Creditors...

Which creditors should I try to settle with first??

My New's Years resolution for 2006 was to payoff all my old debt; I owed:
$1163 to American Express
$1373 to Chase Bank
$1806 to a hospital (NCO Financial was collecting on it)
$2200 to Discover Card
$6541 to BankOne (now Chase Bank)

I started with Discover about March 2005. They were good about actually dropping the interest and setup a $115/mo payment plan for 12 months. They said if I made the payments, they would waive about $200 in late fees/overlimits. They have been good and followed through. Now my balance is about $800 and I pay them about $50/month, but the minimum is $29.

Next I tackled NCO financial in Feb 06, and they settled at $1100 from $1800.

In July 06 the small Chase balance sold it to Resurgence Financial and they now claimed I owed $1800. I told them I would settle for $1200 but also I disuted the rest of that balance and requested validation. Now they are tyring to sue me without validating it. I have yet to file complaints and sue them back.

Last month I settle with Amer Express for $848 from the $1163 they claimed.

All I have left are the two Chases. By the end of the year, I'm hoping to settle for about $4000 out of the $6541 the big one claims owed. And as for the small one, I'll fight it out in court.


Anyway, to make a long story short and aswer the question, I pretty much worked in the order that they were trying to collect it. For a year I wasn't getting collection letters or calls. But then Discover found me at my new job so I started with them. NCO found me next, so I paid them. Amex didn't know where I work or live, but I just wanted to get them out of the way. And so on.

I have...
Capital One (charged off with NCO now) $1472.93
MCI with CBCS $706.59
First Premier Bank (charged off still with them) $358
Rewards 660 $311.69
Bank of America with Baltimore Recovery $961
Last, but not least
Account Recovery (old US Cellular acct) $199.61

The small ones (<$500) are least likely to go to court any time soon. They will send letters and make calls, but that's about it. So First Premier, Rewards and US Cellular I would save for last.

I've had a number of accounts with NCO over the years. All they seem to do is send letters as well. They may send you a settlement letter, that seems to be in their lineup. If it's a good number then go with it when they do.

I would work on Bank of America first. It doesn't seem like its charged off (they do send it out to collections sometimes before chargeoff, just to see if they can get anything before it gets to that point). Maybe you can settle something with them for around $650.

Well, if I settle with NCO with that hurt my credit anymore (it is already showing charge off)?? And with BOA, NCO had that and posted it on my credit report and it is showing derogatory. Now it went to Baltimore Recovery, and they are willing to take $25 month on it. Do I need to leave the NCO report on my credit or when will that come off since they don't have it anymore???

When I settled with NCO, I disputed it the next month and they took it off my report. I think they may figure they got paid, and it just wastes their time to have to keep validating credit disputes.

If Baltimore is going to take $25/month, that's pretty good. But you should make sure the interest and late fees are not still accumulating. If they are, they will take your $25 just to get something, and two years down the line you might have a huge balance. I guess I'm confused whether they are just collecting on it (and BOA still owns it), or did they purchase the debt from BOA?

You should also dispute the BOA account with NCO since they aren't involved in it any more. If they validate it, then request a copy of the original contract (they will not be able to give it to you since Baltimore has it now).

You should try to pay the small creditors off first. What I do is real simple. I pay off the small creditors off first and then I use the amount that I usually pay the creditor I paid off first and add on to the amount that I owe to the other creditor.

First example, let's say I actually pay off ACA Recovery for $75 per month. I take that $75 from the next month and add that to paying off United Cash Loans or send the extra money to T&C.

Alexandra has a good point. I guess I am assuming that you weren't paying anything on them, and that you just wanted to outright settle with them one at a time.

NO, I was looking for some way to pay each month...

Sorry, I misunderstood. How much can you afford overall to send your creditors each month? What I use a weighted formula to figure out what percentage of your debt each creditor has, and then multiply it times the amount you can afford to pay overall; then offer to send them that. Sounds confusing, but here.

Based on the list you gave about, the total sum of these creditors comes to $4009.82.

Now if you divide each balance into that total, you will get a percentage of your overall debt that each creditor holds:
Capital One (1472.93/4009.82) = 36.73 %
MCI (706.59/4009.82) = 17.62 %
1st Premier (358.00/4009.82) = 8.93 %
Rewards660 (311.69/4009.82) = 7.77 %
BOA (961.00/4009.82) = 23.97 %
USCellular (199.61/4009.82) = 4.98 %
-----------
= 100.00 %

Now take the amount you can afford to pay overall each month, and multiply it times the percents. Suppose you can afford to pay $300 total every month. Then:

Capital One (36.73 % x $300) = $110.19
MCI (17.62 % x $300) = $ 52.86
1st Premier (8.93 % x $300) = $ 26.79
Rewards660 (7.77 % x $300) = $ 23.31
BOA (23.97 % x $300) = $ 71.91
USCellular (4.98 % x $300) = $ 14.94
==========
$300.00

Write letters saying that you have performed an analysis of your current financial situation, and based on their balance in comparison to the other balances, this is what you can afford. Include the calculation, and they may think you know what you're talking about and take it.

Gee thanks Mike. I wish that you had your own debt company..How should I do this with NCO??

Sorry mike, forgot to login...

Mike--

The way you broke down the payment amount for each creditor really makes since I think I'm going to sit down and do the same with my credit cards

Brownsugar, if you have any questions about things like these, just ask Mike. He is great with helping out as much as possible.

Mike, I agree with natdust. You should have your own debt company. It's amazing how you figured that out. I'm definitely saving this in my favorites to refer to later on when I'm figuring out my debts. Thanks.

I'm flattered. It's all good on paper but the tricky part is getting them to agree to it.

Had I been as smart now as I was way back when I first got into credit card promlems, and used my own advice, maybe it would have saved some hassle. But my worst mistake was just to ignore it for a long, long time.

But I figure it like this: if you break it down, and try to pay them something reasonable, why shouldn't a company accept it? Something is better than nothing.

They could play hardball and say "pay it in full or we will sue you." But that wastes time and money, and you can get a payment plan in court anyway.

Or worse, in their head, they could sue you and you just might go bankrupt. That happens to them a lot, which is sometimes why they hold off on lawsuits.

You have to put them in a position of believing if they don't agree to your plan, they won't get paid. Period.