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I’ve Been Borrowing Money From Credit Cards to Pay Credit Cards. – Allison

“Dear Steve,

I have $100,000.00 in credit card debt. I have excellent credit, and have never missed or been late on any payments. The problem is – my work is getting slower, I have a feeling I will be loosing my job soon & I can NOT pay my bills any more. I’ve been borrowing money from credit cards to pay credit cards.

What’s going to happen when I stop paying my credit card bills? Can I be sued & can I loose my house. What about my credit rating, will it ever be good again?

Allison”

Dear Allison,

Thank you for writing me for help.

Your statement about having excellent credit but using credit cards to pay for other credit cards is interesting. While you might have a good credit score now the path you are on will eventually tank your score as you max out your cards. Besides…

Using Credit Cards to Pay Credit Cards
is Like Putting Your Debt Into Turbo

Credit Cards on Turbo
Photo Credit: Roozbeh11

Using credit cards to pay credit cards is a delusional game that only gives you satisfaction from denial and not a resolution through reality. In fact it has the exact opposite effect you want it to have. You pay the cards with another because you don’t want to be late on the bill or feel like you are in debt. What you are actually doing is sending yourself so fast down a debt hole you’ll most likely never recover from without bankruptcy. Stop Doing That. There is nothing about that action that will make this situation better in any single way.

The solution here is to come to grips with your reality. Income is slowing so you’ve got to focus on making your life fit within your current income. That will mean you’ll have to stop paying the cards.

So Here’s What Happens

Once you stop paying you will slowly get more and more collection calls until you get to about six months behind. At which time your account will charge off and be bought by another creditor and they will attempt to collect again. Along the way you could be sued for the delinquent debt but that is certainly not likely in the first four months.

Being sued isn’t the end of the world and there are ways to deal with it. For example, if you get replacement income and back on your feet you can go bankrupt and terminate the debt and suit. Without a job there are no wages to garnish so the suit alone means little. It sounds like you also have few assets or cash to go after.

Your number one priority must be to focus on replacing the income. Next, you must get honest about your debt. it is what it is. Once you find that new income then strongly consider bankruptcy. Filing bankruptcy too early without a new income may be a premature discharge, and that can be painful. We don’t know what other debt may occur as a result of the lost job. For example, you might not be able to afford your house payment and lose the house eventually to foreclosure. In that case we’d want to wrap up the residual mortgage debt into your bankruptcy.

If you have any questions about bankruptcy, click here to find a local bankruptcy attorney you like. Go talk to them now, get a game plan in place and educate yourself about what bankruptcy means for you.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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