What should you do when your credit card company refuses to remove fraudulent charges? A reader, John, had this question:

Discover card is reversing charges which I claimed to be fraud on cards that were stolen from me. I asked what their premise was and they notified me the only thing they had was the signature was similar. MY SIGNATURE was on the back of my card so anyone could fake it. What can I do to escalate this? I have already contacted the CEO to get his assistance.

John,

The quickest way to fix this situation is to call your local police department and tell them that your identity is stolen. File a police report to that effect and keep the number of the report.

Then, call Discover back, give them the police report number and tell them that it is a case of identity theft. They should not give you any trouble at that point.

They should also issue you a new card at that point, so that you don’t have to worry about the account being used that way again.

What happens when you stop paying on your credit cards so that you can continue paying on your mortgage?

Another reader, Al, had this question:

I am no different from many other folks who are suffering hard times. My question is how much can a CC company do if I stop paying my CC’s to make sure I can pay my mortgage?

Al,

This is one situation where I can give you a very clear answer:

Not paying on your credit cards will wreck your credit, and likely cause your wages to be garnished at some point in the future. However, you won’t lose your home.

The good news is, there’s a way to fix everything.

Start by gathering together all of your most recent credit card statements.

How many accounts do you have total? Is there any way to make a reasonable payment on some or all of them?

And by reasonable payment, I mean, how much can you possibly afford to pay on each account before it interferes with your house payments.

Figure this number out for each account. Try to pay a little more on the cards with the highest balances.

For example, if you had $200 a month to pay on five credit accounts (no matter what the minimum payments are!) then you could afford to pay $40 on each account per month.

Once you know how much you can afford to pay call each of your credit cards. Tell them that you need to set up a payment arrangement immediately. Explain your circumstances, and ask them to help you.

Whatever you do, do not just “disappear” and have no contact with your credit card companies. I’ll explain why in just a moment.

Warning: It is possible that your credit card company will not help you. If that happens you will have to wait until you are a couple of days past due, and contact the collection department.

Collection reps are trained to help you negotiate payment plans. It would be unfortunate to have to have late payment records on your credit report, but in some cases it’s the only way the credit card company will negotiate.

You may also have to speak with a manager to get everything worked out – don’t be afraid to ask to speak with one.

Once you have someone on the phone who can help you:

Ask them about a credit card hardship program. Some companies offer this, and they may be willing to suspend your payments for a month or two depending on your circumstances.

If you have recently lost your job you may also be able to suspend your payments – it just depends on the company’s policy.

Next, set up a regular payment plan. Even if you can only afford to pay them $20 per month, make sure that you od pay them something, and stick to the plan.

This will protect your credit rating, and keep you afloat until you can increase your income.

In the event that you cannot afford to pay your credit card companies anything at all, you should still call them and tell them so. Ask them to suspend payments for a month or two. This tactic is usually more effective if you can make a payment with the negotiations, but it can also work when you can’t pay anything at all. Again, it just depends on the company.

So, what happens if you stop making payments and do not contact your creditors?

If you choose to have no contact with companies that you owe money to, they will begin calling you, and eventually everyone in your family looking for you.

Within a month or two your credit accounts will be closed, and your credit score will plummet.

A couple of months later, your credit card companies will sell your debt to outside agencies who will use even more agressive collection tactics.

At that point, if you refuse to acknowledge the debt, the collection agency can attempt to obtain a judgment. That would mean that they could either seize your property, or garnish your wages.

It’s really nasty business, and you can avoid it completely by keeping in regular contact with your credit card companies. As long as you are willing to work with them and pay them something, you should be able to work out a plan that protects your mortgage, your credit accounts and your credit score.

Best of luck.

Have a question for us? Leave a comment below!

Keep Reading and Grab Our Free RSS Feed:

• Credit Restoration Brokers – An Interview With Sam Sky
• Credit Card Debt Negotiation – Not All Opportunities Are Created Equal
• Credit Card Debt Negotiation or Debt Settlement

This entry was posted on Saturday, March 14th, 2009 at 07:45 and is filed under Debt Reduction FAQ. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.