I have retail credit cards issued by Comenity Bank. What are my options if I am struggling to make my payments?
I hit a rough patch financially and am not sure what to do. I can only make all my minimum payments by eating into my dwindling savings. A bunch of my credit cards were issued by WFNNB, but now are handled by Comenity Bank? What options do I have if I can't make my payments as agreed?
Thank you for your question about your Comenity bank credit card debt and the best solution for your debt problems.
First a little background on Comenity. Comenity used to go by the name World Financial Network Nation Bank (WFNNB), changing its name in 2012. It manages the credit programs for over 100 large US retailers. It issues credit cards and collects payments for over 100 large US eetailers. You may not even realize that you have a working relationship with Comenity, as the brands it works with have much more familiar names. However, there are over 31 million Comenity customers!
Retail credit cards often come with very high interest rates. You may apply for one because the retailer offers you a % discount on your purchase. If you won't carry a balance on your card, that's not a problem. However, if you don't pay in full each month the cost of the high interest rate will probably be greater than any savings you get from the discount.
Comenity Credit Cards
Comenity issues credit cards for the following retailers:
- Fitch Ann Taylor
- Dress Barn
- J. Crew
- Lane Bryant
- Polo Ralph Lauren
- Pottery Barn
- Sharper Image
- Victoria's Secret
If you have a credit card account with the retailers listed above, ore one of the more than 100 other retailers that have their credit cards issued by Comenity, then you're really working with Comenity. If you're struggling with your bills with any Comenity retailers, it is a helpful to have a general idea how creditors treat collection accounts, as well as how Comenity deals with its customers. This way, you'll know more about the options available if you are having trouble paying your bills on time.
Contact one of Bills.com's pre-screened debt providers for a free, no-hassle debt relief quote.
Contact Your Creditors
A basic rule to follow is to contact a creditor in advance, before you miss any payments. It may not solve your problem, but maintaining open communication is a smart choice. Call the customer service numbers and ask 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, so you can avoid a costly late fee or a major hike in your card's interest rate.
Retail cards, like the one's issued by Comenity, commonly come with a high interest rate. If your credit is in good standing and you have balances on your Comenity (or other high-interest cards), look into a balance transfer offer as a debt consolidation solution. Make sure you understand the fees that come with the balance transfer and how long the low introductory rate lasts.
Unsecured Consolidation Loan
If you're carrying balances on your credit cards and are looking for other sources to borrow money at a lower cost, look into an unsecured personal loan. You need a strong credit score and stable income to get a good rate on a unsecured consolidation loan. Otherwise, though you may find a lender willing to work with you, rates can be quite high.
Learn what kind of unsecured loan you can qualify for, by checking with a Bills.com unsecured loan partner. Remember, if you don't have good credit, make sure the rate and payment work for you before taking the loan.
If you default on any of your Comenity 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 Comenity and other creditors use when collecting on delinquent accounts:
- 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.
- Creditors have thresholds for identifying the accounts they decide are worth pursuing by legal collections. The amount owed and the state specific collection laws being primary considerations. Creditors are less likely to engage in legal collections, for example, in states that don't allow for wage garnishment, such as Texas, Pennsylvania, North and South Carolina.
- 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.
If Comenity 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, such as a credit counseling firm or a debt settlement firm. 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 Comenity and how it deals with accounts enrolled in debt relief programs.
Comenity Credit Cards & Credit Counseling
If you enroll a Comenity account in a credit counseling's debt management program, you should expect:
- A monthly payment that is at least 2.00% of your account balance
- A minimum monthly payment of $15 per account
- An interest rate of at least 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%. Interest rates vary for the different retailers that use Comenity and the rates available in a credit counseling program can change at any time.
Comenity & Debt Settlement
Debt settlement is an option to consider, if you are experiencing a serious financial hardship. Debt settlement is an aggressive form of debt relief designed to get you out of debt in 24-48 months. For the program to succeed, you need make the monthly program payment, which is usually significantly less than the current monthly minimum payments that your creditors require.
Bills.com reviewed hundreds of settlements reached by professional debt settlement negotiators for the client's Comenity accounts (including when the accounts were under the name WFNNB). The average settlement negotiated was less than 50% of the balance that the clients enrolled in the settlement program.
Individuals are certainly free to try negotiating settlements directly with their creditors. The fact is that many people like the skills, nerve, and time to handle back and forth negotiations with debt collectors. For those people, hiring a reputable and experienced settlement company is a wise choice. Only hire settlement firm that charges no up-front fees to enroll. Bills.com recommends choosing a debt settlement firm that is a member of the American Fair Credit Council (AFCC) and has debt consultants that are accredited by the International Association of Professional Debt Arbitrators (IAPDA).
Comenity's Collection Process and & Legal Action
Comenity is not known as the most aggressive creditor. Here are some facts about how Comenity handles collections accounts, based on Bills.com research:
- 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.
- There are rare occasions when some of the accounts that are severely delinquent have been sent to a third party.
- Comenity is not aggressive about sending their delinquent accounts to legal.
- As of September 2013, they are willing, at times, to accept a settlement offer split into to equal payments, possibly 3 pays for older accounts.
Bills Action Plan
- Stay in contact with your creditors. Let them know if you're going to miss a payment. and open all your mail from them.
- Open all your mail from your creditors. Ignoring a problem will not make it go away.
- Review all your debt relief options, before making a decision, so you can weigh the pluses and minuses that come with each solution.
- Check out 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.
Struggling with debt?
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q2 2023 was $17.06 trillion. Auto loan debt was $1.582 trillion and credit card was $1.031 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
The amount of debt and debt in collections vary by state. For example, in Tennessee, 32% have any kind of debt in collections and the median debt in collections is $1892. Medical debt is common and 18% have that in collections. The median medical debt in collections is $888.
To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.