Question Owe $1100 a month on two credit cards, should I pay less than the minimum payment?

[cantsleep]

Due to a long peroid of umemployment and medical expenses I owe about $60K combined on three different credit cards. Minimum payment is about $1100 combined. Since my employer changed me to part time my pay checks are about half of what they once were. I have cut my spending to the bone and am living on peanut butter sandwiches. I am looking aggressively for a new job or a second job. No luck so far.

As of today my credit card payment history is perfect due to taking money out of savings to pay the bill but effective next month I will be broke and my income will only pay for my peanut butter sandwich lifestyle. I could maybe come up with $300-$400 a month to make partial payments to my creditors. (Far short of the $1100 I owe them each and every month) I am maxed out on all my credit cards so a balance transfer is out of the question. I tried applying for more credit to give me some breathing room so I could use the available credit in a new card to pay the existing card minimum balance. But with no more credit available that does not seem to be an option.

Here is my question: What will happen when I call them and tell Citibank and Chase that I can not longer pay the minimum payment? (Yes, I know they will likely tell me that the I have to pay and will tell me to beg and borrow the money from my friends or family and threaten to up my interest rate to 30%). But what would they say after I tell them that is not possible. I just don't have the money and have no one who will elend me the money.

Is it possible I could get some type of hardship deferal and they would cut my payments down to the $300-$400 a month I could afford? Or will they play hardball and charge all kinds of fees and jack the interest up so high that my $60K in debt will soon become $80K or more in a few months.

Is it better to just stop paying and hope they will eventually offer a settlement? HELP!

[NoMoreCards]

Clearly you are considering bankruptcy, or you would not be here. Contact a few local attorneys and talk to them about your possible filing. Most attorneys will do this consultation for free.

Borrowing from Peter to pay Paul does not really work. It might be best to get a fresh start.
All the best.

[keepsmiling]

Cantsleep, welcome to the forum. Everyone here has been in your shoes. The writing is on the wall... you are BANKRUPT. We all are, so you are in good company

Stop throwing good money after bad. The cc co's have no interest in your story. A partial payment is as good as no payment at all. They will raise your rates and harass you to death.

Use your money to live like a human being and make some lawyer appts today. Read up here while you wait for your appts and know the q's to ask. We will be your constant companions over the coming weeks/months. Get yourself Google Voice today as well and save your sanity.

[Pandora]

save whatever money you have left in your savings.... you're going to need it. As Keep stated above - dont throw good money after bad. WHATEVER YOU DO - dont get sucked into payment agreements with anyone until you better understand what BK vs. repayment agreements and/or debt settlement means.

Welcome to the forum - stick around, read as much as you can, and make an informed decision on what's best for you.

[ksgirl38]

Stop making the credit card payments. The money would be better spent towards a BK attorney. In most cases the credit card companies won't take any legal action against you until a minimum of 90 days. In my case, my 90 days came right at when I filed so I saw minimal effects. You might get phone calls, but those can be ignored. I wouldn't even waste my time calling the companies to tell them you won't be making the payments. There's nothing they'll do for you and it honestly would be a waste of time. I was in your same situation, perfect payment history and so far I've only seen minimal effects to my credit score, although I'm still waiting out my 60 days so we'll see.

[pamkev]

I agree with above posters. We tried calling the banks Citi, Chase they could save us 6.00 each month accorded to there plan. Big Deal. We got tried of robbing Peter to Pay Paul should have filed 2 years ago but didn't used up all our savings was even looking at cashing in 401k to pay off some cards. I'm so grateful I found this forum before we did it has been a lifesaver. We can breath again and you will to.

Pam

[helpmeout]

When I was in your shoes and had finally made the decision to file BK, I stopped paying all credit cards. By the time that I made the decision, I was already maxed out so I hadn't been using them.

It's probably time for you to take a realistic look at your budget and seriously consider filing BK. You ever heard the saying "robbing from Peter to pay Paul"? That is all balance transfers is doing. Trust me, BTDT. Doesn't work.

[Drazil65]

Hi, we have all been there and that is why we ended up here. I agree that the writing is on the wall for the most part and you can dig your hole deeper and keep trying to stay afloat by robbing peter to pay paul. We have all done that as well. It only gets worse and if you see nothing else here on this forum at least recognize that the most common lesson learned here is that almost all of us had wished we had done it sooner.

Once you accept that this is the road you will go down I think you might want to research and setup up Google Voice account to field your phone calls. You will be very happy you did that. Then stop paying all credit card payments and start saving that money to pay for a bky attorney. Start making appointments (1st consults are free) to start interviewing attorneys. Make your list of questions for them and then keep making appointments until you are comfortable with one of them. The sooner you start to become proactive in your finances again the better you will feel. You have options and this is just one of them and probably the one that makes the most sense in many ways. You will feel back in control of things and that is a good thing. Good Luck!

[HHM]

Note, paying less than the minimum is a default. A default is a default, you don't get any points for trying. So, if you can't make at least the minimum, then you pay ZERO.

[chrisdfw]

Note, paying less than the minimum is a default. A default is a default, you don't get any points for trying. So, if you can't make at least the minimum, then you pay ZERO.

That pretty much sums it up.

Don't waste your money on partial payments or your breath telling your story. I also would not pay anything on other cards because they will see you default on these and jack your interest rate anyway. Keep your money

[joshuagraham]

Stop paying your CC's IMMEDIATELY! Go get a nice ribeye steak to give you some nourishment and celebrate your soon-to-come debt independence! Don't look for another job - or at least don't take one that will put you over the limit to file Chapter 7 (your BK attorney should advise you of this.) Save up that money that had been going to the CC's, and start calling some BK attorneys. Make note of the last time you spent anything (including a cash advance or balance transfer) from a CC. You want to wait about 6 months after that to file for BK.

You are in a wonderful position to release yourself from this debt - most of which was garnered nor from spendthriftness, but because you happen to have the terrible luck of living in the only wealthy nation on Earth that does not have a comprehensive health care system. In fact, the health care system for folks outside good insurance plans (i.e., I consider bad insurance plans to be virtually worthless) is one big game where the prices are hiked up to ridiculous levels because so many folks can't pay them, making the unfortunate few who do have the cash lying around pay for everyone who doesn't.

The cost to you in being able to get loans in the future is dwarfed by the amount of cash you will get (i.e., in the form of release of debt) from filing Chapter 7. Do it, and don't look back. It's more than a feeling to rid yourself of indecision, and eventually get peace of mind.

[bcohen]

I was in your shoes back in 2009, and I quit paying ALL of my unsecured debts--cell phone, credit cards, and medical bills. Now, more than 3 years later, I am no longer struggling to make ends meet (since I don't have all those debts to service) and I have not been sued. In the event that I do get sued, I will just file for BK.

My point is that you never should have depleted your savings to pay debts--only to pay living expenses going forward, such as rent, utilities, food, medicine, etc. You should have stopped paying those debts months ago, and hopefully now, you will cut your losses and quit paying a penny toward the debts!

[joshuagraham]

My point is that you never should have depleted your savings to pay debts--only to pay living expenses going forward, such as rent, utilities, food, medicine, etc. You should have stopped paying those debts months ago, and hopefully now, you will cut your losses and quit paying a penny toward the debts!

Well aside from possibly a small amount of cash that would be exempt in Chapter 7, if the OP were to file for Chapter 7, any assets she would have would be confiscated, so it's a moot point.

[ksgirl38]

Well aside from possibly a small amount of cash that would be exempt in Chapter 7, if the OP were to file for Chapter 7, any assets she would have would be confiscated, so it's a moot point.

Yeah, but you can always use your savings to pay forward your bills to guarantee you'll have money later. That's what I did. I paid forward some of my utility bills and insurance to use up my savings, but now I have that extra money that would have gone to those bills.

[SadPanda]

In my experience, calling them and telling them my situation just made them inform me that they will report my nonpayment after 90 days (or it might've been 60 days) to the credit reporting bureaus. I don't remember if I asked them to lower my minimum amounts due, but I'm pretty sure they would never do that for me.

After a few months of nonpayment, they may send you a letter offering to settle for less than you owe, but these settlements (from my experience) usually have to be done in one payment (I think there was one that offered it in four payments). This was always ridiculous, because they're basically saying, "We know you don't have the money to pay us $200 each month, but we'll settle this debt if you pay us one lump sum of $1,000." If you don't have the money to pay the minimum amount due, how do they expect you to pay the lump sum, even if the amount due is reduced from $4,000 to $1,000? Of course, I don't know how much they'd settle yours for, but I'm assuming the reduced amount would still have to be paid in one lump sum, rather than them letting you pay monthly payments on the reduced amount.

Since you said you may be able to afford $300-$400 a month, I agree with the others that you should use some of that money for food and then save whatever you can towards a bankruptcy attorney, rather than the credit card companies. Also, I don't know if you've heard of those "debt relief" companies that offer to lower your bills, but just in case you're considering trying a place like that, I thought I'd mention that you should probably skip those types of places. I haven't used them myself, but I've heard those places usually do more harm than good and many people who try that first end up filing bankruptcy after a while anyway.

Even if you can continue to pay the minimum amounts due on your credit cards, if your payments are mostly just going to the interest, then it will take you many years to get rid of this debt. If you file bankruptcy, you can wipe the debts away and start fresh. If you can file for bankruptcy sooner rather than later, I'm pretty sure your credit score (if you're concerned about that) won't take as much of a hit, because if your score isn't too bad now, then it may not have to recover that much after your bankruptcy.