Good Faith Credit Card Payments Backfire: Debt Experts Weigh In

From Michael Bovee at Consumer Recovery Network

Due to the stop and start of your payments and the fact that you are sending in less than the minimum, it’s a little hard to judge how delinquent Capital One considers you at this point. If you have missed three consecutive payments, ask about the availability of short- or long-term hardship plans. Hardship plans allow you to reduce the monthly payment and typically either remove or stop continuous late fees. A short-term plan would last 6 to 12 months, where a long-term one would allow lower payments for the life of the balance. You must meet the reduced payment on time—all the time—or will be removed from the program.

If you call and ask about available hardship plans and you are told you cannot qualify for one, do not get discouraged. Call again a week or two later, or ask about a hardship plan when they call you.

You can also talk to a credit counseling group to see what they may be able to do for you through a debt management plan. I would recommend speaking with an AACC member who offers repayment plans where your interest rates are reduced and penalties removed.

My Advice

The first thing I’d suggest you do is contact a credit counseling agency to learn whether they may be able to work out a more affordable repayment plan with Capital One. This will likely be the least stressful of your options, because the counseling agency will essentially be the “middleman” between you and the issuer.

If they can’t help, then you may need to think about the advice these experts have given in terms of trying to get Capital One to put you on a hardship plan.

There’s one more thing I would like you to consider. Last week I interviewed bankruptcy attorney Jonathan Ginsberg on Talk Credit Radio. One of the things we talked about is what happens when consumers are “judgment proof.” Being judgment proof essentially means that you don’t have any assets a creditor could go after if you were sued. You can find out whether you are judgment proof by talking with a bankruptcy attorney. Given your limited income, you may be.

If you are, you may be able to use the fact that you met with a bankruptcy attorney as leverage with Capital One to get them to work with you. Or, you may be able to hire the attorney to write a letter to that effect, for a reasonable fee. If the issuer continues to play hardball with you, it may be worth it to set up a free consultation with a bankruptcy attorney to discuss this option.