A. You could borrow the money by taking a home equity loan or a
Q. Now that I've read about the other options who would want to pay
creditors in full?
A. Actually, most people take this route, then again most people won't
need to access this web site.
Q. I am here because I have a serious credit card debt problem, should I consider payment in full?
A. Yes, this site exists so each option can be explored, only then can
the right decision be made. First I would recommend consulting an experienced
debtor's attorney about your "serious" debt problem. What seems
dramatic to some people may be minor to creditors and debt attorneys. For
small debt problems you should strongly consider payment in full.
Q. How would you define a "minor" credit problem?
A. Let's say that you can't pay your mortgage this month because your car
needed major repairs. The problem stems from a one time occurrance. If
you have the money in savings or confident with advances on credit cards
you can make those payments easily. I would recommend you pay the mortgage
in full and on time.
Q. Couldn't I get the bank or credit card company to let me skip a payment or at least pay
only the interest?
A. These may be possibilities which fall under the workout catagory, but
banks and credit card companies don't like workouts of any kind. Save your debt workout request for a
time when you have a more serious problem. The fact that you got through
this problem may even help to do the debt workout later.
Q. How would this help me?
A. Creditors like to see you have done everything you could on your own
and made every good faith effort to solve debt problems without their help,
before they do a workout. Paying in full this time may pave the way for
a future debt workout.
Q. What if I have they money but I just don't want to spend it on
my credit card bills?
A. Don't expect much sympathy from the creditor. You promised to pay the bank or credit card company
using any and all of your resources and that's what they will demand. All
other options may still be available, but difficult to achieve.
Q. If I don't have the money how can I consider paying my debt in full?
A. You could borrow the money by taking a home equity loan or a
personal loan, but be careful not to get deeper into a
hole from which you can't get out. Do not risk the house for a credit card debt. Read more about dangers of home equity loans here.
Q. What are some other factors that influence this decision?
A. Credit would be one of the strongest. If your credit hasn't been ruined
yet paying credit card debt in full may be attractive. If you don't know what your credit score and credit report looks like you should check it.
Q. What if the creditor doesn't report to services, like a freind
or relative I owe the money to?
A. These generally call for friendly debt workouts. Here personal relationships
play a strong role. It may be payment in full seems a small price to pay
compared to the strain of dealing with a friend or relative you can't pay
back. If the relationship means that much to you it probably means just
as much to the other party and they will understand if the terms of your
loan need to be modified. In most of these situations I see the loans end
up paid in full but not under the original terms. I would call this a debt workout too.
Q. Are there any other situations where creditors might be paid in
full?
A. Some debtors feel they never want a credit card again. Others can't
live without a credit card. If over use of credit cards got you into trouble you
might be better off without any. Otherwise remember you probably won't
be able to get a credit card for a few years. Sometimes debtors pick one card and
pay it in full so they can keep it. I gennerally find a better option here
is a debit card or secured credit card.
Q. Will they let me keep an existing credit card even if everything else falls apart.
A. Most of the time if you never become delinquent they will let you keep
a credit card in good standing. Many cards always have the right to cancel your account for other bad
credit, even if you are current with them. If you stay timely with them,
chances are they won't run your credit report and see the other bad items. Sometimes
they know and don't care as long as they are paid on time.
Q. What else should I look at when deciding to pay a credit card in full?
A. The dollars involved and your overall plan will guide you. A chapter
7 candidate with a $3000 card balance should let it go. Remember you can
always get a secured card, sometimes for more than your deposit. A
workout debtor with a $250 balance on a $5000 live and open credit line should probably
pay it off. You will have to pay something to work it out anyway and having
a credit line can be very important in completing the workout process.
Q. I don't have the money and I can't get any, how can I pay creditors
in full?
A. I have no magic answer. You may get some hints from my article on Where To Get Money When You Need Money. In cases where payment in full will not be an
option and you should examine other ways to fix your debt trouble.
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Lifestyle
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Creditors in Full