Overwhelmed with credit card debt and shutting down my business – need solutions.
Self employed Cabinet Builder for the last 18 years, partner for 12, than on my own the last 6.
For the last 2 years the work has slowed, my price has stayed the same and everything else has went up = profits down.
Last summer I had tennis elbow and this summer it showed signs of returning, which is another reason I am planning to get into trucking.
I have devolped way to much credit card debt and am in the process of shutting down my bussiness which is slowing down anyway and going into trucking.
I don't have a job nailed down yet but I go for an interview next week.
My question is I have fallen behind on 5 of my cc payments this month will be the 3rd missed payments and I am wondering how long they can be let go before others become involved like lawsuits or collection companies?
Credit card companies are chase, us bank, att universal card, regions, fia, and hsbc.
I have talked to chase and they offered 2 percent and 5 year payment plan which sounds good and once I get trucking I should be able to keep up with my payments. However, I havent said yes or no or talked to my other cards yet.
How long do I have until the situation with my unpaid credit cards get real?
—rodney
Short answer
With no income and several months of missed payments behind you, start with a bankruptcy attorney and find out what chapter 7 looks like. If chapter 7 is out, settle, and prioritize the cards by which ones can be settled earliest and for the best savings.
Key points on this page
- Chapter 7 is the strongest of the debt solutions, so rule it in or out first before you plan around anything else
- After charge off a creditor has three options: assign the account, sue on it, or sell it
- Most creditors move accounts into those collection buckets after about 6 months of non payment, and some place with attorney collection firms far more often than others
- You have roughly 3 months before that starts, which is why the bankruptcy conversation comes first, especially if your income may look the same in 90 days
- If you settle, prioritize by creditor, in this case Chase, US Bank, AT&T Universal, HSBC depending on the card branding, and FIA Card Services or Regions Bank
- Balances change that order, and once it will take more than 12 months to gather the settlement money, the risk of being sued has to be part of the plan
Given the fact that you are behind a few months with your creditors already, and not working, I would suggest you first find a bankruptcy attorney to discuss what your options are with chapter 7 will look like. As debt solutions go, chapter 7 is the undisputed heavyweight.
If during your fact finding you discover there are reasons you should avoid filing chapter 7, or cannot qualify for chapter 7, then I would suggest looking into settling with your creditors as a debt solution.
Generally speaking, your creditors will be looking at 3 limited options after they charge off your account; assign, sue or sell. I cover these three collection buckets in debt settlement – why and when banks do it.
When debt collection gets real.
You have time, at least as things stand today. But that will not last long. As you will read in the above article, most creditors dump accounts into different collection buckets after 6 months of non payment. Some are prone to placing accounts with attorney collection firms more than other. And some may never get real with debt collection (using being sued for collection as how we define real).
You have 3 months before you have to think about that. And the fact that you do not have enough income right now, and could be in the same boat in 90 days, is why I suggest talking chapter 7 bankruptcy over with an attorney first.
Let’s assume you cannot or will not file bankruptcy. You are going to want to get to as much of the settlements as you can as quickly as you can. I find it best to start by prioritizing all of the credit cards in order of which ones can be settlement the earliest and for the best savings. Your list would look like this:
- Chase
- USbank
- At&t Universal
- HSBC (depending on branding of the credit card)
- FIA card Service/Regions Bank
Without the balance information for each account, I am stuck with a straight forward list. But if one of these accounts has large, or even too small a balance, the priority could change.
Once I look at prioritizing for savings using real time settlement policies and recent results, I then want to know how long it is going to take you to pull together or save up for the settlements I have estimated. Once I learn it is going to take more than 12 months, I then apply some risk factoring and want to discuss that.
Ideally, everyone wants to avoid debt collections getting real, and there are definitely real strategies to help limit the potential. But it really can depend on where you are at in the collection cycle, with which creditor, and how much money you can bring together.
You can post more details in the comments below. Information about your balances on each credit card, interest rates, how long you will need to pull together about 40 percent of the combined balances, will all help me get more into the particulars.
Anyone with questions about settling credit cards and avoiding late stage debt collections (being sued) is welcome to post in the comments below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
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