Debt Relief FAQ

Do I Need to Pay on a Credit Card if It Is Due to the Same Company That Holds My Mortgage?


Many borrowers feel obligated to pay credit card companies that seem to have the same name as their mortgage lender because they think there is a connection between the credit card payment and their chances to get a modification. This just isn't true. Mortgage lenders and servicers don't have any connection to credit card issuers when considering a modification.

There is no alliance between mortgage lenders and credit card companies. They routinely ignore the existence of the other types of debt and in fact, encourage you to pay them from whatever source possible. There is no real brotherhood of creditors and you should feel comfortable in requesting a resolution of your mortgage, even if credit cards to the same "company" aren't being paid.

Should I Pay My Credit Cards if I'm Struggling With My Mortgage?

Many borrowers continue to pay high-interest unsecured credit card debt while they're in the process of losing their homes. This is a major mistake, but it occurs on a regular basis for a few reasons:

  1. Borrowers truly do want to pay and have been trained to make timely monthly payments even if they can't afford to make the payments, and are actually in jeopardy of losing their homes.
  2. People want to pay someone, or as many people as possible so they don't have problems and battles with everyone. They deplete their available money in an effort to pay as many creditors as possible, even when it doesn't solve their real problem and actually can make it worse.
  3. People are very concerned about their credit score and will go to all lengths to preserve their score, even in part, by making payments on as many bills as possible. Of course, this doesn't help because credit score has nothing to do with a successful mortgage working or modification and credit scores will be impaired by the mortgage default.
  4. People pay credit card companies to avoid the interest rate increases and brutal late charges imposed by threatening credit card collectors. In most cases this doesn't avoid the imposition of these fees and costs anyhow, as credit card companies can legally raise your rates for any reason they deem appropriate, including mortgage default.
  5. People pay credit card companies and waste precious financial resources that could better go to their mortgage/house to avoid relentless phone calls from credit card companies and collectors. Collectors for unsecured debt can call many times per hour on a daily basis, and people often give in and deplete their monthly budget to avoid the endless and often harassing phone calls at home and at work. Giving in to these threats and harassment is a common mistake, even though you have a right to not be contacted by telephone.

Credit card or unsecured debt is the last thing you should pay. It does nothing to feed, clothe or house you or your family. Most credit card payments accomplish nothing, since all the payment goes strictly to interest on past purchases and provides nothing for a family's present needs today.

Saving your house is far more important than paying credit card debt and in fact, credit card payments are among the leading causes of home loss in America. Paying high-interest unsecured debt robs families of the resources necessary to save their homes from foreclosure. If you are facing a choice, pay your mortgage, not your credit cards. You can handle unsecured debt later. They can't take anything from you, and they're always negotiable for a small dividend on the dollar.

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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.