Deep Do-do

[Halbard]

OK... I have a friend who has some troubles.... Out of the blue, his credit cards have essentially doubled their rates.... making the interest due more then his minimum payment. He recently had a couple of 90 days on the cards, but good standing for the last five years. That plus other bills from the divorce and, well, life.... have put him in a difficult place.

On the one hand, getting a new card seems kind of, well, silly, but it might allow for transfers to a lower rate. Or should we contact the card Co's and close out the account, and ask for lower rates. Or... is there a third option I don't know about? I'm still (really) new to this game, so any input or ideas would be a great help at this point.

Thanks in advance....

[Methuss]

"out of the blue"? Not really. His interest rates and payment terms have increased because of the 90 lates. When you are late on a payment, even just once, that triggers the default rate on the account. It doesn't matter if he has been a customer for 30 days or 30 years. That is why his rates went up. After about a year of on-time payments, the consumer can usually ask the creditor to consider returning the rate back to the non-default rate.

The best advice I can offer up if he can't make the payments now is to call up each creditor and ask to speak with a supervisor about entering into a hardship program. They will pretty much freeze use on the accounts, freeze or reduce the interst rate, and set up a reduced payment plan. Once back on his feet he can go back to regular use by calling them up and reinstating the account to normal status. As above the key thing is to have about a year of good payment history to show that he is no longer such a huge credit risk.

[Halbard]

Problem is... with the new rates, the min payments have jacked up so high, he can't afford the min's anymore.... He got raped in the divorce, poster boy for getting a good lawyer. So now, he's sneaking by, working two full time jobs just to cover this stuff. A year might be OK.... but I've heard there are longer term programs.... if so, how do you apply for them?

Thanks again Methuss!

[un4givn]

Call the creditors and ask for the hardship department. Explain the situation they should work with him. A letter to the company execs might also be needed if he can't seem to get through to the special debt/hardship debt.

[Ahntara]

This frustrates me and I don't want to flame, so pardon my tone.

But there really is no shortcut. Your friend has two options: Increase his income or decrease his expenses. There are no easy answers and all the actions he takes now other than paying, on-time, in full, are going to have consequences. He will be dealing with those consequences for years to come. I just wish people (myself included) would stop looking for a quick fix and an easy way out. The reason I wish this is because there are so many predatory businesses and people who are marketing quick fixes and easy solutions. It's just marketing! Their priority is making money for themselves or staying in business, not helping someone else. Even non-profit organizations have this priority. ARGH! This frustrates me. But I wish your friend good luck.