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.
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...
WalStMonky
Happy Member
posted: Nov. 13, 2008 @ 12:17p
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)
lhendricks92
Senior Member - 1K
posted: Nov. 13, 2008 @ 2:01p
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.
lhendricks92
Senior Member - 1K
posted: Nov. 13, 2008 @ 2:24p
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.
glxpass
Senior Member - 5K
posted: Nov. 13, 2008 @ 3:57p
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.
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?
Thank you Michael. That simple explanation helped tremendously. After reading it, might I add that education also seems a way for American to return to there former glory?
Venturion said: Thank you Michael. That simple explanation helped tremendously. After reading it, might I add that education also seems a way for American to return to there former glory?
Yes, education might be be a way for "Americans to return to their former glory". It might also help if we add business ethics to the curriculum as well as courses on personal responsibility. I'm sorry to disagree with many of you, but I find it ethically distasteful to try to avoid any legitimate debt, be it personal or business.
skibum43 said: Yes, education might be be a way for "Americans to return to their former glory". It might also help if we add business ethics to the curriculum as well as courses on personal responsibility. I'm sorry to disagree with many of you, but I find it ethically distasteful to try to avoid any legitimate debt, be it personal or business. I hate it when a good joke goes over someone's head. I guess I had to give one red in this thread. Congratulations, skibum. Also, if you read through, then you might observe that the majority of us agree on the ethical issue.
louieeG
Senior Member
posted: Nov. 14, 2008 @ 8:39p
I think this is a valid question raised by Venturion. Sometimes there are valid reasons why business debt must be negotiated or written-off. So we should not assume this information will always be used for unethical reasons. Sometimes "pay your bills, deadbeat" is really not an option. At that point I would (and i'm sure a lot of business owners) would like to know what other options are out there.
PolarDude
Senior Member - 1K
posted: Nov. 19, 2008 @ 5:03a
Would like to hear what the Creditboards crowd has to say on this issue.
Bump. For those in need (aka ethical disclaimer), perhaps a simple strategy woudl be to call your business card number, and mention that while you are current, you foresee potential repayment problems in the future and were wondering if it might be possible to settle the balances for a %. You could even ask for a condition that no negative marks be put on your personal credit report as a result. Obviously you can expand the details here, but I'm giving the basic idea.
As for what I expect, and have been reading, is that you won't find any company that will offer you forgiveness until you have been late on payments, likely at least 3 in a row (and hence killing your credit report). Is that worth it? Depends on how much trouble you are in and how much you may be able to write off.
In any event, it would be interesting to collect some data points from people to see what the card issuers are saying to this question.
I spoke with Chase's "Collections/Hardship" department. Without being behind on payments, there is nothing Chase can do. Chase does have a toll free line that connects you with a local consumer credit counseling non-profit. I tried calling two of them. The backlog is immense and I don't want to divert resources from someone in greater need.
If I can kick off my spouse's A0R, I might miss a few payments to see how Chase's tune changes. Bring on the hate.
I missed the last payment on both of my two mega Chase Biz cards ($62K and $72K balances). I wondering whether a new A0R and its associated inquiries and new accounts will help or hurt negotiating with Chase's hardship department. I don't expect to get any help from that department until I miss the second payment next month. I'm skating on thin ice here for several reasons - but I'm particularly dependent on the presumption that Chase won't report the late payments to my personal credit report as my Third Federal HELOC application is pending.
PolarDude said: Would like to hear what the Creditboards crowd has to say on this issue. I scanned CB threads for about an hour and had no luck finding a dedicated thread or even a single post alluding to the strategy. Their search engine is worse than the one here at FW. I'll leave it to someone else to replicate this post on CB. I feel dirty every time I surf their site
This thread is going to become more interesting than a movie. Please keep us posted.
codename47
Senior Member - 3K
posted: Jan. 1, 2009 @ 11:45a
3. If you've ever defaulted on business credit card debt and the consequences. I have a data point for this. One of my buds has an advanta card. Good income, overall good credit, never late.
They rate jacked him to over 30%
He said F' that I'm not paying.
They called and called
and called some more.
He told them he wasn't paying until they lowered his rate back to what it was and waived the late payments and additional interest.
At 90 days, poof, it was all complete and he was "late enough" so they did everything he asked for.
tmolloy
Member
posted: Jan. 1, 2009 @ 12:12p
CN--was there any effect on his personal CR for those 3 months of business lates?
codename47 said: At 90 days, poof, it was all complete and he was "late enough" so they did everything he asked for. Fantastic, CN47 - thanks for contributing. Do you know (or could you ask) if he had any principal "forgiven" or canceled?
codename47 said: One of my buds has an advanta card. Good income, overall good credit, never late. They rate jacked him to over 30%Yup, my current Advanta APR is 37.19%. But there is no balance.
codename47 said: 3. If you've ever defaulted on business credit card debt and the consequences. I have a data point for this. One of my buds has an advanta card. Good income, overall good credit, never late.
They rate jacked him to over 30%
He said F' that I'm not paying.
They called and called
and called some more.
He told them he wasn't paying until they lowered his rate back to what it was and waived the late payments and additional interest.
At 90 days, poof, it was all complete and he was "late enough" so they did everything he asked for.wow, your "friend" seems to have a lot of animosity towards creditors.
Crazytree said: wow, your "friend" seems to have a lot of animosity towards creditors. I'd have animosity for anyone trying to charge me 30+% interest. They're not the mafia for chrissake. That kind of rate should not be legal.
fleetwoodmac
Senior Member - 1K
posted: Jan. 17, 2009 @ 11:25a
Are there any business credit cards that do not ask w-2 forms or any other document for proof of business?
My $72K balance Chase Biz card has jumped to 27.24% interest after the first missed payment. No contact from Chase yet. I am planning to wait to contact Chase until I miss the second payment unless someone has a good reason to contact them now.
I don't have anything new to add. Business as usual with no impact on my personal credit. Will check in early 2011 if/when I receive the purported 1099.
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