Business Credit card, interest rate jumped from 8% to 26%, what to do...

[Pablo]

Hi all,

NEw to the site, have looked around to see if the topic has been covered but couldn't find it so am posting...

Here is my situation. Have a business account with Advanta, 8% interest. All good, great card, been using it for a while. Even their cash advances are at 8%. So recently my business went really sour, and had to leverage some of the credit line I had with them. Soon as I was indebted to them for about 20K, my interest rate went from 8% to 26%. I am neither willing nor able to pay this off at that rate. I borrowed the money at 8%, this doesn't seem fair, though I know its all part of my agreement with them. So I called a few time to get things sorted, to be told very rudely to deal with it. I informed them I will stop making payments, which will begin in a few day when money is due. My question is, how can I go about settling this debt? Do I have to wait for them to sell the debt to a collection agency and deal with them, or is there a process to directly deal with them for a settlement. I have no issues paying off the full amount, but at no more than 8%. Can I miss a couple of months and directly deal with Advanta to settle? Or do I need to wait for it to be sold? I don't want this to linger too long before settling, for multiple reasons. Any help would be greatly appreciated. Thanks!

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[swirlgirl]

Welcome. I don't know what to tell you. You signed the credit card agreement, so you knew that they could change the rate at any time. You don't have to like it.

Now, you can stop paying if you want to. But why trash your credit score if you don't have to. If you have the money, just pay it. You can try calling their hardship department to see if you can work something out.

[Pablo]

I don't have the money to pay it off, thats the problem. And at 26% interest on approximately 24K, I'm getting hit for $500 a month on interest. It is absolutely absurd. I know I signed up for it, but this practice is so ridiculous. They waited till I was well indebted to them to jack it up. If I knew I was borrowing at 26% I never would have. My question is in regards to settlement. Can I miss 3 months and get them to the bargaining table. ANd if so, at that point will I need all of the 60-80% that they might settle for up front, or would they work out a payment plan over 6-12 months?!?

Also, what are the ramifications of not settling with them and letting it go to collection agency? Since this is a business account, I'm not too familiar with the process. Honestly, my credit rating is not even of concern to me. I am trying to get out of the business of owing money. ALready own my home, which will has less than 50K left in mortgage at 5.5%. I guess the other question is, will this issue giving a hit to my credit rating affect my mortgage rate. I'm assuming no as I've locked in, and would need to miss payments or something negative on the mortgage for that rate to change. Thanks again.

[willingtocope]

I assume this "business" credit has your personal gurantee. If so, that means when you default, it becomes a personal account and will ding your credit reports. However, since its business related the protections of the FDCPA do not apply.

So...for the most part...you're screwed. They can rate jack you at any time, and there isn't much you can do about it. Furthermore, if you have other CCs, this may cause them to go into "universal default" which means they'll raise their interest rates also.

At this point, all I can suggest is you call them and try to work your way up the food chain past the phone jerks. See if you can qualify for a "hardship" program.

Not making payments for a few months probably isn't going to help. They'll check your credit reports, note that you have assets for them to go after, and probably start litigation.

[Goldbug]

It's almost impossible (or at least it was for me) to get biz credit without tying it to you personally. Before they adversely effect your CR, sell an asset or something to pay them off and get the hell away from 'em. They've showed their stripes, learn from it don't let them screw up your CR.

Goldbug