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Credit Cards after Foreclosure

Discussion in 'Deed in Lieu of Foreclosure - Do You Need Help to ' started by Esme56, Feb 21, 2009.

  1. Esme56

    Esme56 LoanSafe Member

    Hi Everyone,

    I am hoping that some of you who are ahead of me in the process can help me out on this one (I'm planning on missing my first mortgage payment in March).

    What happens to your credit cards after foreclosure? Do the banks close them? I have 2, with 0 balances. One is with B of A and that is where my credit card with the largest credit line is with. The other is an old one left over from college and the credit line is very small.

    The main reason I am worried is that sometimes I have to rent a car for work and I need one for that purpose. I don't need credit cards for day to day shopping.

    thanks for any input!
  2. SlammyR

    SlammyR LoanSafe Member

    i have been on the phone with my cc's researching this. mind you, i never told them "hey, i'm going to stop paying my mortgage so tell me how that will affect this card?" all i asked was, "if i'm late on another creditor's payment, how will that affect this card?" and "does this card have a universal default policy?" here's what i have found:

    2 of my "Big Bank" cc holders could not tell me for sure on the phone if my cards had the "universal default" policy in place. they said "i'm sure we do, most credit card companies do that now". which i found very interesting. they don't know for sure???

    in one of my cardmember agreements, it only says if i make a payment late TO THEM, (over 30 days) a default rate would kick in, UP TO 29.99% but no more. the lady on the phone told me this too. she said it depended on my credit history with them, and time i've had the card, as to what rate that may be. for those in good standing with that cc, it may never go up that high. for example, mine might not ever go past 17% she said. says NOTHING about defaulting anywhere else. (however, another card i never use does have universal default. i would expect that card to be cancelled, more so because i don't use it rather than solely because of the universal default issue. but big whoop. no great loss.)

    i can assume my more used cards may lower my credit limit, but of course i won't know until it happens, but always be prepared for this. i am sure if you have a balance on something, they are not going to just cancel your card, but rather make you pay the default rate if applicable.

    authorized users: my wife has cc's "in her name", but i am an authorized user. she called and asked, if i screw up my credit, it will not touch her cards. i can still use hers without worrying about any default rate. keep this in mind for balance transfers if you need to move $ out of a high default rate...

    lastly, my favorite discovery: my home improvement warehouse card has no universal default. the lady told me "we don't care if you default with another card, just keep current with us and there will be no default rate. what happens on your other cards does not transfer over to ours." because that card can only be used at that store, apparently it's handled differently. so check with your cards that are store-specific and find out.

    best advice and suggestion: don't wait for the other shoe to drop, call and request a copy of your current cardmember agreement for all your cards now. who ever reads these things anyway? but now is the time. if you don't understand something, simply call and ask them to clarify!

    maybe you should get a debit card from your bank to use instead of a cc. they work just as well for anything you'd use a cc for!

    hope this helps!
  3. LeavingAZ

    LeavingAZ LoanSafe Member

    Hello!
    I have a BofA cc that had $5K limit about two months ago.
    They stripped it down to $500 bucks and the APR hasn't changed. I had a 0 bal on the card anyway, which is great. My Discover card changed the APR from 7% to 11% recently, but hasn't decreased the limit or anything.
  4. willthisnightmareend

    willthisnightmareend LoanSafe Member

    We have missed 3 months of mortgage payments since we started the modification process. My credit rating was 787, and heaven only knows what it is now. We use a mastercard and charge around 80k per year, but pay in full each month. No late payments or finance charges, and thankfully they haven't touched our credit limit since my husband uses the card for work expenses!! We also have an American Express that is used at Costco only. We had a 16k limit with American Express which was lowered to $5oo.oo last month. This month it was CLOSED!!!!!!!! As much as I thought I was prepared emotionally for this ride, it shook me to the core when I read the letter from AE stating that they have closed my account due to my credit rating. SO SAD! When I was current with my mortgage I was told I couldn't get help until I missed my payments, now I feel like a felon.
  5. civilguy

    civilguy LoanSafe Member

    I am in preforeclosure now havn't made payments since May 08 and currently am the PROUD holder of a 477 fico score. The only company that decreased my limits was AMEX but other than that I still have huge credit lines w/ advanta, bofa, wamu (now chase) and when I Capital one.
  6. AZChick

    AZChick LoanSafe Member

    Over 60 days late here, no effects so far....
  7. WiltedInWI

    WiltedInWI LoanSafe Member

    I am 6 months in arrears on my 1st mortgage and they have also filed foreclosure against me. Ironically, I just got a letter from my cc company (Orchard Bank) saying that they have raised my credit limit from $500 to $700 becuase o fmy excellent payment history.

    Also, just as an FYI, if you need a cc for renting a car, getting a hotel reservation, etc., I'd recommend contacting Orchard Bank and at least getting a SECURED credit card. So, if you open a cc account with them for $500, this is the amount of your cc limit. It's also a great way to help start re-building your credit score as they do report to the 3 major credit bureaus. I actually applied for a secured cc (thinking that was all I'd be able to get) and they approved me for an unsecured card with a limit of $500 (although, now $700 apparently!).
  8. cactus77727

    cactus77727 LoanSafe Member

    At four months of late mortgage payments (all other bills paid on time), one of my three credit cards reduced my credit line from $10,000 to $800.
  9. MRC123

    MRC123 LoanSafe Member

    Amex is the only one that has lowered the credit limit from $9,000 to $2,500 after 2 months late, now at 5 months late, nothing else has changed.
  10. cc123

    cc123 LoanSafe Member

    Cactus,

    From $10,000 to $800? Which credit card is that? That would be another nightmare for me!
  11. AmericanNightmare

    AmericanNightmare LoanSafe Member

    Yes, my Costco AMEX was reduced from $8000 to $1800 after not paying my mortgage for 2 months. I have not used it for the past month and I'm waiting to see if they will contact me.

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