We’ve accumulated a significant amount of debt around $60,000 which is quite embarrassing, but I feel comfortable sharing it here. Some of this debt comes from 0% interest purchases that we’ll pay off by making the minimum payments, so I’m not too worried about those. However, the larger debts of $7,000 to $14,000 are causing me a lot of stress. I’ve fallen behind by a month or two, and now the minimum payments needed to catch up are completely unmanageable for us, ranging from $350 to $1,200 across four credit cards. We earn a decent income, but unexpected expenses keep arising. I’m afraid to contact the credit card companies and hesitant to file for bankruptcy unless it’s absolutely necessary. I’m feeling overwhelmed by the whole situation. Any advice would be greatly appreciated!
Give the credit card companies a call and let them know what happened. Most will offer to close the accounts in exchange for you going on a payment plan. All they want is the money you owe them. If you file for bankruptcy and receive nothing, they would prefer to put you on a payment plan. Wishing you luck. There are other people experiencing similar circumstances as you.
This is the correct response; the account will be closed after 60 months and the rate will be lowered to about 10%. A ding for canceled accounts will be issued by the bureau, but it’s nothing in comparison to rolling over debt or filing for bankruptcy.
For what length of time does that remain on your report?
it takes seven years
That’s for bankruptcy 7 years and my credit scores didn’t suffer possibly because I’m paying the entire balance down at zero percent interest or a reduced interest rate, and my credit cards are temporarily closed before reopening.
I’m referring to the time it takes for Charge Off to post your report. Seven years pass when payments are made after the due date🤦🏻
I would like to ask you a question. How on earth did you guys end up with that many credit cards?
There are four that don’t have any discounts from big-box stores. Again, don’t worry about those. Because the payments are little and manageable, you can remove those. About $40,000 is the high interest loan that most worries me. Their mental health and financial problems caused them to fall behind, but they were controllable before; now that they are, the challenge is catching up.
Just think about it how large was your purchase, and how small is the minimum payment? Store credit cards aren’t designed to help you finance a big purchase for free; they’re meant to lure you in and make extra money through high interest rates.
For example, I once bought a new laptop with a 12-month, 0% interest Best Buy card. The total cost was $780. The minimum payment on that card was about $25 a month. Over 12 months, paying just the minimum would total $300, leaving $480 unpaid by the time the 0% period ended. To avoid this, I paid $80 a month to make sure I’d pay off the balance before the interest kicked in.
What’s worse is that store cards often don’t just start charging 25% or more interest on the remaining balance they apply it to the entire original balance if you haven’t paid it off before the introductory rate ends.
When I worked at a store, I can’t tell you how many times I was only allowed to tell customers what the minimum payment would be when they asked about the 0% interest offer. This leads people to think they’re all set. The store’s financing company doesn’t calculate your minimum payment to ensure you’ll pay off the balance on time; they actually try to prevent that. If I were you, I’d check the terms and conditions carefully.