Closing CC's Before Defaulting on them

[max123]

Hi all,
I'm in dire need of some advice.

All my CC payments are due in the next 10 days, some 5 CC's, but I won't be able to pay them anything. I'll be late for the first time, I lost my job in January. I simply can't borrow any longer from any Credit Card to pay the others. I have $200 in my checking, and the min.'s are $1200.

Is it better to call the CC's and ask them to close my cards before the payment date and before I default?

I'm thinking if I close them I'll avoid the late fees and the interest rate from skyrocketing.
If you have any experience or advice please post. Thank you!

[BigJohn]

You avoid the late fees and skyrocketing interest if you make the required payments. Nothing else will stop that. You ask tell them help and tell them you are having problems but they generally show no mercy.

[max123]

Thanks BigJohn for your reply. So I gain nothing from asking them to close the accounts?
What will happen when they send them to collections, will the collections add more fees on top? I'm guessing yes, and the cycle never ends, then?
This is a very scary situation, and I'm not at all prepared how to deal with it.

[Ifonly]

Closing the account only closes it to new charges by you. You will continue to be hit with overlimit fees, past due fees and default APR's. Sorry.....

[max123]

Ifonly, thanks for your reply. I guess I'll never be able to catch up again...scary.

[StartingOver08]

If you have not filed BK yet - you could call each of the cc's and ask for their hardship program. Most will have available either a short term (6 mths) or a long term program (5 yrs). In order to get the program, you have to talk to the hardship dept and NOT the CSR's. Be persistent! Getting thru to the hardship program is tough - the CSR's act like a wall. You have to keep calling and insisting. I even had a couple of the CSR's tell me there was no such dept., but there was and I eventually got thru.

One of the things they will do is close your account (you are current - so you can have them close it at "consumers request") Some people can negotiate a one or two month 'grace period' - but only if you are current. You can also negotiate, in exchange for allowing your account to close and a monthly auto draft (from a neutral account you set up for this purpose) - a zero interest payment plan. Try to do this now. I did two of these about a year before I filed BK and the rates were 2% and 4% - It is my understanding that now they will go to zero percent.

Its worth a try. But you must do it before you default. Also, download to your hard drive all of your statements for at least 2 yrs before you call them - because they will probably knock off your online access. That way if you do have to file eventually, you have the statment history.

[catleg]

Sadly the late fees and usurious interest is part of the "game".

The only sensible thing to do is to stop playing. Stop feeding the dragon.

At some point down the road you will either file BK or settle with them for around 50-60 cents on the dollar or else get on a long term low interest rate payment plan.

[Flamingo]

Hi all,
I'm in dire need of some advice.

All my CC payments are due in the next 10 days, some 5 CC's, but I won't be able to pay them anything. I'll be late for the first time, I lost my job in January. I simply can't borrow any longer from any Credit Card to pay the others. I have $200 in my checking, and the min.'s are $1200.

Is it better to call the CC's and ask them to close my cards before the payment date and before I default?

I'm thinking if I close them I'll avoid the late fees and the interest rate from skyrocketing.
If you have any experience or advice please post. Thank you!

When you borrow from Peter Card to pay Paul Card all you are doing is putting yourself deeper in debt. If you do that practice for a few months and just make minimum payments, the banks/cards you are withdrawing cash from catch on and will up your interest or reduce your available credit amount. As others stated, closing your account does not protect you from any penalties, higher interest, etc. on the balance owing. Pull out those little brochures that came with your brand new credit card. They can do quite a bit when you stop paying.

You have to make a decision as to how you want to handle this because you can't do the Peter and Paul thing forever. Best of luck to you!

[max123]

Thanks guys for your time and advice.
StartingOver08, I'll call the CC's and ask about the hardship program, thanks. I'm afraid that even with 0% or 2%, the min. payments are gonna be more than I can pay now, but I'll offer them to pay whatever I can at this time but if they don't agree, then I guess I'll have to wait and see if they sue me. And also, thanks for the great advice to save the statements, I'm doing it now.
Catleg, when do they start offering 50 cents on the dollar settlements? I read on the forum in a year, right? This would be an option for me if I find a job, start saving and then pay them off one by one. But, I'm afraid that I'll get sued before they offer me these deals or before I find a job.
This is all a catch 22, I lose either way. I'm really trying to avoid Bk, but if I have to, I'll file.
Flamingo, yes robing Peter to pay Paul was foolish. I've been thinking about that quite a lot lately.
Thanks again guys.

[catleg]

Some of them have offered settlements, usually starting between 60-120 days late. Citi sends letters with chess pieces on them saying it's your move. Discover has a website called cardmemberassistance.com. Notably I have not gotten any from Chase or BofA, but I'm not talking to them either.

Based on your minimums it sounds like you have between 30k-60k of card debt, honestly, I'd wait till I found a job and then BK7 them.

Settlement is really a way overstated and overhyped thing these days. It's not a realistic option unless you have only 1 creditor and/or the amount is really small, or you're really bluffing over the whole thing and have the money.

Like for example if you owe a $500 debt and it's going to increase by $78 a month in overlimit/late fees you really don't want to let that one go unless you are sure you're going to BK it. That could increase into the thousands by the time a JDB gets a hold of it.

[max123]

Catleg, you're right, the more I'm reading here about a settlement with credit cards down the road, the more discouraged I get.
I wish I had only one creditor, I have 5. I owe $58K. They're not maxed out, but with fees I guess they'll soon be. I haven't used any CC's since 1 1/2 year ago, I wanted to pay them all off.

I owed more, but I had equity in my home so last year I took a Heloc, and paid every penny from that line to CC's. The ones that were left were manageable, but I was living paycheck to paycheck until I got laid off.

The real kicker is: Now I have no equity in my home, I owe $80K more than it's worth, still have CC debt... and no job in sight.
I'm reading and learning from this forum since yesterday, I have to make a plan of some sort and go with it. You guys are truly great.