A shameful thing to talk about

[Merkava_4]

Dear MacRumors Community,

I regret to inform you that I have gotten to the point where I may have to forgo making debt payments on some of my credit cards. I am simply running out of funds. I have heard that banks can be particularly aggressive, but I don't know in what way. I have three cards that are on frozen status in exchange for lower payments. I feel awful about the whole thing because the banks have been my friend throughout my long bout with unemployment. Without the banks, I wouldn't have made it this far. I feel very ashamed of myself. I had planned to be employed long before now, but the applications and resumes keep going unanswered. None of the employers are interested in me for whatever reason.

I have never been in this situation before and so I ask you, what do the banks usually do?

 

[eyoungren]

If you are in America, because I can only speak to that, you will get letters. Then phone calls. You will lose the ability to use the cards at a certain point after the due date you stop paying.

Within a couple months, the bank will sell your debt to a credit collection agency. That agency will start calling. They have around seven years to try and collect the debt from you. If you speak to them and they can verify that it was you, the clock restarts. But eventually they stop calling and with enough time (perhaps around 10 years) and no contact the debt can disappear.

In the short term, your credit history is impacted. Depending on the severity of your debt this may make opening a checking account difficult. If you already have a checking account then this doesn't really impact it. We (my wife and I) were cash only from around 1997 to about 2005 or so. The banks maintain their own system (ChexSystems) that they put you on if they close your checking account for various reasons (constant overdrafts, etc). That's separate from the credit bureaus and any bank you try to get a new checking account with checks that system. If you're on it, it's very hard to open a new account.

Some caveats…

Some credit card lenders will threaten to sue. If they do and you don't contest it or make an agreement, they will get a judgement. That stays around on your credit report. Wage garnishments, bank account liens and such can result but unless it's a government debt those are much harder for the debtor to get.

You can make agreements with the debtors (either the bank or the collection agency) to make installment payments on your debt. We've done that with both credit card companies and the lawyer office/debt collectors for those threatening to sue. Just be aware you're acknowledging the debt and that restarts the debt clock.

You don't even have to talk to anyone sometimes. One debt collector I dealt with via one email. I got from them the number of the account they'd filed my debt under and used their web portal to make monthly payments that I could afford until the debt was paid. They never bothered me with any further phone calls or emails.

There is no need to be embarrassed. Stuff happens in life and the banks/credit card companies/etc are ultimately for profit companies. Your debit is a commodity to them. It can be bought and sold. Most of the time they are willing to accept partial repayment of the full debt.

 

[scubachap]

Dear MacRumors Community,

I regret to inform you that I have gotten to the point where I may have to forgo making debt payments on some of my credit cards. I am simply running out of funds. I have heard that banks can be particularly aggressive, but I don't know in what way. I have three cards that are on frozen status in exchange for lower payments. I feel awful about the whole thing because the banks have been my friend throughout my long bout with unemployment. Without the banks, I wouldn't have made it this far. I feel very ashamed of myself. I had planned to be employed long before now, but the applications and resumes keep going unanswered. None of the employers are interested in me for whatever reason.

I have never been in this situation before and so I ask you, what do the banks usually do?

Are you in the US? It might be worth mentioning roughly where you're from as it will affect the suggestions / advice that can be given etc. (I could only really suggest specific stuff from a UK perspective)

As Eyoungren says - please, please, don't be too ashamed of yourself. Sure, you've got yourself in a mess and in the end you'll need to get yourself out of it but bear in mind we're currently in a very strange financial world and its chewing people up right, left and centre. (Here in the UK twenty years ago food banks were pretty much unheard of - they're now common.) There's an old joke - if you owe the bank one hundred thousand you've got a big problem, if you owe the bank a billion or two it's the bank that has the big problem. I'm not making light of your situation but when there's an issue like this please remember there's a counter party that has also made mistakes and the 'clever' people at the top have been making mistake after mistake. (The west's entire economy is currently running on debt and endlessly borrowing from the future.)

 

[bigjnyc]

I had a friend that went through this a few years ago, there were 2 things that helped him through it:

he signed up for a few government programs that were designed to help him with the debt as an unemployed individual. They worked with the banks on his behalf to freeze the debt until he was able to start paying it off.... This of course means you won't have access to the line of credit and won't be able to open any new accounts so bear that in mind.... Google these, I am sure they are easy to find.

He started doing odd jobs that he was overqualified for just to get some income coming in while sending out applications... For example he did uber, food delivery, worked at a retail store, and a warehouse delivery company.

If you have a vehicle these are jobs that anyone can do and that will help get at least a little money coming in, they are also very flexible so you will have time to continue applying and going on interviews, etc..

 

[Huntn]

Dear MacRumors Community,

I regret to inform you that I have gotten to the point where I may have to forgo making debt payments on some of my credit cards. I am simply running out of funds. I have heard that banks can be particularly aggressive, but I don't know in what way. I have three cards that are on frozen status in exchange for lower payments. I feel awful about the whole thing because the banks have been my friend throughout my long bout with unemployment. Without the banks, I wouldn't have made it this far. I feel very ashamed of myself. I had planned to be employed long before now, but the applications and resumes keep going unanswered. None of the employers are interested in me for whatever reason.

I have never been in this situation before and so I ask you, what do the banks usually do?

I hope you find a good path out of this.

In the Houston area, they have been consistently advertising debt relief, not bankruptcy, not debt consolidation, but wiping debt away. They were saying $10k or more. However, I have an impression there is a caveat, that you must be able to pay on any remaining debt left, so I would assume this means being employed, but I don’t know for sure. And unfortunately I don’t remember the name of the company. 🤔