As you can guess, I'm struggling with this topic and an effective title to properly describe it.
Let's start with MikeR397's seminal thread on getting business credit for your A0R. Many of us have accumulated extensive business credit for our A0Rs. I'd like to explore strategies for eliminating portions of this business debt as it comes due. While there are numerous experiences regarding negotiating with creditors to reduce personal credit card debt, I don't believe we have much information on the same subject with regards to business credit card debt.
Please offer your suggestions/experiences/criticisms on: 1. Whether or not you've ever been offered a deal on repaying your business credit card debt back early. 2. If you've ever been repeatedly and sequentially late on payments and how you and the issuer dealt with it. 3. If you've ever defaulted on business credit card debt and the consequences. 4. If you've ever negotiated with an issuer to lower your outstanding balance and/or change terms to prevent default. 5. Your opinion on the requirement to truly be under distress to undertake any of these approaches. 6. What boundaries should be respected during this process. 7. Any impacts on your personal credit profile with respect to any of the above.
Please also provide some circumstantial information if you've been in this situation (e.g. credit score, utilization, outstanding balances, issuers, etc.). Thank you.
It might be helpful to avoid individual posts flaming the clearly controversial nature of this thread. If you think this idea is unethical and that I'm a deadbeat, then just red the thread and add whatever note you like to the quick summary. Thank you.
Message edited by: Venturion on 2008-11-12 20:32:29 CST
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Interesting article, Mike. It's clear that the provision permitting the banks to spread the losses out over several years killed the deal. I wonder if the same group will go back with an amended proposal.
tripleB said:If your market cap is large enough you can just wait for fed gov to bail you out. If I owned/ran a public company, its much more likely that I'd be on phat beach than fatwallet. Still, your point is well taken and part of the reason that I'm trying to carve out a piece of the bailout pie.
I have no experience, so I'll just offer assumptions. I would guess that most of Supercreditman's debt that was forgiven was fees and interest, because he was in deep doodoo. If you get some forgiven, I think they'll put it on your personal report. The question is, how much can you get forgiven vs. lost profit later due to bad credit.
One could argue this would be like maximizing your tax deductions. The gov't just increased your future taxes with a bailout and gave the money to Chase, and now you want it back. And they potentially decreased the value of your savings by increasing the money supply. Isn't a business supposed to maximize profits? OTOH...
Where in the world is the idea that supercreditman defaulted or had outstganding debts forgiven? Since he disappeared I can presume it not unlikely, but it was never reported that that's what ha;ppened, and it's perfectly reasonable that he dropped out of FWF posting because of the grief he got from the local W2 drones.
WalStMonky said:Where in the world is the idea that supercreditman defaulted or had outstganding debts forgiven? Since he disappeared I can presume it not unlikely, but it was never reported that that's what ha;ppened, and it's perfectly reasonable that he dropped out of FWF posting because of the grief he got from the local W2 drones.I just took him at his word. in his own friggin thread, WSM (Emphasis added by me)
just because AIG/GM/banks, etc. don't deserve a bailout doesn't mean you deserve one. at least those parties attempted to act in good faith.
i realize ethics are subjective, and maybe i'm just a huge hypocrite for participating in other FWF shenanigans, but this idea crosses my personal line. if you tell the bank you can't pay, but you really can, isn't that (by definition) lying and perhaps even fraudulent?
Lhendricks, thanks for bringing in a vital component to this conversation. Let's say that I'm left with my house and my car and enough operating cash to survive month to month. Would it be lying to say that I'm unable to repay the outstanding balance? I could do another A0R to refinance the debt or I could use my HELOC for the same purpose, if either of these considerations are relevant in your mind. The former would certainly negatively impact my credit score, while the latter would primarily impact my ability to further borrow. Your thoughts are greatly appreciated.
I'll step off my high horse - I'm obviously not fully aware of the situation. If you feel you have a legitimate case for business debt forgiveness/modification, my comments are moot.
Other than preaching, I don't have much else to add. I'm certainly interested in the topic.
Venturion said:Lhendricks, thanks for bringing in a vital component to this conversation. Let's say that I'm left with my house and my car and enough operating cash to survive month to month. Would it be lying to say that I'm unable to repay the outstanding balance? I could do another A0R to refinance the debt or I could use my HELOC for the same purpose, if either of these considerations are relevant in your mind. The former would certainly negatively impact my credit score, while the latter would primarily impact my ability to further borrow. Your thoughts are greatly appreciated.In all honesty, I'd consider your example no different than drawing $100k BT money, stashing it in a savings account, then claiming you cant repay the balance because your paycheck wont cover it. Just because you 'stashed' the money in your house rather than a bank account doesnt make it any different.
Glitch, what if my HELOC is frozen? Should I sell my house to pay off the debt? What if I have no equity? Does liquidity matter? Are my retirement accounts fair game? Where do we and the creditors draw the line? Perhaps there is no line.
I readily admit that the matter may be black and white. I'm just making sure we explore the scenarios in sufficient depth to ferret out all underlying assumptions and beliefs.
The bailout is helping many people who stashed THAT money (A0R, heloc, etc.) in their lifestyle as opposed to their homes. Should I receive different treatment because of my decision?
I agree that if this is money that was strictly taken out for AOR purposes this type of post crosses an ethical line. There is a difference between profiting from the banks by playing within their rules and trying to outright not repay money you promised that you would.
Now, in terms of a failed business where you had every intention to repay, I have no problem having this discussion. Unfortunately, I don't really have any experience to add to the discussion.
Venturion said:Glitch, what if my HELOC is frozen? Should I sell my house to pay off the debt? What if I have no equity? Does liquidity matter? Are my retirement accounts fair game? Where do we and the creditors draw the line? Perhaps there is no line.
I readily admit that the matter may be black and white. I'm just making sure we explore the scenarios in sufficient depth to ferret out all underlying assumptions and beliefs.
The bailout is helping many people who stashed THAT money (A0R, heloc, etc.) in their lifestyle as opposed to their homes. Should I receive different treatment because of my decision?I'm not saying I disagree with the overall point - people are getting 'bailed out' when they dug their own hole in the first place, and I'm equally insulted that they are being given a get-out-of-jail-free card just because they were stupid and irresponsible.
But I think it is black and white - liabilities (loans/debts) are offset by assets, not income; however, what is considered an 'asset' in this context has yet to be defined. Until that definition is established by the powers that be, no one can know where the line is, and we are still playing by the 'old' rules which say you pay your debts unless you file for bankruptcy.
And I do think that, on a whole, those who have overspent and are getting bailed out will still end up behind those of us who have made and continue to make responsibile decisions with our finances.
Perhaps they should revist that "forgive 40% of your balance" plan that had been proposed, only adding the requirement that anyone getting such relief is banned from doing business with that lender ever again. Establishing some long-term consequences will make the short term benefits look alot less lucrative.
I admit that I'm a bit turned off by this thread, but that's mostly because I imagine people who *are* able to repay their business debt will use any techniques learned here to unjustly (and unnecessarily) bail themselves out.
I imagine the proper way to look at this thread is that it simply discusses a technique or tool; it's how the tool is used that brings up ethical issues. And I suppose rather than trying to determine what's ethical, it would be more productive to try to determine how others are affected by using any techniques discussed here.
For example, if many people employ ideas discussed here to dismiss business debt whether or not they could actually afford to pay it, and others are burdened with that cost with no compensation for that, that's a big problem. BTW, this is why I don't dismiss bailouts out of hand; we have to somehow assess whether society (an admittedly vague term) benefits from these bailouts before dismissing them just because they might help people and businesses who don't seem to deserve it. I'm all for accountability, but if our country goes down the tubes, then who's right and who's wrong won't really matter.
I apologize for all the philosophy and opinion rather than contributing something actually substantial to this thread.
Message edited by: glxpass on 2008-11-13 16:01:22 CST
Complimentary, critical, off-topic, I really do appreciate all of the posts.
Ethics: I do agree with just about everyone indicating that this approach crosses a personal line for them (and possibly for me). However, the inequality of people getting their mortgage rates reduced, walking away from homes, living 6-9+ months in a home without making any payments, and generally finding a handout for past and current unacceptable behavior is driving me nuts. Will I do anything of the sort contemplated here about it? I don't know.
Tactics: For now, I am searching other forums and calling any of my industry contacts to answer the basic question: do issuers have a workout program for business credit balances? At a minimum, I want more information.
Issuers: which issuer would be the best with which to test the water. I think I only have business balances remaining with two issuers: citi and chase. However, I can reload a couple to test. I'm not adverse to getting blacklisted by Chase as some mentioned in the other thread. That said, why not pick the lowest potential liability issuer?
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