Fox News has a guest, Bill Bartman, who advises that you STOP paying credit cards, in some situations.
Bartman interview on Fox News (link no good)
His first point is, the big national credit card companies all sell their bad debts.
This is true, he says after 6 months of no payments, but I cannot verify that, the agreements are different.
What the big banks have decided is, at some point, it is not worth it to them to chase bad debt.
Once you file for bankruptcy, in Michigan and everywhere else, they sell your debt, per their standard agreement with LVNV funding or Sherman Acquisition or whoever, for pennies on the dollar. The bank closes its file.
The bottom feeding debt buying company files a proof of claim in the bankruptcy court, betting that overall, they will collect more on their claims than they paid to buy the debts.
Outside of bankruptcy, I am not so sure.
They have their own in-house collection people. Then, at some point, they hire collection agencies.
These third party collectors work on a contingency fee, that is, they keep a percentage of what they collect. If they collect nothing, they keep nothing.
If that does not work for the bank/credit card company, they can sue, but that means paying court fees and process servers, good money after bad.
Or, they sell the debt, keep that money, and close their file.
Like any venture, there is no guaranteed profit in the debt buying business either, as one of the big debt collection firms just went belly up.
As I always say, step one, figure out your future monthly income and expenses, your monthly budget.
I know this involves some guesswork, but there is no way to plan for the future without starting with the facts, how much are you making, and what does it cost you to live, not counting credit cards.
Bankruptcy is, and should be, a last resort.
But, if you do not have the income to pay the cards, should you cash in retirement accounts, take food out of your children’s mouths, be in a position to not be able to help them with college expenses?
Not my job to tell people that they should file bankruptcy, just to urge you to get the facts of your situation, your monthly budget, what are the debts, the monthly payments on them, what can you really afford at the end of the month.
Then I can tell you how you would fit in a Chapter 7 or Chapter 13 bankruptcy.
Stop Paying Credit Cards?