Credit Card Debt Q & A


Question: had a divorce. still have a lot of equity in my home 58%. have had good credit for a long long time 35+ years. total revolving credit $110K. have a problem. can’t sell home with ex. rented home. it will take 2-4 years for this to resolve. in the meantime I asked the largest ccard account I have for payment plan. FICO is 740-760 has been that way 20+ years.

what is better on credit report. closed ccard account with payment plan. or an open account with payment plan. I want to minimize impact.

called ccard company to arrange something in advance. they want me not to submit a payment so I show up in there system. Asked them is this collections at ccard company or a 3rd party. they hesitated but said collections at the ccard company.

I said I want to work with the ccard company I have been with you 35+ years and I fully intend to clear this debt.  they immediately agreed to zero percent interest. what’s the best way to handle this. they are telling me 5 years- zero interest which is good. but I do not know how that is reported and I do not know (i.e. if longer term on payment plan > 5 yrs is negotiable). I have 3 financial instruments with the lender. I have always made good on them but cash flow dictates I initiate payment plan on one of them. thank you.

A: Hi Mark, it sounds like you have credit card debt that is eating at your pocket book. My recommendation would be to check with some local banks, and see if you can get a loan at a lower interest rate to pay off these cards, so the interest is not killing you. Also you could look at reducing some other expenses to pay off the credit card quicker. If these two options are not a option, then I would go with the payment plan, but ask if they will report it as a payment plan and how it will affect your credit score. I would get something in writing from them on the plan you choose and how that will affect your FICO score. There no exact science with the bureaus in regards to how a payment plan will affect your credit score, but it will lower it because its a trigger that you are having issues. Avoid not paying your credit card, a late payment will destroy your credit scores.

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