Not pay off credit card?

[dennis in se pa]

What happens to ppl who can’t pay off their credit card bills? Say they want to, but are unable due to a life change? The amount is unsecured, so what recourse does the bank have other than to ruin that person’s credit score?

[Por_sha911]

If the debtor contacts the company, most lenders will try to work something out with them. If they don't communicate then the lender has to assume it is intentional and report them.

[The Synergizer]

They can make your life miserable. Credit card debt is not dischargeable in bankruptcy court. It can follow you as long as your individual state laws allow. And then collection companies can follow you forever (they have no recourse but can hound you still). The card companies can get a judgment against you. And on and on... Oh, they will also add on penalties and interest and when you owed $100 it can easily turn into several thousand... And if you try to buy anything, it will be there on your 540 fico score...

Best answer, never owe a credit card company anything. Pay the statement in full.

[Rick Lee]

You never have to pay off a credit card and the credit card company probably prefers you actually carry a balance and keep paying them interest. You have to make minimum payments though.

[dennis in se pa]

So they can ruin her credit, score and hound her. If she is leaving the country that doesn’t matter. Years ago, I heard of a woman who maxed out her credit cards because she knew she was filing for bankruptcy. I wonder what happened there.

[Rick Lee]

There's usually a lookback on some types of BK just because of people like that. Maxing stuff out just before filing means that stuff won't be discharged.

[KFC911]

Originally Posted by dennis in se pa

So they can ruin her credit, score and hound her. If she is leaving the country that doesn’t matter. Years ago, I heard of a woman who maxed out her credit cards because she knew she was filing for bankruptcy. I wonder what happened there.

The laws were changed just a few years ago which eliminated CC debt from being discharged during bankruptcy as was previously posted.

I disdain the banks and CC industry for their practices, but .....

How much CC debt are we talkin' about here, what's her age, and is there any chance her returning, or future "life changes"?

Being unable to pay one's debt is one thing .... but "choosing not to" ... just like some bankruptcies, etc. should have consequences too imo.

[David]

Kind of off topic but not too many years ago my credit card interest rate was around 3% so I didn’t worry about paying it off every month. Then they raised it to around 19% (I don’t pay attention anymore) and I’ve paid it off every month since then. Seems like not a smart move on the bank’s part.

[KFC911]

Banks and the CC industry are $toopid $mart ... the bulk of their profits are made daily on the 3-4% they make on every single CC transaction .... the interest they make on folks who carry a balance is just gravy.

They eat CC/Debit card losses daily because they know how profitable it is to have the general public "hooked on credit" and using their cards and they laugh all the way to the bank.

They will not kill the golden goo$e .... they make too much despite the frauds and deadbeats who don't pay .... just the cost of doing business.

[sc_rufctr]

"life changes"

Sounds like something beyond her control. Health and therefore employment? So her credit score is ruined. Then what? Not much as far as I can see aside from not being able to get a new loan to buy a house or a car.

About 2 years after I split with my ex a debt collector called me because she borrowed about $70,000 to start her own business and it failed (My mobile number was listed at the time). They told me she just stopped paying the loan and they wanted me to honor her debt. I told them we were divorced, she has a boy friend and they live in another state but they still tried to push me to pay her debt... Idiots!

[wdfifteen]

They can ruin your credit score and make your life miserable with demand letters and phone calls. It's easy for them - they let computers do the work.
The best way to avoid it is to set up a payment plan for a few dollars a month.
DO NOT ignore them. They start tacking on late fees, and then raise the interest rate, in a few months a $100 cc bill will balloon up to $1000. Credit car debt can be discharged in bankruptcy court, but it's not guaranteed.

[sc_rufctr]

That's easy... Ignore, move, change your name whatever. Just walk away.

Years ago (late 80s?) there was a really bad train crash and fire in a London tunnel. Lots of people died but a few more people than the body count in the wreck simply went missing. The authorities suspect that a few people who were on a different train just walked away and started new lives somewhere else.

[Seahawk]

Originally Posted by wdfifteen

The best way to avoid it is to set up a payment plan for a few dollars a month.
DO NOT ignore them.

100%.

So much goes into this: age, level of CC debt, income, other assets, permanency of the life change, etc. it is impossible to give a detailed answer other than what WD wrote.

I wish them the best.

[GH85Carrera]

I have one credit card I use strictly for my business. At the end of the year, we renew several expensive aerial photography and mapping software licenses, Photoshop, Office 365, a 12 month lease on our airplane hangar, and other end of year expenses to get it all on that year's expenses for taxes. We always pay the statement balance and have never paid a penny in interest, and I had to read the statement to see we are at a rate now of 16.15% in theory.

The January CC statement hit and it was $6,728.11. We of course paid that in full on the day it was due. Every credit card statement by law must show what you would pay if you pay the minimum payment and it would take 25 years and pay $15,251.00 to pay it off. Or if we paid $237.00 per month it would pay off is 3 years and coats $8,534.00

I hear of people with insane credit card balances. I can't understand how it happens. When I was broke, and struggled to pay my bills, I have only an American Express credit card as I knew I could not carry a balance, and I had to pay it off each month. Then and now a credit card is a very convenient and necessary tool. You have to have one to rent a car, or check into a motel. I traveled some for my photo business. That card was my introduction to adulthood..

All creditors want to get paid. That is the business model. Contact them, tell them the problem, and send some payment each payment.

[masraum]

If you don't pay, and you don't tell them you aren't going to pay, then they'll write it off and ding your credit, and probably sell your debt to someone that will hound you forever.

If you are tight, and call them and tell them, they will work with you on a reduced payment plan possibly even with a period of no payment, and your credit won't get dinged.

If you work out a deal, for instance you owe $50k, but you agree to pay 25k and they write off the other 25k. THey'll send a 1099 to the IRS, and the 25k that they wrote off will be like income that you have to pay taxes on.

I think those are scenarios that I've seen/heard in the past.

[rfuerst911sc]

Originally Posted by dennis in se pa

So they can ruin her credit, score and hound her. If she is leaving the country that doesn’t matter. Years ago, I heard of a woman who maxed out her credit cards because she knew she was filing for bankruptcy. I wonder what happened there.

In my opinion that woman and others like her are irresponsible and a POS .

[KFC911]

Originally Posted by wdfifteen

They can ruin your credit score and make your life miserable with demand letters and phone calls. It's easy for them - they let computers do the work.
The best way to avoid it is to set up a payment plan for a few dollars a month.
DO NOT ignore them. They start tacking on late fees, and then raise the interest rate, in a few months a $100 cc bill will balloon up to $1000. Credit car debt can be discharged in bankruptcy court, but it's not guaranteed.

I stand corrected regarding CC debt and bankruptcy ... the changes in laws were regarding student loan debts a few years back.

I never accumulated debt (much ), and certainly never "bad debt" like via CCs, but walking away from it as an "easy way out" via bankruptcy, etc. is alien to me too.

To some folks .... "it's just business" .... I reckon .. it's just none of my business .... different strokes.

[dennis in se pa]

I am 72 and have always been a responsible consumer. But for some reason when someone has difficulties, and one of these big corrupt banks gets the short end of the stick, it doesn’t bother me.

[GH85Carrera]

Originally Posted by KC911

I stand corrected regarding CC debt and bankruptcy ... the changes in laws were regarding student loan debts a few years back.

I never accumulated debt (much ), and certainly never "bad debt" like via CCs, but walking away from it as an "easy way out" via bankruptcy, etc. is alien to me too.

To some folks .... "it's just business" .... I reckon .. it's just none of my business .... different strokes.

Back in the early 1980s Oklahoma was in an oil boom. The boom went bust, and a lot of oil companies just declared bankruptcy and walked out on a lot of bank loans. Penn Square bank folded.

One of my acquaintances and customers owned an oil company and hired me to photograph his annual Christmas party at the fancy country club with open bars, and lots of food. He too had to close, and lay off all the employees, but he refused to walk away from debts he had signed for. He ended up selling all his possessions except one old pickup. He sold his house, and all his personal assets, and slept at friends houses for a few months. He paid off every single debt, and started again from scratch. He said he was a millionaire before, and can do it again. He built a new company, and eventually sold it to a much bigger company, and he retired with a nice big nest egg. He said his word was all he had for a while, and that got him through the tough times. He worked as public face for a while for the big company until he was ready to just be done.

I had to admire his ethics.

[wilnj]

She may not care about what people think of her but they will even call and hound anyone she’s lived with or places shes worked.

It won’t be the credit card companies with a reputation to protect but rather debt collectors working on commissions who don’t care who they piss off.


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