Save 50% on credit card debt - More Wisdom and Experience from David
I've always done business with a local bank and have always had
excellent service. There's not as many local banks as there used to be
due to the bank mergers of the last 15 years but you can still find
them if you search around. I'm glad to hear you dumped Chase; I had a
credit card through them and lived to regret it.
Speaking of credit cards, I have another tip you wish to pass on to your readers. I would have posted it under the comment sections of your blog but I don't think it would get much visibility there. If you want me to post it on your blog myself, let me know where. Anyway, here's the story --
Awhile back, I had some financial problems with credit cards that were due to both mistakes on my part and their shady business practices. I was using four cards to pay for daily expenses and dividing the costs between them. I was tempted by the zero percent interest rates some offered and was making payments on time. At that time, two the banks merged and instituted policies that I wasn't aware of which effected two of my cards. The result was that when I went slightly over limit on one of the cards, they froze not only that card but another one as well and raised the interest rates on both! The previous policy never froze the account but just added a modest fee. This ruined my cash flow and things spiraled out of control after that with the other cards following suit when I made late payments to them.
Here is my tip for those who may find themselves in a similar situation.
It got to the point that none of them would negotiate and lower the interest rates so I stopped paying them. After you stop payments for six months, they're willing to settle and will accept 50% of what you owe and forgive the rest of the debt. If you negotiate harder with them, they will forgive more but 50% was fine with me so I raided my retirement fund, paid them off and suffered a huge hit on my credit rating. You'll notice I said MY credit rating but NOT my wife's. Since most of the credit cards were in just MY name, it was only MY credit rating that got hit. When my wife and I had to refinance, we did it in her name and got a favorable rate. After getting out from under the credit cards, we were able to pay everything on time so my credit rating has recovered. Recently, we took advantage of the lower interest rates and refinanced under better terms using both our names.
The lessons to be learned are:
1) Never include using numerous charge cards as part of your financial plans - even for a short time.
2) If you HAVE to use credit cards and are married, DON'T get them under both of your names. Let one person take the credit rating hit.
3) Pay attention to changes in your credit card policies. I never used them much and wasn't used to cards that changed interest rates and credit limits for no reason.
4) Forgiven debt is taxable! Be prepared for the tax hit on your extra "income" on your 1040 form.
5) Don't get too greedy in your negotiations. Eventually, they WILL take legal action so you want to strike a bargain while it's at your advantage.
I hope this helps.
Keep up the good work Don.
Dave
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Maybe part of the negotiations could be for them not to report blemishes on your credit rating. Since they have ruined my rating by dropping limits, I don't care any more personally, so i am not planning on paying anyway. Let them spend the money to take me to court and collect.
Don
Speaking of credit cards, I have another tip you wish to pass on to your readers. I would have posted it under the comment sections of your blog but I don't think it would get much visibility there. If you want me to post it on your blog myself, let me know where. Anyway, here's the story --
Awhile back, I had some financial problems with credit cards that were due to both mistakes on my part and their shady business practices. I was using four cards to pay for daily expenses and dividing the costs between them. I was tempted by the zero percent interest rates some offered and was making payments on time. At that time, two the banks merged and instituted policies that I wasn't aware of which effected two of my cards. The result was that when I went slightly over limit on one of the cards, they froze not only that card but another one as well and raised the interest rates on both! The previous policy never froze the account but just added a modest fee. This ruined my cash flow and things spiraled out of control after that with the other cards following suit when I made late payments to them.
Here is my tip for those who may find themselves in a similar situation.
It got to the point that none of them would negotiate and lower the interest rates so I stopped paying them. After you stop payments for six months, they're willing to settle and will accept 50% of what you owe and forgive the rest of the debt. If you negotiate harder with them, they will forgive more but 50% was fine with me so I raided my retirement fund, paid them off and suffered a huge hit on my credit rating. You'll notice I said MY credit rating but NOT my wife's. Since most of the credit cards were in just MY name, it was only MY credit rating that got hit. When my wife and I had to refinance, we did it in her name and got a favorable rate. After getting out from under the credit cards, we were able to pay everything on time so my credit rating has recovered. Recently, we took advantage of the lower interest rates and refinanced under better terms using both our names.
The lessons to be learned are:
1) Never include using numerous charge cards as part of your financial plans - even for a short time.
2) If you HAVE to use credit cards and are married, DON'T get them under both of your names. Let one person take the credit rating hit.
3) Pay attention to changes in your credit card policies. I never used them much and wasn't used to cards that changed interest rates and credit limits for no reason.
4) Forgiven debt is taxable! Be prepared for the tax hit on your extra "income" on your 1040 form.
5) Don't get too greedy in your negotiations. Eventually, they WILL take legal action so you want to strike a bargain while it's at your advantage.
I hope this helps.
Keep up the good work Don.
Dave
****************************************************************************
Maybe part of the negotiations could be for them not to report blemishes on your credit rating. Since they have ruined my rating by dropping limits, I don't care any more personally, so i am not planning on paying anyway. Let them spend the money to take me to court and collect.
Don
Posted by facilitator at 11/30/2009 6:59 PM 
Categories: uncategorized
Tags: wipe out credit card debt negotiate credit card debt Save credit card debt
Categories: uncategorized
Tags: wipe out credit card debt negotiate credit card debt Save credit card debt
I recently fell on hard time and could not make a Credit Card payment. The card holder pulled up my past payments and saw I had paid over the phone from a checking account at my credit union and just drafted my account for the minimum payment without my permission. The credit union said they could not refund the money even though I had not authorized it, and that I needed to get the credit card company to put it back. Well I got the money back and then I asked for a new account with the credit union to stop future abuses and they denied my request because I had a loan with the credit union as well and the accounts were linked. NEVER PAY A BILL WITH A VOICE AUTHORIZATION DIRECTLY FROM YOUR CHECKING ACCOUNT. If I had used a debit card I could have claimed it was lost or stolen and got a new number immediately but no so if you give out your routing number and account number to vendors.
The credit card by the way was Bank of America.
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From the Facilitator:
I am sorry for your situation but not surprised any more. The many emails that i have received from people reading this website is very sad and disturbing. I will never us an automatic payment again and am now switching back to check and cash. See my comment about CHASE. The banks, including credit unions, and credit card companies are no longer dealing in the real of my understanding of ethics. They use the laws, which they helped to lobby for and create, to smash people like you and me at every turn. I would cancel your credit union account like I did (you actually might have to leave in the membership fee, like $5.00 because you have a loan) but put a stop on the account activities and more to a different bank or credit union. I wrote CHASE a letter that I am no longer responsible for anything they pay out (see previous comment). I would also cancel all credit cards. You might also participate in the civil disobedience (called computer disobedience on the first page). Right now I am only paying 1 credit with a life 2.99% for the life of the balance but CHASE, CITIBANK and Band of A**holes, I am not paying. I am also contacting my former credit union, CHASE, BofA, Provident and M&T Bank that I cannot make a payment. I have hired an attorney and may be filing Chapter 13 Bankruptcy. As it unfolds i will keep you informed through this blog and website. I am also open to any suggestions from people as to what this website and we as a group could do to impact these legal thugs. Remember you are not alone and the banks need us more than we need them.
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