Jairo Wants to Stop Paying His Bank of America Clean Sweep Debt Consolidation Loan

Jairo wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

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“Dear Steve,

I opened that Bank of America Clean Sweep six months ago and I keep paying every month a little more than the minimum but the amount is almost the same and they reduce my credit card from $7000 to $500. My wife’s job is giving her less hours every month and she is the head of household, we barely can pay this account.

If we stop paying the clean swip from BA how this can affect us?

Jairo”

The Answer:

 

Dear Jairo,

Bank of America extended credit to you with enthusiasm and encouragement and if you stop paying it they will pursue you with vengeance and hostility. Chances are very good that they will sue you for the debt and you will certainly wind up in collections and get calls and letters from bill collectors.

I previously reviewed the Bank of America CleanSweep offer in detail and pointed out all the “gotchas” in that offer.

But your situation brings up another point. You see credit is granted in absolutes, as in you must absolutely repay this debt in accordance with the terms you agree to when you sign a contract for credit. But life is anything but absolute. We have no idea what is going to happen to us at any point in the future, like hours being cut.

Frankly, it looks to me as if you simply got sucked in to the negative terms and conditions associated with the credit offer; they have reduced your line of credit down to the minimum, your interest rate will probably go up and the minimum payment is making little to no progress in actually reducing the balance.

All of those negative consequences and more are part of the CleanSweep and other offers.

Some solutions to consider would be a debt management program if the reduction in hours was temporary and likely to go back up in the near future. But bankruptcy is always a legal option to discharge legal debt you can’t pay anymore. You should consult a local bankruptcy attorney and ask for a free bankruptcy review for more information about how bankruptcy might help or hurt you.

Steve

The Answer:

 

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  • Goober

    The Gold Option Loan was sold to us as a loan. But in reality is was not a fixed rate loan at all but a credit line with an APR that compounds daily. Ours is at 13.99% and has stayed at that rate for the past 39 months. 57 months more to go. I really don’t think BK is the way to go if you can make the payments. I think the loan was predatory and surprised that no class action lawsuits have come up on this one. If you do not file for BK then you will be sued and most likely a judgement will be filed against you. Depending on the state you live in the judgement will stay on your record for anywhere up to 20 years. It will affect your credit too of course, as would BK.

    I would speak to a lawyer who deals with consumer affairs not just a BK attorney. They might have more input as to what you can do to negotiate new terms to the so called loan. BTW, we went to a BOFA branch today and on their records it shows it’s a credit card. On the website it shows it’s a credit line but it’s called the Gold Option Loan.

  • Goober

    The Gold Option Loan was sold to us as a loan. But in reality is was not a fixed rate loan at all but a credit line with an APR that compounds daily. Ours is at 13.99% and has stayed at that rate for the past 39 months. 57 months more to go. I really don’t think BK is the way to go if you can make the payments. I think the loan was predatory and surprised that no class action lawsuits have come up on this one. If you do not file for BK then you will be sued and most likely a judgement will be filed against you. Depending on the state you live in the judgement will stay on your record for anywhere up to 20 years. It will affect your credit too of course, as would BK.

    I would speak to a lawyer who deals with consumer affairs not just a BK attorney. They might have more input as to what you can do to negotiate new terms to the so called loan. BTW, we went to a BOFA branch today and on their records it shows it’s a credit card. On the website it shows it’s a credit line but it’s called the Gold Option Loan.

  • Eric

    My wife is barely swimming in debt and I am about to declare bankruptcy for a bad real estate deal. There is litagation that could pay off her debts within the next year. My wife wanted to use a debt consolidation company in order to cut her monthly payment. However, In Charge Debt Solution gave her a payment of $407 for 15,000 of debt within a payment period of 41/2 years. She already pays about $400 per month. Can you recommend a course of action to save on the monthly payment?

    • http://GetOutOfDebt.org Steve Rhode

      Eric,

      Let me be open and honest with you. The InCharge Debt Solutions debt management plan she is investigating might give her a break on interest but that’s not what she needs. It sounds like she needs a break on the payment. Unfortunately that’s not the way credit counseling programs work.

      I’m not quite sure what “barely swimming in debt” means. Does it mean that she can easily afford the payments or that she is struggling?

      If she is drowning in debt then there are all sorts of scams that might suck her in because they look attractive. But the reality is that the only legal protection she can get from her creditors if she can’t make at least the $400 monthly payment is going to be a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.

      If she can easily make the monthly payments she is better off sticking to the creditor payments or to look at consolidating the debt through a peer-to-peer lending network like LendingClub.com.

      Steve

  • Heather

    They will sue you. We just received our summons of being sued by them about 2 weeks ago. We have met with a bankruptcy attorney and are currently filing chapter 7. No other way out. So if you decide to stop paying they will sue, so see an attorney and have a back up plan. Take it from someone who is there right now!! They are ruthless.

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