Capital One Debt Consolidation

I Am Struggling to Pay My Capital One and Other Credit Card Debts. What Options do I Have?

Capital One is my largest creditor. I have five different Capital One cards. I have good credit and I've always paid my bills on time. This year, our household income has taken a hit and I am only able to pay my bills by eating into my dwindling savings. What options do I have for consolidating my Capital One debt and my other credit card debt?

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Capital One Debt Consolidation | Credit cards on a desk

Thank you for your question about your Capital One credit card debt and the best solution for your debt problems. Capital one offers credit cards, home loans and auto loans. Capital One is best known for their credit cards which they aggressively market (What's in Your Wallet? and Alec Baldwin commercials for double-mileage awards). The majority of the people who are looking for debt consolidation options for their Capital One debt are seeking help with their credit card debt.

Self-Help

When you are working to solve a debt problem, there are steps that you can take on your own. At times, problems may be so severe that they require professional assistance to get the best results.

Contact Your Creditors

Contact your creditor in advance, before you miss any payments. This does not guarantee that they will waive a late fee, not hike your interest rate, or be flexible with you, but maintaining open communication is a smart choice. Find out if they offer a financial hardship program. That may give you some temporary relief. Ask for an interest rate reduction or permission to make a smaller than normal minimum payment.

If you are struggling with credit card debt, contact one of Bills.com's pre-screened debt providers for a free, no-hassle debt relief quote.

Balance Transfers

If your credit is in good standing and you have balances on your any debts you are carrying a balance transfer is another possible debt consolidation solution. Make sure you understand the fees that come with the balance transfer and how long the low introductory rate lasts.

Capital One Debt Consolidation Loan Options

Capital One does not offer unsecured personal loans or personal lines of credit. If you have strong credit, you may be able to find a debt consolidation loan from another provider, such as a bank, credit union, or a peer-to-peer lender.

Shop around for a personal loan by checking with a Bills.com unsecured loan partner. Rates can be high, if you don't have good credit. Also, make sure you can afford the monthly payment.

Outside Help

If Capital One or your other creditors are not willing to work with you, your best debt relief solution may be to work with a professional debt relief organization. Look into both credit counseling and debt settlement. Before you choose the right way to solve your debt problem, it can be very important to understand how your specific creditors work with their customers. That way, you can plan the most effective strategy for getting out of debt.

Bills.com's editorial staff has done extensive research to provide you with some specific facts about Capital One and how it deals with accounts enrolled in debt relief programs.

Capital One Credit Cards & Credit Counseling

If you enroll a Capital One account in a credit counseling's debt management program, you should expect:

  • A monthly payment that is 2.00% of your account balance
  • A minimum monthly payment of $15
  • An interest rate of 6%. If your rate is at or below 6%, not only is there is no reduction, but your rate will be increased to the 6%. If you have a card with an interest rate below the one the DMP will put in place, you can try keeping the card out of the program, but most DMPs require you to place all of your cards into their program.

Capital One & Debt Settlement

Consider debt settlement to resolve your debt, if you are in a serious financial hardship. Debt settlement is an aggressive form of debt relief that's designed to get you out of debt in 24-48 months. For a debt settlement program to succeed, you need to make a monthly program payment, which is usually significantly smaller than your required minimum monthly payments.

Bills.com reviewed hundreds of settlements reached by professional debt settlement negotiators for the client's Capital One accounts. The average settlement negotiated was less than 50% of the balance that the clients enrolled in the settlement program.

You are free to negotiate directly with your creditors, if you feel you can do so successfully. However if you are not confident that you have the skills, nerve, and time to handle back and forth negotiations with debt collectors, consider hiring a reputable and experienced settlement company. Only hire a settlement firm that doesn't charge up-front fees. Bills.com recommends choosing a debt settlement firm that is a member of the AFCC (American Fair Credit Council) and has debt consultants that are accredited by the IAPDA International Association of Professional Debt Arbitrators).

Collections Process

If you default on any of your Capital One accounts, or with any of your other creditors, and you are unable to work out a solution with them, you will end up in collections. Not every creditor treats all their delinquent accounts. Even the same creditor may treat individual customers differently. However, there are some basic strategies and practices that Capital One and other creditors use when collecting on delinquent accounts.

General Collections Practices

  • Most creditors first attempt to collect a debt internally. If not successful, they refer the account to an outside collection agency or a law office for collections.
  • Some creditors have in-house legal departments to collect on the debt, though that is becoming less common.
  • In general, accounts are referred for legal collections after they are somewhere between six and nine months delinquent, depending on the creditor.
  • Your recent activity on your account can affect the collection process. Some creditors pay close attention to your specific account activity, when deciding whether to pursue legal collections. For instance, large recent purchases may cause a creditor to pursue collections more aggressively.
  • Eventually, your account may be sold to a debt collector. Creditors that are unable to collect anything after your debt has been contracted to a law office usually sell the debt to a debt purchasing collection agency. This frequently happens approximately 18 to 24 months into the collection process.

Wise Advice:

Different factors influence how aggressive a creditor is, when trying to collect from you, including: the state you live in, the assets you own, and state-specific collection laws. Creditors are less likely to engage in legal collections, for example, in states that don't allow for wage garnishment, such as Texas, Pennsylvania, and South Carolina.

Capital One's Collection Process and Legal Action

Here are some facts about how Capital One handle collections accounts, based on Bills.com research:

  1. Capital One is not known as the most aggressive creditor, but ranks in the middle of the pack.
  2. They begin to offer settlements when the account is in pre charge off status. Usually about 3 to 4 months after the last payment was made.
  3. Accounts in the Recovery Department, the last stop before an account gets sent to legal collections, may be willing to settle in full for 50%, after the account charges-off.
  4. Most settlements need to be paid off in full within a 90-day cycle, though settlements on very large balances may be given more time.
  5. An account goes to legal collections based on the customer's credit report and assets. Large balances are likelier to end up in legal collections.
  6. They pay close attention to recent charges made prior to any default. If you made large purchases in the six months before you defaulted, it is far likelier that your account will be sent to legal collections.

Bills Action Plan

  • Keep in touch with your creditors. Let them know if you're going to miss a payment.
  • Open every letter you get from a creditor. Ignoring a problem will not make it go away.
  • Review each one of your debt relief options, before you decide which one is best for you.
  • Check out the Bills.com's no-cost Debt Coach tool. Debt Coach allows you to easily go over all your available debt options, based on the goals and priorities that you specify, giving you a realistic estimate of how long it takes to get out of debt and what your total costs will be.