Hey, I’m in a debt relief plan and have two credit cards included. My bank closed both cards, and I haven’t paid them yet. They haven’t even started negotiating with the debt relief program. Why would they do this?
Maybe the bank just decided to minimize their risk, but honestly, they don’t communicate these things clearly most of the time.
Lex said:
Maybe the bank just decided to minimize their risk, but honestly, they don’t communicate these things clearly most of the time.
My debt relief company is unsure too, and I really don’t want to call my bank directly.
@Hayden
I get that. Banks can be intimidating, especially when you’re in a tough spot financially.
Lex said:
@Hayden
I get that. Banks can be intimidating, especially when you’re in a tough spot financially.
Yeah, I doubt they’d even want to talk to me after I joined a debt relief program for their cards.
Banks typically close accounts when you stop making payments or when they’re included in a debt relief program. As for the delay, debt relief companies usually wait until enough money builds up in your account to negotiate. Have you checked with them about their process?
@Ellis
Yeah, I only have around $2,000 saved so far. The bank closing the cards made my credit score go up a bit though, which is confusing.
Hayden said:
@Ellis
Yeah, I only have around $2,000 saved so far. The bank closing the cards made my credit score go up a bit though, which is confusing.
It’s probably not the account closure itself that helped. Maybe it reduced your overall credit usage. Once the debt is settled, it’ll likely show as ‘settled for less’ on your report.
The bank closed them because you stopped paying. It’s pretty standard.
Uma said:
The bank closed them because you stopped paying. It’s pretty standard.
Right, but what happens to the debt now?
Uma said:
The bank closed them because you stopped paying. It’s pretty standard.
Right, but what happens to the debt now?
You still owe it, and it’ll stay on your credit report as defaulted until it’s resolved.
@Uma
When I pay it back through the program, does the default status change?
Hayden said:
@Uma
When I pay it back through the program, does the default status change?
It depends. If it’s paid in full, it’ll eventually show as paid, but if it’s settled for less, it’ll stay marked as such for up to seven years.
@Uma
Was it a bad idea to join this program? Or will things work out eventually?
Hayden said:
@Uma
Was it a bad idea to join this program? Or will things work out eventually?
These companies can help, but they charge fees for something you can do yourself. If it helps you get back on track, it’s worth it, but you could save money by negotiating directly with creditors.
Closing the cards doesn’t help your credit. It’ll show as closed and defaulted. You might want to learn more about credit management to avoid future issues.
Uma said:
Closing the cards doesn’t help your credit. It’ll show as closed and defaulted. You might want to learn more about credit management to avoid future issues.
That’s why I’m asking here. What happens to the money I still owe?
@Hayden
You’re still obligated to pay. I’d suggest getting a free credit report from all three bureaus to check your accounts and ensure there are no errors.
Uma said:
@Hayden
You’re still obligated to pay. I’d suggest getting a free credit report from all three bureaus to check your accounts and ensure there are no errors.
Should I ask my debt relief company to explain things and push them to negotiate? And after I get the report, what do I do next?
@Hayden
You could contact creditors directly to negotiate yourself. You’d save on fees and possibly avoid defaults. Also, learn how to dispute errors on your report. It’s easier than it sounds and can make a big difference.