What Can Happen to Credit Cards After Foreclosure
Like so many of you, I too have had my share of financial problems the past couple years. During the good times, I got a little overzealous and purchased a 2nd home and a seasonal vacation rental. Basically this meant that I had 3 mortgage payments and the rental income I received only covered the expenses on the seasonal vacation rental during the summer months. Once winter came around, those came out of my pocket too, so I decided the best thing to do was sell the vacation rental, so on the market it went.
There my listing sat, and sat, and sat, collecting dust with no offers. It got to the point where I could no longer afford to make the payments on the 1st and 2nd, so with much hesitation, knowing I was going to ruin my perfect credit rating of the past 20 years, I stopped making the payments on December 1st, 2008. I had no choice.
The late payment letters and collection phone bank accounts started coming fast and furious by February. I really needed to learn another language or two, because how many times can you tell a collection agent “I don’t have the money” after 3 phone calls from the same lender in ONE WEEK? Maybe if I could say it in Spanish or Greek, they’d understand and stop calling. But no…..persistent buggers they are….and the saga continued until I just stopped answering the phone.
So April came and I got a letter from my credit card company who holds both my Visa and my American Express accounts for the past 15 years. These two accounts didn’t start out with this “ungentle giant”, but they ended up there much to my dismay. So anyway, I got this letter saying that my $45,000 credit line (that I paid perfectly up to that point I might add) was being cut to $13,000. Guess how they came up with that amount? It wasn’t rocket science or anything. My balance on the card at that point was $12,800, so I guess $13K looked like a nice round number. Ditto for my American Express account. This company is nothing if not efficient! Nothing like killing two birds with one stone!
Being the so called “credit expert” that I am, I knew this was the start of the ramifications of my not making my mortgage payments on my seasonal vacation rental, but boy, did that hurt the ego or what? I’d had that account for 15 years with a $45,000 credit limit; had never missed a payment or ever been late, and now it was down to $13,000. If that wasn’t bad enough, do you know what happens when your balance is basically as high as your credit limit? It totally dumps your credit scores……as if the late payments on the mortgage weren’t bad enough. I went from a 768 score down to a 569. Thanks for the help! Deep down I knew and understood their reasoning. I was now considered a credit risk and they had to limit their possible loss. I sure didn’t like it, but I understood it.