Credit Card Debt

by Piper
(Marietta Georgia America)

My cousin is self-employed in Georgia; has two business credit cards, two personal credit cards, personal line of credit and a business line of credit all of which are maxed out. The projects that would have provided income since April did not pay him because they not get loans from the bank hence he my cousin was not paid.

He has called each agency owed monthly to give an update, except June in which he was trying to find another way to get funding. Last month he paid each of them $100 in good faith which was not the minimum, but they barely acknowledged it. I told him to notate each conversation including name, date and time when he contacts the companies for his sake.

Now one of the banks, billing statement, wants entire $40,000 as does one of the credit cards. He just secured a project coming up in August/September that will be able to pay some of these accounts off gradually, but not in full.

He refused to join the programs where the credit card company pretends to help lower the amount until the last payment and then closes the account. Wouldn't the closing by the credit card company affect his credit score even more?

How can he buy time or negotiate?



Comments for Credit Card Debt

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Aug 06, 2010
negotiating small business debts
by: Mary & Gerri

Thanks for submitting your debt collection question on our Q&A page. It's really terrific that you are trying to help your cousin through this difficult time.

You don't say how much your cousin owes on all his various credit cards but since one balance is $40,000, we would imagine the total is pretty high. That means he has to really take a hard look at what his options are.

If you look at this from a creditor's perspective, He owes a lot of money and the longer it takes them to pay, the more likely it is he will default or file for bankruptcy. Sending token payments of hundred dollars to his creditors is not likely to buy him time.

It sounds like he is concerned about his credit scores. But at this point, his credit scores have probably already been significantly affected. It would be a good idea for him to order his credit reports at annualcreditreport.com to find out how each of these accounts is reporting. But if they are significantly delinquent or charged off and in collections, the damage is done, so preserving is credit is really not the main issue here.

The main issue is for him to find a solution to get out from under this crushing debt. He is going to either have to consider debt negotiation/settlement or bankruptcy. The difficulty with debt negotiation is that he is already significantly delinquent and that increases the likelihood that he could be sued by one or more of his creditors. But if he is determined to avoid bankruptcy, it may be worth a try.

We would encourage your cousin to do two things:

Talk with a bankruptcy attorney. He may have no intention of filing, that he does need to know what will happen if he can't resolve these debts and his creditors decide to sue them. Encourage him to a free consultation with a bankruptcy attorney to find out more about what his options are.

He can also listen to our debt settlement podcast and
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