# Credit Card Debt



## madcatwoman (26 Mar 2009)

I'm posting this on behalf of a relative (lets call her Mary) who is in a bit of trouble with her credit card debt. I'm sure given the current climate there's a lot of people in a similar situation so any advice about the situation would be greatly appreciated.

Mary has run up a credit card debt with MBNA of €5,400 in one year. She has not been paying even the minimum payment back each month. 
She also has a BOI credit card which has a balance of €1,500, which again is not being paid back each month.

Mary recently attempted to get a consolidation loan and was told she was on a bad credit rating list

Both organisations have been calling/writing to Mary and she has been putting her head in the sand and ignoring their calls and letters. The latest letter from BOI says that if she does not call, it will be on to the debt collectors. 

Eventually Mary spoke with MBNA who said that if they did not receive a small payment (less than 100) by the end of the month, they would be also on to the debt collectors. 

Considering Mary cannot get a consolidation loan, what is her best course of action here? I'm very interested in hearing any experience others may have had in a similar situation. MBNA have suggested they may be able to come to an arrangement with her with regards stopping the interest. I presume this would be a short term arrangement? 

My second question is this - If Mary does not take responsibility for paying off the debt, what exactly will happen when it goes to a debt collector? Bear in mind Mary lives with her parents and has no assets except for a relatively inexpensive car. (>4k value) Could Mary's parents be dragged into this situation?

I presume this is going to have big repercussions for Mary in the future in terms of getting a loan or mortgage.

It would be great to hear of other's experiences with this or indeed any advice you may have. Thank you.


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## papervalue (26 Mar 2009)

What is Mary's situation?
Is she working ?
Why does she not pay at least the min balance? 
What age is Mary- is she over 18?
Could she try to transfer it to another credit card company at 0% for a few months?


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## madcatwoman (26 Mar 2009)

Thanks for your reply..

Mary is indeed working, which to be honest makes all this sound the worse that she just ignored the bills coming in. She is very bad it seems at managing the money that she earns.

 She is over 21.

That might be an option about the 0% credit card - but would she actually be offered one considering she tried to get a loan and is on some sort of bad credit list?


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## mro (26 Mar 2009)

Maybe an obvious question but why dosent she start paying them off? 
If MBNA want a payment of approx 100 by the end of the month can she pay this and maybe try to come to the same type of arrangment with the other credit card company.


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## papervalue (26 Mar 2009)

Ask her to go to MABS. Once over 18 she has to be grown up about it and pay her credit card debts like everyone else. Being employed their is no reason she should not be able to pay min amount. I would assume she is rent free at home. What does she spend her money on?

All about budgeting.


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## madcatwoman (26 Mar 2009)

Papervalue, I agree wholeheartedly that she should be taking responsibility. I've printed out for her all the information from the Mabs website on budgeting and dealing with debt.

I suppose where I'm coming from, is if she continues to ignore what's going on, what are the actual consequences? What does a debt collector actually do to get the money back? I have never been in such a position myself so I am unaware of what happens.

Also, Mary's parents are quite concerned as they are wondering if there is any action taken against her by debt collection agencies, is any of their assets at risk?


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## papervalue (26 Mar 2009)

From parents point of view, their under no obligation to this debt. They are no way liable. 

Honestly not sure how far a debt collector would go.

Should be no need for debt collector if she tries to deal with it immediately.


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## csirl (26 Mar 2009)

> I suppose where I'm coming from, is if she continues to ignore what's going on, what are the actual consequences?


 
The damage to her credit rating is what will cause her the greatest harm. She will find it impossible to get any credit for a long time - this means any aspirations she has of being a homeowner will have to be forgotten. No chance of things like car loan etc.

If I were her credit card company and I got nothing from a visit of a debt collector and I knew the person was employed, my next course of action would be to use the courts to get a portion of her salary paid to me monthly.


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## jhegarty (26 Mar 2009)

Why can't she pay the €100 to mbna ?


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## madcatwoman (26 Mar 2009)

jhegarty said:


> Why can't she pay the €100 to mbna ?



The 100 has been paid. 

I was just curious as to if she does nothing else, what actions can be taken against her and what are the repercussions (credit rating, court action etc). And I suppose, what options the banks will give you if you actually communicate with them with regards organising paying them back. Has anyone got the interest stopped on their card for any considerable amount of time to allow an installment type repayment?

Thanks for all your replies, they have been very helpful.


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## gillarosa (26 Mar 2009)

Hi,
First of all to answer your question about her parents, they are not liable if she took the card out solely in her name, but I imagine their worries are greater than that now.
€5,400 on one credit card in one year (especially while there is a second one in use also) is a huge amount for a young person with no obviously high outgoings such as a home and she drives a modest car, is it possible that there is a touch of depression at the bottom of it or a compulsion to shop? if so it may explain her reluctance to address the problem of the repayments in a structured and responsible way.
I'd recommend they sit down with her and work out a budget taking her current disposable income per month and see how they can make a schedule of repayments on the two debts within say an 18 month period, assuming she is earning an average wage and stays employed there is no good reason it cannot be achieved by paying say €500 per month, they can encourage her to set up dd's from her bank account, once she has been shown its achieveable it may make it easier to face.


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## sam h (26 Mar 2009)

Some good advice there - she definately needs to show willing to pay her debt.  I'm wondering why you are even asking the question:



> I was just curious as to if she does nothing else, what actions can be taken against her and what are the repercussions (credit rating, court action etc).


 
She has a job & no dependants so she has no reason to even consider not paying it off & this should not be an option as it WILL affect her credit rating (even if BoI and MBNA don't feel it is worth pursuing....it will come back to haunt her.  She needs to face up to the music and pay her dues.

It will probably end up being a very good life lesson.  Has she started to pay BoI at all?  If not, the best thing she can do it to contact them and make arrangment to pay the debt, they will be open to negotiaton, but she has to contact them ASAP.

I assume she has now cut up the credit cards & is living on a more realistic budget which buys essentials only?


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## madcatwoman (26 Mar 2009)

gillarosa said:


> Hi,
> is it possible that there is a touch of depression at the bottom of it or a compulsion to shop? if so it may explain her reluctance to address the problem of the repayments in a structured and responsible way.



I think there might be some truth in that, which is partly why I am worried and posting up here about it as opposed to telling her to cop the f**k on. Its as if she can't face looking at the problem, and has even at one stage bought a new SIM to avoid having to get calls from people in the banks.

It would be a great lesson all right to face the responsibilities and pay off the debts eventually, i just hope she will do it before it spirals any further out of control.

Thanks again to everyone who replied.


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## Luckycharm (26 Mar 2009)

She lives at home with no kids etc - does she pay rent at home, she is also lucky enough to have a job.
Ok more then likely her credit rating is with the ICB and it is not good. This will mean that she will not be able to get credit from any banks for a long time. 
What can happen- it will be probally go to Debt collectors, if they have no success it will go legal. Then the banks can go for a judgement, then an installment order and if she still does not make any payments the banks can get a committal to send her to prison!!! 
She really needs to contact her banks as they would rather work with her to clear the debt then go down this line but they will have very little sympathy for someone who just ignores everything!!


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## Tintin14 (20 May 2009)

Hi ya,

Sounds like "Mary" is in a bit of a fix.  About 12 months ago I was in a similar situation with MBNA, I rang them and told them I simply couldn't afford the repayments.  They immediately froze the interest and I agreed to pay 90 a month, which is slowly reducing the balance still 5k left ouch.  But atleast the interest isn't adding up.

HOWEVER, MBNA have given me a very bad score to ICB and my rating is disastorous as a result.  I have the opportunity now to get an apartment through the affordable housing scheme but no bank in the country will give me a mortgage.  They all say the same thing no problem with giving me the lump sum and have no doubt based on wages etc that I can make the repayments, but won't give me mortgage approval based on the bad rating.  And the bad rating lasts on your ICB report for 5 years, nightmare.

So Mary needs to wake up quickly.  Bank of Ireland are very good and very approachable.


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## onq (20 May 2009)

madcatwoman said:


> I think there might be some truth in that, which is partly why I am worried and posting up here about it as opposed to telling her to cop the f**k on. Its as if she can't face looking at the problem, and has even at one stage bought a new SIM to avoid having to get calls from people in the banks.
> 
> It would be a great lesson all right to face the responsibilities and pay off the debts eventually, i just hope she will do it before it spirals any further out of control.
> 
> Thanks again to everyone who replied.




Not dealing with a debt is one way of making sure you get into trouble.

Getting into trouble is the way some people ask for help.

And it might not be financial help she needs.

There may be a whole self-image/depression thing going on.

In the current economic climate that's understandable.

Its also possible that something happened a year ago to make her run up this debt.

Peer pressure, running with a crowd of wealthier friends, making a good impression - all can lead to credit problems.

Or you might find it goes back to problems in a relationship.

The point being that the debt may be a symptom. 

Not a problem.

Hope this helps.


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## ANORAKPHOBIA (21 May 2009)

Mary should sell her car and use the proceeds and the savings on running costs to reduce her credit card debts. It sounds like she is quite naive regarding financial matters. Someone talking a bit of commonsense to her might also help.


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## startagain (10 Jun 2009)

I can hopefully give you some advice as i have dealt with MBNA and BOI credit card debt,
if mary rings MBNA and tells them that she is in difficulty, they will ask her to fill in a budget form, they contact you then asking what amount you can pay back each week/month. Just tell them what you can afford. her parents are not liable for her debts (i too was afraid of this when i moved home to sort out my finances) so they have nothing to worry about =)

But from my experience (never too my own advice until recently) dont ignore the banks??/mbna! they will call and send letters until you start to show your making payments weekly


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## Bronte (10 Jun 2009)

The worst thing that can happen to her is she can go to jail, we are talking about an adult in a job who has made absolutely no effort to make any repayments, a highly likely candidate for jail.  

She needs to urgently tackle the reasons for getting into this debt in the first place.


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## Hybrid Boss (10 Jun 2009)

I'd say both cards are now revoked at this stage, so cutting them up wont make a difference. Now would be a good time to tackle all her outstanding debt. She probably has an overdraft on her account? Mobile phone bill? And a loan on her car? Or did she buy the car with her credit card? BOI should consolidate her BOI cr/card into a loan. She’ll find once a payment structure is in place for all her debt she’ll find it very easy to get used to the outgoing payments. The main thing to do here is not to let the debt go legal.


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## Nutsy (11 Jun 2009)

*"a highly likely candidate for jail."*

With all due respect, I think this is a tad OTT.

Nutsy


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