How long can we get away with not paying credit cards?

[Lovesgirl]

Hubby and I work for a S corp which he "owns" and we are going to close that business, no assets and lots liabilities. We are both filing personal chap 7. We are opening a whole new company so that we will still have jobs LOL We are preparing for the possibility of filing bk in the next 2-3 months. We have always paid our credit card bills $1600 a month in min payments on time but usually the minimums. We are working on refi on the house with BOA/Countrywide thru the HARP makinghomeaffordable.gov plan just to reduce the mortgage payment (which is $1326, may go to $600 if it goes thru). and we are trying to refi our car (payments $524 but always on time and in full) so get the payments lower. And we have to wait for the paperwork on the new company to come back from Raleigh and set up a new company account at a new bank, a new merchant account, business license, etc. while our credit still looks "good", then we can file bk if we choose. Sales are way down and we sure could use the $1600 we have been payiing on the credit cards and the $801 I have personally been paying in a DMP on mine thru CCCS. Question is: When do you think it is safe to start not paying these credit cards because we are concerned about it showing on our credit reports too soon and messing up our chance to start a new business. Should we use delay tactics in the meantime, like tell the cc people sales are slow and it's taking all our money just to keep power, insurance, etc. and we will try to make it up next month? or should we pay half the minimum? if we don't pay at all and just tell them, we just don't hve it right now? try next month . . how long do you think it will be before it shows up on our credit reports? It is such a guessing game and if we don't do it right, we could screw ourselves. Anyone with advice, please help. (P.S. there are probably 12 cards in all between the cards for husband and my cards so there are a bunch of companies, some of which are BOA who we are trying to refi the mortgage with).

[Pizza]

Hubby and I work for a S corp which he "owns" and we are going to close that business, no assets and lots liabilities. We are both filing personal chap 7. We are opening a whole new company so that we will still have jobs LOL We are preparing for the possibility of filing bk in the next 2-3 months. We have always paid our credit card bills $1600 a month in min payments on time but usually the minimums. We are working on refi on the house with BOA/Countrywide thru the HARP makinghomeaffordable.gov plan just to reduce the mortgage payment (which is $1326, may go to $600 if it goes thru). and we are trying to refi our car (payments $524 but always on time and in full) so get the payments lower. And we have to wait for the paperwork on the new company to come back from Raleigh and set up a new company account at a new bank, a new merchant account, business license, etc. while our credit still looks "good", then we can file bk if we choose. Sales are way down and we sure could use the $1600 we have been payiing on the credit cards and the $801 I have personally been paying in a DMP on mine thru CCCS. Question is: When do you think it is safe to start not paying these credit cards because we are concerned about it showing on our credit reports too soon and messing up our chance to start a new business. Should we use delay tactics in the meantime, like tell the cc people sales are slow and it's taking all our money just to keep power, insurance, etc. and we will try to make it up next month? or should we pay half the minimum? if we don't pay at all and just tell them, we just don't hve it right now? try next month . . how long do you think it will be before it shows up on our credit reports? It is such a guessing game and if we don't do it right, we could screw ourselves. Anyone with advice, please help. (P.S. there are probably 12 cards in all between the cards for husband and my cards so there are a bunch of companies, some of which are BOA who we are trying to refi the mortgage with).

Browse the site and you'll find that everyone has had a different situation in regards to how soon their credit card companies take action. It mostly depends on how much effort (and money) the creditors would put forth to sue, which is based on what kind of assets you have, out of those, which assets are protected/exempted (depends on the state), and the size of the debt. Looking at your payments, the amounts owed sound very large, so the chances they would pursue legal action quickly is rather elevated if you have non-exempt assets.

If you're thinking BK, this is what I've gathered: Go at least 90 days without charging, and look back at your history for any large balance transfers/cash advances - if they are any younger than a year and ESPECIALLY 6 months, beware (search the site for 'creditor objections'). Consult a lawyer before defaulting and get an educated opinion. Paying less than the minimum won't satisfy the creditors, you will default. You can explain your circumstances (in writing ALWAYS) to the creditors, but they probably won't want to help unless they think they can get at least most of their money back. If you settle for less than the balance, there are also tax consequences - you must pay taxes on what you skip out on.

If you're this close to thinking about BK, do plenty of research so you'll know what questions to ask your attorney.

Now then, how long can you go without paying? Could be 6 months, a year, a few years, or forever; there's no quick & easy rule. Expect the phone calls to start quickly and frequently if you don't pay and your credit to start going downhill quickly. If you even miss ONE payment, it won't take long for other creditors to know about it and they will quite possibly penalize you with higher interest, lower credit lines, and account closure. And NEVER let any of them get a judgment... if you are faced with a suit and can't defend the debt (which is a given if you charged it), file and protect what you can.

[JRScott]

Before the current economic crisis you could have figured a year or more on most cards, however they are becoming more aggressive and might sue within 6 months now.

[catleg]

Indeed, I have been sued mainly by Chase and Citi after about 6 months of non-payment. This is, however, the creditor's paradise of NJ.

I would suggest that if you're already showing financial difficulty, whatever cards you may currently have open will shut down very quickly e.g. a 30 day late. (ahem, up yours, Amex).

[123ABC]

I stopped paying all my cards in March 2007. Capital One sued me in July 2008 and got a judgement in Oct. Citi just started suing me in march of this year. Nobody else has bothered.

I just filed my BK yesterday.

while i dont reccomend waiting as long as I had to I would wait as long as possible.

good luck!

[DSIG]

each creditor is different. In fall 08 decide to pay less than the minimum on both my amex credit cards after calling amex and sending them countless correspondence that I would be falling behind. Min payments on all my other cards remained current. At the 6 month mark Amex sends me letters saying that my accounts are transferred to collections. The CAs tried to collect for another 6-months and failed at which time Amex charged-off one account. On the other account I made a good faith payment directly to Amex while the account was with a CA, which reset the date of last activity and delayed chargeoff. Amex reported no derogs on either cards until one month before charge-off. Then they retroctively changed the date of last activity to 1 year back but only reported a derog comment.

Bottom line--your credit score will take a huge hit and if your credit score is important to you then you need to keep paying the min till you file. The lates and derogs will not go away when you file. Once reported they stay on your report until 7 years after the date of late deliquency/activity.

Since I decided to file bk (still have not filed yet), I let the other payments go and the creditors all attacked like vulchers. One late or missed payment in this economy and they are calling you the day after the billing cycle.

So, this is just a strategy. You can try less than min payments to buy some time. The creditors will either react like amex and see if you intend to catch up or they will hound you till you pay....and if you listed your employer or work number in any credit apps they will find you

[catleg]

I think the lates do go away. Maybe you should dispute some of those accounts and see.

[Pizza]

Today, both First USA (a division of Chase) and Citi sent me a "let's work it out" letter. Through communication, you can stall legal action through negotation over APRs and minimum payments, but they probably won't take peanuts a month, and you NEVER want to settle for a percentage because it will cause tax consequences.

Just ride the course and drop the BK-Bomb when they get serious about legal action.