Dear Credit Guy,
Mywife has a credit card in her name only. She is on permanent disability andunable to work. She gets approximately $400 a month, less Medicare. I don't knowhow old this account is, but I'd say 5 years at least. Long story short, theaccount has a $14,000 balance. The card issuer took advantage before the newregulations took effect and raised the interest rate to 29 percent. The accountis current, but now we are paying $500 plus a month for the minimum amount due,most of which is interest. I have tried to call the card issuer, but they won'tspeak with me. My wife's disability prevents her from handling the situation. Iam in sales, and my income based on the present economy doesn't leave me withenough income each month to pay anymore. How do I handle this other than to stoppaying and mess up her credit score? I am a homeowner with good credit, and sheis not on the mortgage. Also, how could she have gotten this card in the firstplace on her own with no job? -- Bill
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Theguidelines for extending credit certainly have changed in the past five years.Your wife's credit card account is a good example. At the time she acquired hercredit card, card issuers had looser eligibility requirements, issuing creditcards to students and others with no documented income. However, if your wifewas to apply for a credit card account today in our tight credit environment, Idon't know of any card issuer who would qualify for an account today. So, thatshould give you a little peace of mind that she won't be able to open any othernew accounts to surprise you -- in the near future at least.
Now,as for how to handle the situation of paying the $14,000 credit card accountbalance with a 29 percent (ouch) interest rate. First, you could considertransferring the balance from your wife's account to another credit cardaccount in your name with a much better interest rate. Cutting the interestrate in half to 14 percent would be a savings of almost $200 on your monthlypayment each month, and you should qualify for a card with an interest rate evenlower. Shop for the card that best fits your needs and be sure to know what youwill pay in balance transfer fees. Of course, with this option, you are takingon the financial responsibility for her account.
Second,you could contact a nonprofit credit counseling agency and talk with a credit counselor about your wife's account. You can reach a trusted agency at the Association of Independent Consumer Credit Counseling Agencies or National Foundation for Credit Counseling. Because theaccount is in her name, your wife would have to sign a debt management plan(DMP) agreement if you decide that would be in the best interest of you both. But you should be able to speak with a counselor about the situation andtogether determine if a DMP would be best. You should get a much lower interestrate on a DMP with a plan to pay off the balance in five years or less.
Lastly,I don't advise you just stop paying on the account. If you cannot afford to payanything on the account, you might consider consulting a bankruptcy attorney todetermine what options are available for your wife. She can file for bankruptcyprotection separately from you, but I'd check with an attorney who will know whatstate laws apply and how best to protect your own credit.
Takecare of your credit!
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