Please help, new to debt settlements!

This is my story. I was a customer for Discover Card. I maxed out my cc 3 years ago @ around 6300. I was only making mostly minimum payments to pay the card when I realized I wasn't making much of a dent on the card. I didn't understand how finance charges worked back then and charges was about 23%. In 2009 I cancelled the card completely and I was put in a hardship program and I was catching up. I got down to about 5000. The last 2 payments I made was on March and April of 2011 and I noticed that my payments weren't making a dent so I called Discover to find out what was going on.
They told me that the program has expired and that I was being charged with same finance charges that I had in the beginning. I was confused and I told them that I thought this was a permanent program until the entire balanced was paid. They told me that the program was only for 12 months and this was explained to me(which they never did). So I completely stop paying.
During the time of Oct 08(when I maxed out my card) to April 11 I have already paid Discover about 4200 through monthly payments and now my balance is now over 6500. How does this happen?
For the past 8 months they have tried to contact me but I only spoken to them twice. I offered a settlement for about 2000 but they did not accept it and I got nowhere. The second time I finally spoke to them was on Dec,11 and they told me they would accept 4500 and I said that was too high and I countered with 2000 again and they said no(in truth I would have been willing to pay 3000 but they never lowered their settlement). They told me that this was the last month that they would try to help me and then it would go to collections. They tried to get me into another payment plan where I would just pay about $80 a month.
The representative asked if I could afford $80 a month but I got upset and I hanged up the phone. I should have said no and continue to negotiate but I didn't know what else to do.
Now this is the situation now, I received a letter from a CA. It is from Richard Boudreau & Associates. The letter is stating that I have 30 days to dispute the validity of the debt or the office will assume the debt is valid. I'm not sure if I want to deal with this company as I have already read some negative experiences dealing with some of people of this office.
Now here are the questions that I have.
How did people successfully settled with Discover Card with at least 50% because that was I was trying to do but I had no luck. Can I still contact Discover to renegotiate with a settlement because I will have some money soon to pay off this debt? Is there a way to pay off this debt without having to deal with RJB and Associates?
Also I live in CT and the letter I got came from New Hampshire. What happens if I don't contact them at all due to the negative feedback from this office.
I appreciate any advise that any one can give. I have been visiting this site for about a year now before I have decided to join as this place has a lot of helpful information. Thank you.

You are really in a complicated situation. I don’t have any idea regarding this matter. Let’s see what the other forum experts say.

Hi Nox,

The detail that follows is as much for you as it is for others who come upon this thread who are dealing with Discover.

Discover, like other banks, have policies and procedures in place to manage accounts that go delinquent, or when offering a lower monthly payment to its account holders.

These operational policies are applied differently to each account. Discover is more nuanced in how they treat individual accounts than many other banks.

During the time frame you agreed to a smaller payment, discover made temp hardship repayment plans available in 6 and 12 month windows. Long term reduced payment plans with Discover were available pretty much exclusively through a debt management plan sponsored by a credit counseling company.

Settlement opportunities direct with Discover prior to charge off were typically not achieved for less than 40%. Not every account qualified for that reduction. Unseasoned accounts may not qualify for settlement at all.

Holding firm to the dollar amount you proffered was never likely to work. Had you been more aware of the dollar target that you were most likely to succeed with, and given the info you provided, you would have been successful settling prior to the account charging off. The benefits of which would have been settling for less than you are most likely to now (there are some limited exceptions where Discover accounts are settled for less than 40% with an outside agency - they are nuanced as well), and you would have likely been able to avoid the charge off - R9 - being reported on your credit which typically allows someone in your position to more rapidly return to higher credit scores than someone with charge offs on the report.

A couple months ago Discover started offering accounts that qualify with internal criteria a 50% balance reduction with payments amortized over multiple years. This may/may not have been what was being offered to you with the 80 dollar payment. Sometimes they just offer you a low payment to keep the account from charging off and this keeps them from having to recognize the loss for accounting purposes and buys you a month. Strategically, buying a month can work for certain people in certain situations - like this time of year when you may not have enough to settle but getting a tax refund in a couple weeks, an then settle in full avoiding a charge off.

The long term payment along with the 50% reduction is likely a pilot. It may stick around as a loss mitigation tool, it may not. It will not be available to all account holders regardless.

Discover tends to want one lump sum payment when settling pre charge off, where larger national banks offer pre charge off balance reduction settlements with 3 month terms for payment. That is what is happening now - not what will always be happening.

The current assignee collecting on your Discover account is a collection law firm. Given state proximity, they may have been authorized to file suit in their collection efforts. To confirm my concern, you should find out if they have offices and operations in your state. They have sent you a standard dunning letter. I would not personally recommend sending a dispute requesting validation, though it is your right.

Your questions:
"Can I still contact Discover to renegotiate with a settlement because I will have some money soon to pay off this debt?"
Yes, you can contact Discover. They have a contract with RJBA and they will tell you to contact RJBA as a result.
"Is there a way to pay off this debt without having to deal with RJB and Associates?"
While RJBA is contracted - no. If it is later placed with a different agency/firm then you would be able to deal with them.

"What happens if I don't contact them at all due to the negative feedback from this office?"
They will continue collection efforts they are contracted to perform which may include suing you, or their contract will run through its timeline and the account will shortly after be placed with a different collector. Your determination to not contact them due to things you have read on the internet is not all that productive a position to take given the circumstances.

You may be able to settle with RJBA with payment terms. Discover accounts placed with Zwicker and Assoc, as an example, have been able to settle for 50-ish% with 12 month terms recently. As mentioned above though, this stuff changes due to bank policy tweaks and/or how your account is tagged. Your efforts may not yield this result.

Nox - I went through the above timelines not to rub you the wrong way, but to make a point to future readers of this thread. Sign up for an account on this site immediately and start posting right away. There are knowledgeable regulars here who can respond with helpful feedback. There are also debt and credit career professionals that post great stuff here from time to time. They cannot get specific to your situation and ask questions of you in order to drill down and give helpful tips unless readers post.

Best of Success in your efforts!

Thank you @ Someone for responding. I'm trying to understand the explanation your giving but I'm confused about what you said. I would like to ask about some of the things that you said.

You said:
"Had you been more aware of the dollar target that you were most likely to succeed with, and given the info you provided, you would have been successful settling prior to the account charging off." How could I have known about the dollar target. How would I get that information so I could have been better prepared to settle?

In your next paragraph, it sounded like it would have been a good idea to accept the new payment program that Discover was offering me. I didn't accept it because I saw it as a program that was temporary and that I will continue to pay Discover more money than what I actually owe. And after doing this for three years I got tired of doing that.

You also suggested that I should contact RJBA. Should I respond to them via mail or should I call? I have been reading some very negative experiences with people dealing with this office(being rude to people, very quick to threaten to sue). I am willing to give the benefit of the doubt but if they once treat me negatively I will completely stop contacting and just respond to them via mail only.

Thank you again for responding.

Hi Nox,

Targeting a dollar amount or percentage for settlement is pretty straight forward for most accounts though the amount can be a moving target depending on when an account is settled, how delinquent, who the account is with (OC, agency, purchaser, attorney), account behavior prior to default (ton of charges or cash advances prior to default, how new the account.
By creating an account with this site and posting your situation as soon as you know you can get valued feedback, you would have received some from other members about their results with Discover and how they were timed, mods would comment, and a few pros who do drive by posting would have caught one of your threads and weighed in. This would increase the odds that you would have been able to target the 40-ish% that is generally the lower end settlement percentage with Discover prior to charge off.
That's just a long winded answer to your question of how would I get that information. The short answer is - you ask for it.

The lower payment option comment:
If the 80.00 payment was just going to buy you a month to avoid the charge off that would have allowed more time to rustle up needed money to fund a feasible settlement figure - it is a good strategy. If it just blows 80 bucks - not so much....

What you describe about paying Discover more than what you owe as a balance is the cost of carrying credit balances. That's what the issuers are in business to do. Please know I am not being antagonistic when saying this; whether we tire of paying more than what we owe and decide to take action for our financial future is just the decision that has action steps taken on our end. What happens from there is just business for the creditors. Not paying makes us a statistic and subject to the non performing asset policy and procedures of the creditors. Banks SOP for recovery efforts are predictable given a set of facts. How we manage and react to that in a manner consistent with our financial ability to fund settlements, with which creditors, and in what order, is not hinged on emotion, its about maximizing the math we have to work with (money and budget to settle) and how that stacks up to the math of the creditor (SOP for what they will accept and when). Being tired of it affects us all, I get that. It just does not change the primary function of settlement which is math and timing.

If I were you I would call RJBA if you want to attempt settlement. I do know that it is difficult to handle rudeness if that is what they display. Being abrupt and blunt is just how collectors roll a lot of the time. There are a mess of comments all over the internet about virtually any established collection firm, including this site. I would encourage you to ignore singular comments, and focus on the ones that have follow through where the poster continued contributing and tells a story of what happened next, and then next, and finally how they resolved the account - if at all.

Nox - settling debts is a confrontational effort. Less so than in the past due to the economic down turn, but non confrontational debt relief is primarily attributed to credit counseling and debt management plans.

Given the information you shared, I would be prepared to settle between 48 and 60% in order to put an end to the account. You can certainly hold out to see if the account cycles out to a different collector, but you do risk being sued the longer the account remains unpaid.

Are there multiple addresses on the letter head you received from RJBA? You mentioned they are in NH, but does the letter have multiple addresses - one of them being in CT?

Richard Boudreau and Assoc. is a collection attorney acting as a collection agency. Unless he is licenced in your state, he cannot threaten or attempt legal action. However he may refer your account to an attorney in your state. Discover is quite aggressive and does rountinely sue.

You will need to call to negotiate a payment plan...they will not do it thru the mail. Same goes for a settlement.

I received a summons today. And it's from RJB & Associates/Discover. They did have a office in Danbury, CT which I was not aware of. It says that I have to file a form called an Appearance with the NL, CT court and I do not have to go to yet unless I received a separate notice to come to court. I have never been sued for anything before and I don't know what to do.
I admit I didn't call yet because I was too afraid to speak to them and I didn't have any money yet. But I was going to call them this week as I did get some money recently. What can I do now? Can I call RJB and talk about making a settlement or do I have to go through court process.

For the record, there's another option: move the court to compel JAMS arbitration. It will take a ton of reading and mental preparation, but will probably get you the cheapest settlement % of all the other options.

What is JAMS arbitration and how can I use this information to offer a settlement.
Thank you.

This is an option with very little hand-holding and whole days of searching & reading. Google is your friend.

Ok. I've looked up some info on JAMS arbitration. Do I need to request arbitration during court proceedings or this is something that I do before it goes to court?

It varies depending on your state. But generally, after they serve you with a lawsuit, you file:
1. An Answer with the court which includes arbitration as an affirmative defense.
2. You initiate arbitration with JAMS and serve the plaintiff a notice of election to arbitrate.
3. You file with the court a motion to compel arbitration. There are internet forums out there that focus almost exclusively on credit card arbitration.

Get your copy credit card agreement ready before anything else, and carefully review the arbitration clause.