6/7 years ago my $940 CC debt was sent to collections through B of A. What should I do?

[titus]

When I was just out of high-school, my friends convinced me to get a CC because they all did (I know…stupid/irresponsible) so we could go on a vacation and “not worry about money”.

I spent a little less that $2k and was paying it off every month for a while after, but at a certain point I had to move out of home due to personal/mental health reasons. I even dropped out of college. I remember being warned about it getting sent to collections years ago but I was so depressed and just trying to survive (pay my rent/bills, work and stay alive) that I didn’t care. I’ve been living on my own since and paying my own rent/bills…still, living paycheck to paycheck but things have been slowly improving in my life now. I’ve been doing a little better mentally and I’m just trying to get my life together for a better future. Taking care of this debt is my next goal.

I see on my Bank of America app that I owe $940 and some change on that CC still and it says it was sent to collections…but under “who to contact” it says Bank of America…not a collection agency.

I want to start fixing my credit and get my life on track. I tried researching online but it’s all very confusing. I’m afraid to call Bank of America to ask because I don’t have an extra $940 to spend on that right at the moment…but if I had a game plan I could have that in maybe 2-3 months.

I just need more information/advice. I haven’t had a credit card since and don’t have any other debt. And don’t worry, I’ve learned my lesson and am becoming a lot more responsible when it comes to my mental health & finances. It’s slow going but getting there.

So if anyone has any knowledge or advice for what I should do…please help my clueless ass out. I’m done running from my problems now.

Thank you.

 

[redeemed20300]

@titus Get your free credit report from the three reporting agencies. It will show the outstanding debt and how long it has been out there. If your timeline is correct outstanding debt falls off your credit report at 7 years. You still technically owe BofA but not paying them won't hurt your credit any more.

You can switch to a different bank so you don't have to see it on the app but BofA will probably always remember their $980.

Also, if you contact them you can reactivate that debt over the 7 year limit if you say the wrong things to them so maybe don't talk to them until you have confirmed.

 

[titus]

@redeemed20300 Okay, so I just checked my account and I almost had a heart attack.

It says that I am $44k in debt….
I checked to see why and I just realized my two work-issued credit cards are the majority of my debt…and they are not listed at being paid on time either. (One of my part time jobs is as a personal assistant and me and five other employees all have credit cards to run errands, etc.) I had thought the work issued cards were on my Boss’s account. I’ve only personally used my work credit card a few times and maybe charged less than $1k total. I am super confused.

My own personal credit card is still listed as owing $940 though…

Wtf does this mean? Is it normal for “work CC” debt to show up on your credit score?

 

[redeemed20300]

@titus For the $940 each state has it's own statute of limitations somewhere around 7 years. The credit report should show when that debt became delinquent. If you are close to that time you can wait it out and it falls off your report. BofA will still want their money and you need to web search for ways you can reactivate that delinquent debt and how to avoid them.

I can't help you on the work cc. Having outstanding debt on a cc isn't the end of the world but your employer needs to be making monthly payments on time. Did they have you open your own cc or set you up as an authorized user on their account?

 

[ntokila]

@titus For the work CC it depends how the cards were opened. Usually in this situation the company (or your boss themselves) would have the credit card opened in their name and then make you an authorized user for the card, basically 'this us my CC but OP is allowed to use it'.

SOMETIMES companies will open a card in your name, meaning its your line of credit. This is almost always an improper way to handle it, usually done through negligence, ignorance, or sometimes maliciously (ex. The company can't get a credit card approved/can get better rates so they put the card in the employee's name).

I wouldn't panic about it, I am not sure of the details but I'm pretty sure that even if you're only an 'authorized user' on a card it shows up on your credit report, but its not your debt. I am honestly not sure if that debt affects your credit score.

ETA: I just looked it up, most business class credit cards do not report authorized users so wouldn't show on your credit report. Personal credit cards usually do though, and that balance shouldnt affect your credit score as long as you are only an authorized user (not a joint account holder, or the card being in your name).

 

[pederson07]

@titus As others have noted, the $940 debt is probably so close to the 7 year limit that you are better off doing nothing with it at all.

Your work cards are a different matter and you need to fully understand the terms of how the cards are repaid. Some companies will handle the repayments for, others require that you pay the money and submit receipts to get reimbursed. But you need to find out before that card starts getting declined.

 

[kathyisongodsmission]

@titus It may just mean that Bank of America referred it to their own internal "collections" department - not that they sold the debt to a collection company.

If Bank of America sold the debt, then you don't owe Bank of America anything - you owe it to the company they sold it to.

But frequently, for a company of any size, the first step before they sell of your debt is to tell you it's in their own "collections" department, or that they have hired a collections specialist or whatever because that sounds scary. But they haven't actually sold your debt and you still owe them.

I'd like to think if it's still saying Bank of America is whom to contact that it means they haven't actually sold your debt. You'd have to potentially talk to a human and get them to confirm, though.

 

[titus]

@kathyisongodsmission Okay, got it. Thank you. Typically should debt be paid back all at once? Would a monthly payment incur interest?

 

[kathyisongodsmission]

@titus Your debt should be incurring interest now. So if you pay, say, $200 towards it, then you're only paying interest on $740 instead of $940.

If they're not showing interest, then that's a little bit suspicious and I'd definitely want to talk with a human to make sure the debt hasn't been sold.

A credit card interest rate tends to be in the neighborhood of 20-25%. So figure if you haven't paid anything in two years, then your balance two years ago was around $500-600 and interest has been accumulating on that. Every penny you pay down is one more penny you're not paying interest on.

But if you know that $940 is what your balance was two years ago, then that seems very odd ... and I'd want to hear from a human first.

 

[titus]

@kathyisongodsmission Gotcha. I guess I should talk to a human. I just got my credit report and on there is still shows my own personal debt being from the B of A card ( $940 ), but I guess I may have to still talk to a human about this.

What is baffling me now is that it says I am over 44k in debt due to my two work-issued credit cards…is that normal?

 

[kathyisongodsmission]

@titus Does it show you as "in debt" or having that as "available credit"? There's a big difference.

My wife has a credit card that has something insane like a $30K limit. So that $30K shows up as "available credit" to us, even though our actual balance is like $500.

Having available credit that you don't use is great for your credit rating. This may seem counter-intuitive (why would I want to lend you money if you could potentially go out and run up a $30K credit card bill and then owe more than you could possibly pay back). But the thought process, I suppose, is that you are demonstrating financial trustworthiness by having the credit limit available to you and being disciplined enough to not use it.

So if it is simply showing it as available credit, that's actually helping you.

But if the company actually owes $44K on the card? That is potentially hurting you. A card where you're just an authorized user that owes $44K should hurt less than if it's your own card ... but it's still not great.

 

[titus]

@kathyisongodsmission In debt… one of the cards has no available credit left on it at all, and the other one is close to being maxed out as well…

 

[kathyisongodsmission]

@titus I would complain loudly to your employer about this.

What's the point of you even being an authorized user on two maxed-out cards?

 

[kathyisongodsmission]

@titus I've never been on a company credit card, so I have no idea what "normal" is. (When I need to make a company purchase, I either do it with my personal credit card and submit for reimbursement or the boss hands me his credit card to make the purchase.)

But I know that if this was affecting my personal credit report like this, I would be raising holy heck at the office and if it wasn't taken care of immediately, my resume would be going out 10 times a day.