once with the foreclosure because your RE investment went bad. Now you want them to take another hit with your CC's becuase you want to support your entire family instead of paying back money you borrowed.

This is exaclty the reason the USA is in trouble... peoeple not taking personal responsibility for their actions.

**jonbme** · 09-09-2009, 08:12 AM

Originally posted by arthurb999 View Post

To your original question... if you stop paying you will eventually get sued and because you make enough to pay them (based on YOUR income and expenses), you will owe the balance and interest/penalties and wages could get garnished. You could stop paying them and hope to do a lump sum settlement (but you need about half of the debt in cash to do the 1 time payment). Your credit is already shot from the foreclosure.

They jacked up your rates because they probably pulled your credit and saw the foreclouser and realized your a huge risk. Also, banks need to make up for all the people walking away from upside down properties out there...

I understand your frustration and my response wasn't meant to tell you how to treat your family but sometimes a hard look is needed.

From my view and most likely the view of the banks, you are looking for a way to snake out of paying your debt. You already did it once with the foreclosure because your RE investment went bad. Now you want them to take another hit with your CC's becuase you want to support your entire family instead of paying back money you borrowed.

This is exaclty the reason the USA is in trouble... peoeple not taking personal responsibility for their actions.

Chances are, I'm going to pay the debt. I'm only evaluating.

If they hadn't jacked my rates up, I probably wouldn't even be considering it. I would never take out debt at that interest rate voluntarily.

Regarding the RE I forclosed on, it was not an investment property. I bought a house (I was getting married), with a 2 year buffer for payments. I never thought it would take me so long to sell, but 6 months after I bought the house, the real estate tanked, 1/3rd of the condo building foreclosed and forclosure prices became the comp. No one would touch it, eventually I ran out of money. It was a risk, but at the time it didn't seem like a likely risk.

Thanks for the response regarding my question. You can stuff the lecture, though, because I don't need one from you.

**creditcardfree** · 09-09-2009, 08:17 AM

It really will only get worse if you walk away. The amount you owe to credit cards is minimal compared to your income. I don't know if you have any cash on hand...but you may consider making an offer to pay the principal balance in full if they will waive some of the interest that has begun to accrue.

**rizzmo** · 09-09-2009, 11:35 AM

Look, I'm not fond of the credit card companies either, got burned once, so now I don't use them. Seriously though, your being a bit childish. Guess what, lots of other people have had universal default used agianst them, most for missing a payment on some minor bill. In contrast you defaulted on a huge amount of money and expect to be treated better based on the fact you have had credit cards for a long time.

Arthurb999 was simply suggesting you consider the situation with your family. Taking time to consider all the possible solutions to a problem is what a reasonable person does. You have shown this in your original post by asking if you should pay off the cc or not. It really seems unfair to flog him for suggesting you look at this option.

As for your original post, unless you lose your job, you are pretty much stuck paying these cards off. Even the bankruptcy route won't help much, as you would most likely be forced to file chapter 13, but it would save you on the interest. Not saying that you are anywhere near that point, I only listed it as an FYI.

**wincrasher** · 09-09-2009, 12:50 PM

You have a bunch of bad choices - that's the reality of it.

I would offer this though - once your credit is "shot" the clock starts ticking on your rebuilding it. If you default on your cards, the clock resets at that point. So in a sense, you can set a course to rebuild from the foreclosure, or set a course to rebuild from a cc default.

My advice would be to not let your cc get into a default or charge off situation. It will only make matters worse. I don't know your family situation, as that post was deleted by the time I read the thread. You have to decide if you are going to support your family members and take the hit and the ramifications to your future, or not.

Another thing to consider - you can get credit again after a foreclosure - the rate may be high, but you can still get some, because the matter is closed. An default or charge off on a credit card can black-list you from getting more credit - many companies, especially for a mortgage or car loan - will not give you any credit until those items are cleared.

Also, you have to get over the insult of the cc companies jacking your rates. It's happening to millions of people, even those with sterling credit. As soon as your foreclosure hit, you'd have to expect all your rates to go thru the roof and credit lines closed. In fact, that could have happened without the foreclosure.

**Radiance** · 09-10-2009, 07:52 AM

If I understand correctly, you are in foreclosure by choice and not by need.
This is a difficult proposition.

While the foreclosure will be the most damaging factor, take into account that many creditors are only taking into account non-real state accounts in consideration of the nation's situation.

In other words, I am going into foreclosure, but by need, not by choice.
That will damage my credit, but if I keep everything else on time, I'll recover faster and I discover I will not have problems renting or buying a car, for example.
However, when I say everything else, I mean everything, I am still paying HOA fees, taxes and insurance on the property. THis will help me at the end. I only stop paying what I mathematically don't have the money for.

Now, since you are coming for financial advise and not moral advise I can tell you this.
Any monies you have left will be seen as moneys that should go to pay your debt.
Therefore whatever amount you do not dedicate to pay debt can only be used towards your own retirement or prepaid colleges, etc. Otherwise you will be required to use it to pay debt.
Some say you could store it on a bank security box, but other lawyers say you will be asked to explain what happened to that money.

I don't know all your numbers, but I really recommend you get a free consultation with a real state attorney. They will go over all your budget and net worth and give you legal options for your specific situation and state laws.

As per helping relatives, I do undertand, I send $300 a month to my parents, because they are both disabled and have no other ways to make the money. I am actually lucky they don't need assisted living yet.

But measure what are you doing for them, other than paying for electricity and food, I would think about how am I really helping. just my two cents, no judgement

**Radiance** · 09-10-2009, 08:05 AM

Short answer, is yes you should pay all your debt to the best of your ability ;-)

Forclosure, should I pay credit card debts?