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Am I Insolvent?
robotbebop
Registered User regular
Registered User regular
So, I've had trouble paying my credit card and just.. haven't done so. I've been meaning to call the credit counselling society but never got to it.
ANyhow, I'll keep this short: i checked my mastercard balance and the site says that the entire balance ($13,500) is due by the 2nd of February.
Does this technically mean I'm insolvent or is this just the website saying that my mastercard is closed off?
EDIT: I should mention that I do have an appointment scheduled with the CSS now though
ANyhow, I'll keep this short: i checked my mastercard balance and the site says that the entire balance ($13,500) is due by the 2nd of February.
Does this technically mean I'm insolvent or is this just the website saying that my mastercard is closed off?
EDIT: I should mention that I do have an appointment scheduled with the CSS now though
Do not feel trapped by the need to achieve anything, this way you achieve everything.
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I've been there, it sucks. If you can make payments, you can get them to drop the deadbeat late charges / over the limit fees. Just get right with them fucking ASAP because bad credit can fuck you up.
I have tried to reason with them; numerous times. They are completely unwilling to help. They keep threatening to close the card but then never actually do it. I ask them if there's any way to lower the interest and they stonewall me (and often get really rude) to the point where I get so enraged that I hang up.
Is there some specific thing I have to ask them for or ?
Oh, hey I'm making a game! Check it out: Dr. Weirdo!
I have tried this as well and was shot down. I think because I had recently had some outstanding student loan debt within 6 months. But that was quite a while ago. Probably almost a year.
Oh, hey I'm making a game! Check it out: Dr. Weirdo!
If they continue to say no, call back every day and keep reminding them that their options are to work with you or for you not to be able to pay and for them to get nothing at all.
Considering credit cards have interest rates of like 20 - 30%, consolidation would probably be your best bet. Set up an appointment with one of the people at the bank and be clear about your goals. They can help.
I was at the bank asking about a car loan after my accident a few weeks ago. I was looking at about 8% interest rate for a $10K loan. If you're smart, you could have that debt paid off in 3 years or so.
Also, if they bank is willing to do this, cancel your credit card. Do not take out any more credit until this is paid off, or you'll just keep spiraling.
Do not wait, bad credit can haunt you for decades.
While this is responsible and general financial good advice, this is HORRIBLE advice as far as your credit rating goes. Cancelling cards adversely affects your FICO score, whereas having a longstanding credit line helps. Your credit score is basically how good you are at being in debt. It's fucking bullshit.
Don't get upset. If the bank is being a dick to you than that means they think you're good for the whole taco with interest. When a phone monkey gets snippy, just politely ask for a supervisor. If the supervisor is being a dick, ask to talk to his manager.
You have to be persistent. It's frustrating, but it's your best shot at getting results.
Are you making your minimum payments? Did you slip up a few months and that initial 'getting good with jesus' part is just fucking impossible?
I missed a few payments; but what they do is just tack on the interest on top of your balance if you only make the minimum payments. Basically, the min. payments at that point were $250, and they would throw $180 back on after in interest charges. In the last little while I've needed that money for other things and spinning wheels on interest, to me, is sitting on the event horizon of debt repayment.
My goal was to talk to the CCS and go for their debt repayment program where they do all the battle with credit card people - BMO in this case - and then paying that off, which would be far more practical. I just never got to it because it would never come to me when I got home, and I wouldn't think to just do the smart thing and set a reminder.
Based on the current circumstances I'm not sure what their options will be now.
Oh, hey I'm making a game! Check it out: Dr. Weirdo!
I would not give a person in your situation a credit line, at all. Letting CC debt get out of control is a bad, bad sign. Generally, a credit line is just borrowing from Peter to pay Paul, and it makes things worse.
Your best option by far is to ask BMO to simply close the card and give you a reducing loan. This means monthly payments, probably at a rate around 10%. BMO also has a low-interest rate card, around 12%, so you could simply switch to that and keep your credit card intact.
I should note that the above commments about closing the card hurting your credit are false - not so in Canada. your credit report will simply show "closed at consumer's request". Only if the bank cuts you off will it say "delinquent", and then you've got a problem. Of course, BMO's private records (which they won't share) will show you as a bad debtor, and so they won't give you any more credit for a while, regardless of what you do. Try another bank if you have to close the card, but keep in mind they'll be able to see the loan/CC to BMO on your credit report. They won't, however, be able to tell what it's for - as long as you're not behind on payments (and haven't missed more than a few) you should be in the clear.
Just to reiterate, you best bet by far is to negotiate with BMO. Another bank will unwilling to take on bad debt to help you. And keeping everything within BMO's files keeps your credit more or less clean. As you tell it so far, the only black marks on your report will be the missed payments. Unless BMO really just won't budge, don't try another bank (and stay the hell away from payday loan places and the like).
Edit: One last tip - go to a bank in person. Don't deal with a phone monkey if you can help it.
This... this is how credit cards work. You are not going to pay off your credit card by paying the minimum payments. Lowering your interest rates will not reduce that monthly interest charge by much either. You have to start making substancial payments if you want to get this card cleared.
edit: this is for the U.S., sorry. Canada might be very similar though.
So they may very well be expecting you to pay it in full. If you don't that will trigger the next step and so on till they eventually trash your credit rating completely and garnish your wages to recoup the money.
You need to go into the bank in person and talk to them asap.
I recommend you follow this man's advice to the letter, report back to the thread, and wait for his next post.
In the US, this is not the case. Opening and closing cards repeatedly lowers your score. Not having a credit line at all closing your score. But in the OPs case, facing the possibility of the credit card company forcibly closing his card and putting him in default status, yes closing the card is an extremely intelligent thing to do. Also don't be overdramatic. As far as lowering your credit score, closing a card is definitely one of the lesser impacts compared to many other things (revolving debt, frequently maxed out balances, defaulting, or missing payments, etc).
OP: Eh deleted most of the post, it's good that you have a CCS appointment cause that should be your next move if BMO won't move.
PSN: TheScrublet
Seriously. The short answer here: You are fiscally irresponsible, and loaning you money is a bad loan (this is not an attack on you, but an explanation of how they view loaning money). The reason you need to borrow money to pay the CC is because you think you are unable to pay off that debt. A bank loaning you money does not do so because they like loaning money, they do so in anticipation of getting that money back, with interest. If you may not be able to pay off your original lender, you may not be able to pay them off.
The best solution is to do exactly what the quoted said. Involved in this will be saving like mad, tightening your belt and learning to manage your money. One does not end up as deeply in debt as you through routine payments. It happens either through poor money managing, or serious unexpected expenses like medical emergencies.
Sorry but you are wrong. In the US closing an otherwise good credit line does hurt your FICO score. I know because I stupidly did this and it dropped me 50 points immediately. Granted it's not the end of the world, but facts is facts. If he can work something out, keep the credit line open, and just not touch the thing the OP will be in much better shape than if he closes the account for no other benefit than to force him to be responsible with the card.
In the end when he clears it having a 0% debt on a $13k line of credit makes your FICO shine.
Sorry but I am right. What part of the OP made this seem like an "otherwise good credit line" to you? They have set his entire balance due in February. He has missed payments. This is NOT a good credit line. Additionally, I have no intention of derailing this thread with a debate of your credit history, but your score could have dropped 50 points for any number of reasons depending on the number of lines you have open, your history of use with those lines, current standing balance, etc. It is a gross oversimplification and misunderstanding of the system to suggest that because YOU closed a line and lost 50 points, ANYONE closing a line will lose points.
Edit: As further support of this, I went over to FICO to do some hands-on research (slow day at work). This is their dumbed-down explanation. Page 7 is an excellent example of what I'm talking about. Length of credit history is listed at 15% (this would be your justification of not closing the line). Amounts owed and Payment History sum up to 65% (this would be my justification for closing, since OP owes $13k and is missing payments on it).
PSN: TheScrublet
If the credit line is nearly maxed out, however, it's a dumb idea not to close it down.
During that time it'll be nigh impossible to get a new account with that sort of balance. He'll be relagated to a high fee, low balance repair-card-for-the-fucked that will work, but it'll take a long eff'n time.
In short, the best bet is to pay the bills or work something out with the company to reduce the interest while keeping it open and excercising financial discipline.
Close the account, pay off the balance.
And yes, I understand that the amounts owed don't disappear. However, at that point his potential to INCREASE the amount owed is done. A "low balance repair-card-for-the-fucked" is all that someone in the OP's situation needs...something to repair credit history after his current situation is resolved.
IMO, your idea of telling someone to keep a bad card open and "exercise financial discipline" who's missing payments and getting in fights about lowering interest with their company, is akin to giving a recovering alcoholic a bottle of wine and saying "dude just drink responsibly".
PSN: TheScrublet
If the OP has bad marks on his report and he closes out this account it is going to be a bitch for him to get credit in the future. Those repair cards are for the dregs and have some real LOL terms (ie, $250 credit line with $180 in fees to start up). If he can keep the card open and has matured from when he made the bad calls that got him into this mess (if any, there isn't enough info in the OP to tell whether the 13 grand went to Ed Hardy shirts or a kidney operation for his sister), then he should claw, bite, and kick to keep that account open if that's even possible at this point.
Anyway this is going into D&D territory so to sum up:
Robot, your best case scenario is to talk to your bank and be persistent as all hell. Cowboy up and throw everything you have at this card. Sell some stuff on Ebay, get a personal loan from the Bank of Dad, anything to chip away at the principle. Talk to those credit counselors immediately.
If they're set on closing you out, then they'll most likely give you a better interest rate, but it'll be much harder for you to get new credit for much longer than if you can keep it open.
If on the otherhand you irresponsibly racked up the debt and are an addict, close it out and get used to paying cash. It's back to basics.
Red'd for false. In Canada, we don't go by credit scores - your report simply shows balance, maximum, and payment history, with notes if applicable (i.e. 'closed at consumer's request', or 'delinquient', etc). Lenders just get the report and make their own calls/interpretations. Whether or not he closes the card, it'll stay on his report for seven years. Generally lending institutions care about the last two years the most.
If he gets a reducing loan, it'll show the max (so, $13,000) and the current balance (which will obviously drop month to month). Assuming that no payments are missed, a year of steadily paying off debts would go a long way to credit fixin's. If the card is closed, he will indeed not be able to get another card for a while. However, the low-rate cards in Canada are pretty reasonable - most are around a $20 annual fee, with 12% interest. Still much, MUCH better to just get a loan and abstain from credit for a while.
Annual interest payments (no principle!) on $13,000:
20% (current card, most likely) - $2,600
12% (low rate cards) - $1,560
10% (likely rate of consolidation loan) - $1,300
8% (loan rate if you're lucky) - $1,040
In short, change the card to a loan, pay it off, and if at all possible, get some savings going - start a registered retirement plan. If, say, two years from now you've got a much-reduced loan and a couple thousand tucked away, you should have no problem getting a new CC. In the mean time, get prepaid Visas or something if you need to shop online.
Edit: Deebaser, I don't mean to be snippy or anything, you're just coming from the wrong side of the border here. Our lending laws are a *lot* more stringant. The highest cost credit cards you'll find north of the border are around $120 annually with 20% interest, with a minimum of 3 weeks to pay without interest charges.
I just got a letter today stating that the balance is due in full within 10 days of Jan 6th. So that was more than 10 days ago. The best line is this - During the next 10 days a decision will be made as to which of the various alternatives should be taken to effect collection. Amongst these alternatives are: court action or referral to a collection agency.
What exactly do they mean by COURT ACTION?!
EDIT: everything i'm googling tells me that - if they do take me to court - the judge will decide how much i have to pay each month to either BMO or a debt collection agency. I'm phoning the number on this letter first thing in the morning and seeing what she says.
Oh, hey I'm making a game! Check it out: Dr. Weirdo!
They might sue you. They might ask the court to garnish your wages. Those things are extremes, obviously, and would probably end up costing more money for them than they will get back from you. You should follow the advice in the thread and go in person to speak to your bank. If you have a good history with them, and you find a particularly gracious bank manager, you will be able to work something out - anything from a simple payment plan all the way up to forgiveness.
The key is that you talk to the people you are in debt to and show them that you are ready and willing to pay back their money, you just need some help and direction. These people aren't loan sharks.
Also, I would point out that, although Canada relies far, far less on your Credit Score than the States and there are perhaps things that would affect that score more in the US than Canada, the FICO score is still used in Canada when considering loans and rates and whatnot. I know for a fact that I would be able to leverage more with respect to my Total Debt Service due to my high FICO score than the average or less-than-average score. It's not nearly as important, apparently, but it does matter... so someone reading this thread shouldn't just outright disregard any comments by Americans about what may or may not affect the score... it's just that things may be reported and scored differently across the border, and the score isn't so important here.
OP... as I said, I echo saggio here.
So, what did they say? Hopefully they worked out a payment schedule for you... I seriosuly doubt they'd take you to court. Lawyers are expensive, and unneccesary, since you're not trying to run from it.
Oh, hey I'm making a game! Check it out: Dr. Weirdo!
Okay, I'm in the US, but I'm a financial counselor. This is the best I can do.
Credit cards almost never take out court judgments, it is more profitable and much easier to sell to a collections agency where you can settle for pennies on the dollar (50-60% usually).
My advice is to find a financial counselor at a non-profit.
GET THIS IN WRITING.
If you don't, they'll forget it happened.
"Monthly payment schemes" are a way to squeeze money out of you, because they can. Don't agree. Do a lump=sum or an agreement in writing.
If you can at all afford to do so, make sure you pay back more than that as well. Anytime you pay less than the full amount of a CC bill, you're costing yourself a lot of money.
Yep, at 17.5% interest it would end up costing me quite a bit
I'm going to try and find some extra money somehow.
Oh, hey I'm making a game! Check it out: Dr. Weirdo!
Until I hear otherwise I'm assuming 2/3's of that 250 is just paying interest ($3000/year in payments, $2000/year in interest on the $13500 you owe).
That's not a great long term plan but it's good to hear your bank can be reasoned with.
Edit: beated by you in the post above.
Yeah, it gets them off my back for the time being though; which should give me time to find more money or something.
Oh, hey I'm making a game! Check it out: Dr. Weirdo!