Debbie 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 have overextended on my home equity line my condo is not worth the money now. I have been working overtime as much as possible to keep paying bills I borrowed 10,000 from my 401k to cover some of the debt and 5,000 each from 2 friends of mind now the interest rate has just dropped over the last 3months So I can work more and put the less interest rate money to pay back my friends But I am about worn out from working so much But I am only 54years old so I can do it I would just like to keep the lower interest rate I am getting right now with BOA instead of that high rate I paid for 1 year and got into trouble.
If I call BOA exactly how do I ask them to keep low rate on my line of equity adj rate and can I even ask that question without them laughing I know I signed up for this mess
Debbie”
The Answer:
Dear Debbie,
You have no control over this and there is nothing that customer service can say or promise you. The decision to raise interest rates, cut credit limits or make other changes to your account is done according to a formula and not you personally. If your profile, payment history, credit score, balance, or anything else falls within a corporate repricing of their cardholders, you get swept up in it.
Hopefully you are digging yourself out of this mess now and won’t have to borrow any more money from friends or your 401K, an action that I abhor.
But the real question here is now that you are on track, can you be confident that you can continue your current pace and efforts to repay your friends and yourself and what will you do when or if Bank of America raises your rates way up again. That is a question you will have to ask yourself. If, as you say, you are about worn out then maybe the time has come to start thinking about a Plan B. And in your case I think that Plan B = bankruptcy. You’d have to include your friends in the bankruptcy but you could pay them back after your debt was discharged.
Just being honest, the chances of you successfully repaying the debt on the path you are on now is not likely to succeed if you are already worn out and can’t keep up the sprint for the next five years or so.
