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43 Replies Last post: Feb 15, 2009 11:08 PM by alehart

Help with High Interest lines of Credit

Jan 24, 2008 6:53 PM

Click to view Green Biz's profile Start-up Green Biz 5 posts since
Jan 24, 2008
Here is my story. I started a very small business and when I opened an account at Bank of America to be able to cash checks from my first sale. They offered me a line of credit which I originally planned to use only to purchase products and deliver to customers who ordered the product then immediatly pay it off when I was paid. I was then laid off from my day job in the home building industry when that bubble burst. So I began to rob Peter to pay Paul as I had just purchased my first home before I was laid off. So I had to pay the mortgage. I ran out money in my line of credit so I started using the high interest credit card they gave me without asking for it. The first line of credit was 11% the second was 25%. I am now having trouble paying the payments and because I was late my account manager tells me they can not do anything for me. Does anyone have any suggestions?
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Click to view Ed O'Gee's profile Mogul Ed O'Gee 215 posts since
Oct 25, 2007
1. Re: Help with High Interest lines of Credit Jan 24, 2008 7:41 PM
in response to: Green Biz

Hey Greenbiz, sorry about the layoff. But the first thing and no offense is not to blame the bank. You made purchases on the line of credit and credit cards, so unfortunately you are responsible. Don't blame the bank for wanting their money, if you extended credit to a client and they used it, you'd want your money too.


Now for what you should do:


Bank of America like most banks hate to write off debt, they want to get paid and in most instances will work with you to get at least something, rather than writing off the entire debt, which doesn't look good on their balance sheet.


Ask to speak to your account managers supervisor and explain the situation. If you lay out your finances and they realize you can't make the payments based on the current rates, they are likely to reduce the rates - even if its a short term rate reduction, it will help.


If your account manager is unresponsive, speak to someone else. Bank of America is a huge company. Your account manager probably has 30 bosses over him/her. Speak to the right people, trust me someone at Bank of America will be smart enough to work with you.

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Click to view CEO Space's profile Mogul CEO Space 271 posts since
Jan 13, 2008
2. Re: Help with High Interest lines of Credit Jan 24, 2008 7:48 PM
in response to: Green Biz
Green Biz,

Welcome to the forum.

I am sorry that you got laid off.

go to www.prosper.com

It seems complicated but it really isn't. I would suggest you do not try to do it alone. You are more
likely to be funded if you are in a group of people like you.

It seems that people with decent credit scores who have gotten themselves in fixes get funded pretty quickly if in the right group. Of course, there are no guarantees.

You also might consider this borrowing from Peter to pay Paul, but you can set it up so that
you can afford it on prosper because you make the plan and others bid on it if they agree.

I don't know what to total sum of money is and Prosper does have limits, but check it out.

Good Luck

Kathy
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Click to view Green Biz's profile Start-up Green Biz 5 posts since
Jan 24, 2008
3. Re: Help with High Interest lines of Credit Jan 24, 2008 8:09 PM
in response to: Green Biz
Yes Ed O'Gee you are correct I can not blame the bank it was my own fault. I did contact the bank and my account manager told me because I have been late 4 times and most recently in December they would not lower my interest. I just do not understand with me being a Small Business and my line of credit being backed by the SBA why they would not work with me to lower my interest so that the payments would let me get out of debt sometime. My business can not continue giving all my profits to their high interest credit lines. I will try to contact the bank again and ask to speak with my account managers boss. I am thinking about going with Credit Solutions. What do you think about that?
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Click to view CEO Space's profile Mogul CEO Space 271 posts since
Jan 13, 2008
4. Re: Help with High Interest lines of Credit Jan 24, 2008 8:22 PM
in response to: Green Biz
I would NOT recommend you go with Credit Solutions unless they are a non-profit organization.
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Click to view Green Biz's profile Start-up Green Biz 5 posts since
Jan 24, 2008
5. Re: Help with High Interest lines of Credit Jan 24, 2008 8:43 PM
in response to: CEO Space
Then what should I do?
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Click to view Ed O'Gee's profile Mogul Ed O'Gee 215 posts since
Oct 25, 2007
6. Re: Help with High Interest lines of Credit Jan 24, 2008 8:48 PM
in response to: Green Biz
Work with Bank of America and your other creditors to find solutions which work for you. I don't want bash the credit counseling industry, but it makes so much more sense for you to work directly with your own creditors. If they see you are sincere about paying, again it is in their best interest to work with you.

They don't want your property, they don't want your business, they want their money and the interest you promised them when you used their products. Any smart bank and BofA being the biggest around will work with you to get back their money and at least some of their interest.
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Click to view Green Biz's profile Start-up Green Biz 5 posts since
Jan 24, 2008
7. Re: Help with High Interest lines of Credit Jan 24, 2008 9:18 PM
in response to: Ed O'Gee
Thanks for the advise, that is what I would like, I will try again.
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Click to view CEO Space's profile Mogul CEO Space 271 posts since
Jan 13, 2008
8. Re: Help with High Interest lines of Credit Jan 24, 2008 9:23 PM
in response to: Green Biz

Green Biz,

Ed is right. Also, you mentioned that the line of credit is backed by the SBA. Contact them also.

They certainly don't want you to default because they guaranteed it.

The main thing when you go to negotiate with creditors is to NOT just show up with a problem.

Have a plan before you go in. Tell them what you CAN do at this point. They will be much more willing to work with you.

Good Luck,

Kathy
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Click to view CorpCons08's profile Mogul CorpCons08 1,128 posts since
Nov 14, 2007
9. Re: Help with High Interest lines of Credit Jan 31, 2008 3:13 PM
in response to: Green Biz
I hate to sound contradictory on here, but there is a few problems with the responses you have been receiving. Bank of America is not going to lower the interest rate on an SBA-backed loan. The rate was set based on what the offering was from the SBA. Your other solution would be to refinance the debt, however you have not explained to us the length of time you have been in business. If you are under 2 years of business management of this venture, you cannot refinance the SBA debt with another SBA loan. This is explained in the summary pages you received from the SBA. If you are over 2 years of business management of this venture, you may have the opportunity to convert both loans into a conventional bank business loan which has an interest rate typically between PRIME + 0% to PRIME + 5%. With the current prime rate at 6% (lowered substantially over the last few months), the maximum interest rate you would be looking at would be 11% (based on credit) and the payments would be more affordable. I would be happy to speak to you further if you would like. My email address is d.skolnick@skolnick-associates.com.

Best wishes,

CC08
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