Arising From the Ashes of Credit Card Debt

SillyCatMy new bedroom furniture arrived today.  While new furniture is generally a happy occasion for most people, for me it is especially exciting because I was able to finance it over a two-year period at Zero Percent Interest!

I suppose some background information is in order.  From the early 1980s to early 2000s, I relied heavily on credit cards in order to raise my three kids and maintain my home.  We didn’t live extravagantly, but it just seemed that someone always needed shoes, someone needed medical care, or the house needed some kind of repair.  And, of course, there was additional stuff like parts falling off cars or tires needing replacement.  We were living paycheck to paycheck, and that credit was just so easy to get – I think at one point I had almost every major credit card on the market.

Somehow I managed to meet the minimum monthly payments each month – until the federal government, in its wisdom, changed the minimum payment requirements in 2008.  Suddenly, the minimum payments on each card doubled or tripled – two of my cards had previously carried minimum payments of $100 a month, and each of them jumped to $450-$500 a month (which was pretty much the total monthly payments I had been making prior to the change, and I had been struggling with that).

Well, as they say, push came to shove.  I tried desperately to work with my creditors.  Chase accommodated me easily and put me on a 5-year repayment plan at a monthly payment I could afford.

BOABank of America, however, was a whole different story.  I literally begged Bank of America to help me.  I even got an attorney I knew to go on a conference call between me and the Bank of America representative.  I suggested that if Bank of America were to agree to extend the repayment plan to 10 years instead of 5, I could manage to pay the debt in full.  Instead, Bank of America urged me to apply through them for a THIRD mortgage on my house (no thanks – I had already taken out a second mortgage in an attempt to ease my credit card burden).

On one memorable call, I told the customer service rep that I had X amount of money with which I could make the payment that month.  The rep took my bank account information so as to apply the payment (whew!).  But then the rep told me, “Ok, now you only owe another [X amount] to meet this month’s payment.  When can we expect that?”  (Hellooooo, didn’t I just tell her that was ALL the money I had left that month?)

To make a long story shorter, I wound up doing two things:  (1) I complained to the Office of the Comptroller of the Treasury about Bank of America’s tactics, and (2) I ultimately was forced to file for Chapter 7 bankruptcy (I couldn’t even qualify for a Chapter 13 because my debts were too high).

By refusing to work with me, Bank of America wound up getting zip/nada/zero on the outstanding balance on that card.  Wasn’t that a good business decision?!

Which brings me to today’s post.

BankruptcyFilingsBankruptcy is embarrassing and time- and paper-intensive, but in my case totally necessary.  When my monthly payments jumped from a total of $400 a month to something like $1,800 a month, there was just no way I could meet them and still pay my mortgage and keep my kids fed and clothed.

After emerging from bankruptcy, I enjoyed paying cash for everything.  There’s something uplifting about pulling large dollar bills from my purse to pay for a purchase while everyone else in line is trying to find a credit card with some balance left on it.

Of course, the downside is that major expenses, such as household appliances and the new roof, must also be paid in cash.  But somehow we managed over the next couple of years.  Six months out of bankruptcy, I was even able to lease a brand new car because I had an existing relationship with Ford Credit and had never missed a car payment even while going through the bankruptcy.

New cars make me feel special, but there were times I still felt a need to re-establish myself as a worthy credit risk.  Sometimes things come up (like vet bills) that require access to funds that you simply don’t have at the moment.

Declined

I tried a number of times, unsuccessfully, to reapply for credit.  Sure, I could have gotten one of those cards with a 39% interest rate and an annual fee of $100 or so, but I didn’t want that.  I felt it was better to wait until I could obtain credit like everyone else.  I diligently made every mortgage payment (both of them), the utility payments, the car payment, etc., and I routinely put any extra money into a newly established savings account.  Every six months or so, I would apply for a major credit card, and every six months or so I would be rejected.

Three years out of bankruptcy, I found I needed a new bedroom dresser because the drawers in the one I owned had given way, making the dresser totally unusable.  I began shopping for economical dressers I could afford.  As I was perusing the website of a local furniture store, I saw an ad to apply for their store credit, and I thought, “Oh what the hell – I’ll give it another shot.

I applied, and almost immediately, was accepted!  WTF?!  It was especially exciting because it turned out the credit is actually offered through a major national bank, not by the local store itself.

So I went to the store expecting to buy a small dresser at something like 27.99% interest (which I intended to pay off immediately to avoid actually accruing that interest).  I figured it was a good way to help rebuild my credit rating.

When the saleslady mentioned the store was running a no-interest-for-two-years special, I actually laughed.  No way would I qualify.  But I did – guess my credit has improved just enough over the last three years!

PhoenixAnd so, I received my new bedroom furniture today, and I’m basically paying cash for it but just extending the payment out over two years.  Is that cool or what?

I’m feeling almost human again, financially speaking. 

How about you? Did you ever struggle with credit card debt, and what did you do about it?

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I love to heard from my readers.  You may comment on this post, comment on my Facebook or Twitter pages, or email me at cordeliasmom2012@yahoo.com

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Images by:  Jess, and Adam Fagen, and MyEyeSees, and Simon Cunningham/Lending Memo.com, and Prairie Kittin, respectively

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37 Responses to Arising From the Ashes of Credit Card Debt

  1. Doobster418 says:

    Ah those credit cards. I’ve had the good fortune of being able to pay off my credit card balance each month, thus avoiding those interest charges. Glad you’re back on your financial feet.

    Liked by 1 person

  2. Elyse says:

    Thirty years ago, I had terrible health problems. I dealt with some of the emotional aspects of my GI trouble by buying stuff — on credit. But I couldn’t afford it. I was stupid. I got calls at work from creditors. I worked with them, stopped buying stuff. I stayed home instead of going out. Eventually I worked my way out of debt, but it took time, and it cost me a lot of money in interest. Years later when my husband and I bought our first house, I feared at some point during the closing that somebody was going to turn over a piece of paper that would say “NOPE! JUST KIDDING, ELYSE. YOU DON’T GET TO BUY A HOUSE!”

    But they didn’t. We got the very modest house, I continued to rebuild my credit and while I use the cards, I pay the balance every month. Faithfully.

    It must be terribly difficult to have bad credit in this day and age when you need a card to sneeze. Glad your financial woes are behind you.

    Liked by 1 person

    • I hadn’t yet fallen into the credit card pit when we bought our house, but right up to closing I expected my lender to find some reason to back out. At least I was always able, somehow, to make all my mortgage payments, and the house was in joint names, so there was no danger of losing it in the bankruptcy.

      I try to tell my kids to avoid my mistakes, and so far I think they’re all listening, as least when it concerns credit cards.

      Liked by 1 person

  3. Paul says:

    It is easy for the situation with credit cards to go awry. When I was diagnosed with cancer and my income stopped, I considered it a short term problem and used credit cards to pay credit cards. Basically I lived off them. Problem was, there was no end to the problems. The cancer was just the start. It precipitated a domino effect of other health crises that virtually ended my ability to work. And then I ended up on disability pension, which is barely liveable. Some of my creditors were understanding and reduced interest rates and extended terms. Others refused to give and put interest rates up. I considered bankruptcy but the total amount was not real large – and I had no mortgage or car payments (old beater already paid for). So i struggled through and have basically paid off most of my creditors and currently owe less than $10 k . Before I was diagnosed with cancer, I had invested in a university degree that I was assured would increase my income but left me without any savings. I weighed the risks and decided it was worth it but ,in the end, never had an opportunity to use it to generate income. I actually did not do the degree to increase income anyway but rather for other reasons . However the double whammy of draining my resources and then being diagnosed with cancer left me with no buffer. And then no longer being able to work topped it off.

    I can’t see where i could have handled the credit cards any differently and would still use them in the way i did knowing what know now – but all that said they are a like everything else, when used improperly they can get yiu in a heap of trouble.

    Sounds like you did something similar CM – you used the cards to provide for your family and then got hit with a rule change that was not forseen that precipiated a crisis. My guess is that even had you kown what was coming you likely would have still done what you did. So for both of us, credit cards offered an opportunity that had to be adfessed in the end but none-the-less was helpful at time.

    Great Post CM. Thank you.

    Liked by 1 person

    • Even had I foreseen the rate change, I would have relied on credit cards because my finances at that point were so bad I had no way to pay for anything without them. I am so glad I’m off that merry-go-round.
      Sorry to hear about your cancer – are you free of it now? I had a conversation with someone just today about how hard it is to pay for radiation and chemotherapy, along with all the other medical costs.

      Liked by 1 person

      • Paul says:

        I am cancer free after a year of 3 operations, radiation treatment and chemotherapy. In Canada the actual treatment costs are covered by the government but nothing else. Prescriptions and loss of income, etc are the problem of the patient. I was between jobs and so had no insurance. Radiation treatment is wicked stuff and can have side effects up to 25 years after treatment. In my case it destroyed my kidneys, so I’m on dialysis. That’s a life long problem that takes about 20+ hours a week in the hospital or travelling to and from. The radiation did cure the cancer and without it I would likely be dead, but the treatment leaves a mark for life. There are a dozen or more other major side effects that have cropped up as well. A couple almost killed me and a bunch more seriously deteriorate quality of life for the remaining years.

        There would be no way to pay the costs and still live without liquidating assets, of which I had none, or having health insurance. It is expensive business. And it is draining both physically and emotionally. In fact it is emotionally debilitating, especially when there is problem after problem after problem. The patient loses all hope. I went to see a psychiatrist to talk it out and he did not want to have sessions – he wanted to prescribe me psychotropic narcotics for depression and I told him where to stick it. For God’s sake who in their right mind would add narcotic addiction to the ever increasing pile of problems already in play? Sweet Jesus – i told him he was an unprofesisonal pill pusher (in a nice way of course). He didn’t disagree.

        Anyway, that has occupied the last 12 tears of my life. I’m not dead yet. Ha! (Remember that Monty Python skit? “Bring out your dead! Bring out your dead!” “But I’m not dead yet!” “You soon will be” )

        Liked by 1 person

        • Oh my, what an experience you’ve had. I never knew radiation could do that. Anyone having gone through all that has a right to be depressed at times. I’m glad you turned down the narcotics. My husband recently went through a period of depression, and his doctor also jumped right in with a prescription pad. My husband turned down the pills, thank heavens, and we’ve managed to get him past his depression without medication. In his case, he just needed more time to get a handle on things.

          Thanks for sharing your experiences here. I’m sure I’m not the only person touched by your comment.

          Liked by 1 person

  4. Archon's Den says:

    I’m happy to hear that the Phoenix has risen from the ashes. Okay, you talked me into it. I’ll buy lunch. 😉

    Like

  5. Archon's Den says:

    BTW Did the dresser come compete with cat, or did you have to pay extra?? 😀

    Like

    • Ha, ha. It is a cute picture, isn;’t it? No cats in my house.

      There was supposed to be another piece of furniture from a different manufacturer, but it was back ordered. When it came in, there was dirt on it, which the driver tried to clean off. In the process, the paint came off, leaving a clearly damaged area right in the front. Since I was ambivalent about that piece anyway (would it really fit in that room?), and since I was now concerned about whether a replacement item would also have weak paint, I opted to cancel that part of the order. Just as well – one less thing I have to pay for.

      Liked by 1 person

  6. Just make sure it’s paid off before the term ends–often times they will charge you ALL of the interest you would have been charged if it’s not paid off before the 0% expires. They rely on people forgetting.

    Like

    • Absolutely. Most likely, I’ll have it paid off 6 months ahead of time, assuming (knock on wood) I don’t run into any more financial difficulties. Thanks for reading and commenting – hope you’ll continue to visit this site.

      Like

  7. Oh boy…been there. Done that. Lost the t-shirt in the bankruptcy. When my first marriage fell apart, my wife left me holding the bag on a ton of debt and I too had to file bankruptcy. I emerged relatively unharmed because this was back when it was easy to file and walk away from all the debts. I too had similar issues with Bank of America.

    Just be careful….it’s easy to fall back into debt again. It snakes up on you (no, that wasn’t a typo) before you know it.

    P.S….did you take that pic of the scrabble pieces? I love that!

    Liked by 1 person

    • Just one more reason for me to love you, Ollie!

      I learned the hard way about extensive debt, believe me, and I’m being very, very careful now.

      No, I didn’t take the picture – it’s from Flickr.com under creative commons licensing. The link is at the bottom of the post.

      Liked by 1 person

  8. Jim Wheeler says:

    Interesting story, CM. My own instincts are different in that, as a child of Great Depression parents I inherited a profound fear of debt. The only thing I (we) have ever owed money on besides cars and mortgages was a TV set and a little furniture in 1964. We had just moved to a new duty station (Navy) with our three little boys, one was 3 and the twins were 1+. Through the years we scrimped and when I retired from my second career in 1999 we had even paid off the house. Had we not been that way, I’d have been a nervous wreck over it. The boys got through college with scholarships and 2 years at a small college, plus working at summer jobs. (I may have overdone it with them. As my rural uncle used to put it, they’re “tighter than bark on a weenie”.)

    Liked by 1 person

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  13. Reblogged this on Cordelia's Mom, Still and commented:

    It’s been two years since I wrote this post, and I’m happy to say I have not fallen back into the credit card trap (I even paid off that furniture within the first year). Good thing, too, because by keeping my finances in order, my recent job loss and drop in income were not as devastating as they could have been. Yay me!

    Liked by 1 person

  14. Been there. Done that. We are finally officially solvent. As long as we are very very careful. Glad you made it over the hump. It sure is a LONG road, ain’t it?

    Liked by 1 person

  15. Karen J says:

    Thanks for re-posting this, CM.
    Delighted to hear that you’re still staying away from those danged money vacuums! ❤

    Like

  16. joey says:

    Oh yes. That was a quick lesson. My husband lost his job, laptop, company car, company cell phone, insurance — all on a random Thursday in April 2002. That afternoon, I returned to our house to find him sat on the sofa. I had been out having lunch and buying maternity clothes. Ugh, what a bad day. It took us eight months to get into serious debt and then almost two years to get out of it. It was wretched and it changed me forever. Us, it changed Us forever.
    Apart from the mortgages, we lived cash only for about three years. Then we wanted a new bed, mattress, the whole shebang, so we did one of those 6 months same as cash thingies. We managed to save the 20% down payment on our house, but two weeks into our forever home, we had the plumbing incident of 2013. I was damned glad for credit on that, because we only had half saved. Took us almost three years to pay that off, but Wells Paygo tried to keep us paying for five or six or something ridiculous.
    Now, we have had credit cards all along, but we seldom use them. Kohl’s sometimes offers better deals when we pay with credit, so we do that and then literally go home and pay it off, lol! The only one we use regularly is the Amazon card. It’s like good rotating credit, I buy tons of stuff there, keeping me out of the Walmart — and it’s no big deal to pay it off every month.
    I like the security of having the cards, and I hate the vulnerability of using them. Never know when you might need to book a flight and never know when you’ll be out of a job.
    Great post, highly relatable.

    Like

    • A major credit card is definitely a must for anyone who travels. Credit isn’t necessarily a bad thing, it just needs to be used responsibly. Glad you and your husband managed to get through all that. My Cordelia didn’t fare so well – check out her newest post: http://www.cordeliacallsitquits.com/back/ Her situation will make yours and mine look good. Thankfully, she’s getting through it – and has now returned to writing and blogging!

      Liked by 1 person

  17. Thanks for sharing this, CM! For us, even among friends, it’s a taboo to talk about credit card debts. These past two years, my hubby’s event management business is very slow and our credit cards are slowing increasing again. So, we have to be very careful with our spending. Eating out is not an option unless it’s a special occasion and no buying toys until Christmas. ~ヾ(^∇^)

    Like

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