Applying for credit card while in default?

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tallgrl230
Posts: 5
Joined: Mon Jan 13, 2020 2:24 am

Applying for credit card while in default?

Post by tallgrl230 » Mon Jan 13, 2020 2:38 am

I recently went through a divorce and my ex agreed to accept marital debt in both of our names (separate or joint). I'm waiting on my court date to enforce that agreement as he hasn't paid in 4 months. 4 cards with large balances all delinquent and they're in my name only. While awaiting a garnishment to pay them, what can I do? I can't pay them. I've already sent them letters informing them of the situation.

I have one credit card in my name that I kept, but the credit limit is $500. I travel frequently and this limit isn't enough to purchase airline tickets and I hate using my debit card for that. It's also super basic without perks. I miss my card that had great travel insurance and airline points! Are there any cards I could get (even secured cards) that have the travel & purchase insurance and/or earn rewards?

Also, I have all my accounts current besides the 4 cards he has to pay. Would another card that's being paid on time raise my credit? What would you do if you were in this situation? Even after I get a judgment, it'll take ages for him to catch up with past due payments.

jucor
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Re: Applying for credit card while in default?

Post by jucor » Mon Jan 13, 2020 7:23 am

It seems unlikely to me that you'll get any sort of new perks card opened when you have four large balances on cards in your name that have not been paid in 4+ months.

One question I have is why these large balances exist on cards in your name only in the first place. Perhaps a budget/reduced spending is in order?

You also say you are willing to get a secured card, but also don't want to use your debit card to buy flights -- why not? Are you flying for work or pleasure -- if the former, perhaps your employer can buy the tickets up front instead of reimbursing you? If the latter, is that necessary or wise given what sounds like a precarious financial position?

Lastly, you say you only have one card with $500 limit aside from the four past due, but also say "I have all my accounts current besides the 4 cards he has to pay." What are all your other accounts? What other debts do you have?

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whodidntante
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Re: Applying for credit card while in default?

Post by whodidntante » Mon Jan 13, 2020 8:15 am

Discover has rewards with their secure card. There is no great secured card.

Your credit is trashed and recovery will take a while even if you pay off the delinquent accounts. You probably would have been better off paying the minimum.

https://www.discovercard.com/applicatio ... RcQAvD_BwE

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CyclingDuo
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Re: Applying for credit card while in default?

Post by CyclingDuo » Mon Jan 13, 2020 9:32 am

tallgrl230 wrote:
Mon Jan 13, 2020 2:38 am
I recently went through a divorce and my ex agreed to accept marital debt in both of our names (separate or joint). I'm waiting on my court date to enforce that agreement as he hasn't paid in 4 months. 4 cards with large balances all delinquent and they're in my name only. While awaiting a garnishment to pay them, what can I do? I can't pay them. I've already sent them letters informing them of the situation.

I have one credit card in my name that I kept, but the credit limit is $500. I travel frequently and this limit isn't enough to purchase airline tickets and I hate using my debit card for that.
Sorry about the divorce and predicament you are in at the moment.

Based on past CC debt that was built up, you should consider it a new good fortune for you to be relegated to only using your debit card. Cut up the rest of your cards and stop perpetuating the cause of all that CC debt. I hate to be harsh, but just reading your post about applying for yet another card - it sounds like a case of "patient, heal thyself" would be the cure. Utilize your income from human capital to dig out of the CC debt hole and adjust your lifestyle to make that happen. Perhaps we don't know the full story, but who ran up the credit card debt on the 4 cards with large balances?

You'll note that the first step in the Bogleheads Investment Philosophy is...

https://www.bogleheads.org/wiki/Boglehe ... philosophy

Develop a Workable Plan

The Bogleheads approach to developing a workable financial plan is to establishing a sound financial lifestyle.

Develop a sensible household budget - one that provides for needed expenditures, discretionary pleasures and savings for big ticket items like home purchase and higher education for dependents, as well as savings for long term retirement planning.

Avoid bad debt; if you have such debt, pay off those balances first.


Perhaps the most important idea underlying the Bogleheads approach to investing is recognizing you need to save a significant portion of income every month to have enough money for a comfortable retirement. There is no substitute for spending less than you earn. Live below your means. If you don't save enough, no amount of financial trickery will provide the returns needed for a comfortable retirement.

The underlined portions that are in bold seem to apply no matter who ran up the credit card debt that was in your name. That debt needs to be serviced ASAP so you can move forward. I would not be seeking another new credit card during that process to avoid getting deeper into the debt hole than you already are.

Sounds like a financial nightmare, but one that you can climb out of over time if you have the income and apply it. Cue: Dave Ramsey "The Total Money Makeover" regarding how to get out of your debt.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Topic Author
tallgrl230
Posts: 5
Joined: Mon Jan 13, 2020 2:24 am

Re: Applying for credit card while in default?

Post by tallgrl230 » Mon Jan 13, 2020 3:41 pm

jucor wrote:
Mon Jan 13, 2020 7:23 am
It seems unlikely to me that you'll get any sort of new perks card opened when you have four large balances on cards in your name that have not been paid in 4+ months.

One question I have is why these large balances exist on cards in your name only in the first place. Perhaps a budget/reduced spending is in order?

You also say you are willing to get a secured card, but also don't want to use your debit card to buy flights -- why not? Are you flying for work or pleasure -- if the former, perhaps your employer can buy the tickets up front instead of reimbursing you? If the latter, is that necessary or wise given what sounds like a precarious financial position?

Lastly, you say you only have one card with $500 limit aside from the four past due, but also say "I have all my accounts current besides the 4 cards he has to pay." What are all your other accounts? What other debts do you have?
It's a VERY long story and I tried to sum it up. All my accounts...mortgage, imsurances, utilities, medical, etc. Those are all up-to-date. The debt accrued during a 2 year divorce process while husband stopped paying paying for family necessities out of spite. He was ordered to pay these and the attorney debt on the cards. This isn't the point, though. I had great credit and want to start building it again.

I am not spending frivolously and using these cards...they are closed. I use my debit card or $500 limit card and budget to pay it off each month.

Topic Author
tallgrl230
Posts: 5
Joined: Mon Jan 13, 2020 2:24 am

Re: Applying for credit card while in default?

Post by tallgrl230 » Mon Jan 13, 2020 3:43 pm

whodidntante wrote:
Mon Jan 13, 2020 8:15 am
Discover has rewards with their secure card. There is no great secured card.

Your credit is trashed and recovery will take a while even if you pay off the delinquent accounts. You probably would have been better off paying the minimum.

https://www.discovercard.com/applicatio ... RcQAvD_BwE
Ugh, yes I agree. I kept them current for 3 years during the divorce, but couldn't pay after divorce was final and family accounts separated. I thought he'd live up to his word and pay the family debt as he'd kept assets that should have been divided to balance out the division.

fru-gal
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Location: New England

Re: Applying for credit card while in default?

Post by fru-gal » Mon Jan 13, 2020 3:47 pm

I know this is not a helpful remark, but it sounds like your lawyer screwed up okaying this arrangement.

How long does it take to attach his wages? Can you make some arrangement with the credit card companies to pay a small amount each month?

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