Need help negotiating and reducing Debt

Does your wife plan on starting work again soon, or was there a medical reason or something similar that she had to quit working because of? That might help determine if there needs to be a temporary solution or one more immediate.

My Wife had to quit her job to take care of our 6month old son who had to undergo surgery. She is not planning to go back to work for atleast another year. I would more tend towards a permenant solution.

You might want to look into a debt management program. One I can think of right now is Greenpath. They can get the interest reduced and work out a budget to pay your creditors.

It's free for the consultation. They have a good reputation and listing with the BBB.

Once you finish the plan, it doesn't hurt your credit. Since your credit is good right now, you should try and keep it that way. When you do a dmp program, it will report on your credit that you are in a program, but since payments are continued to be made, when you finish the program, it is removed. Therefore, no foul, no penalty.

Good luck.

What are their charges after initial free consultation? Also on the other hand if I dont care about my credit history whats the option?

Charges were $50 enrollment and up to $50/mo.

If you don't care about your credit history, debt settlement (if you have the money) or bankruptcy if you don't.

What are the steps for debt settlement? Do I just stop paying the bills and then see for offers that I get from creditors? If I do it for 4 months and not pay the bills I will have about $15k + I might have about 7k in Stocks which I will get out of.
So a total of about $22k. What would be the advisable steps?

I don't know much about settlement. Try the search box to the upper right. There have been many threads about settlement, and if you do go with a settlement company, PLEASE do your research, because there are many scam companies out there!

What you can do is stop paying till you start getting calls from the creditors and talk to them and explain whats going on and they might counter offer your a reduced amount to settle the debt

If I do that then can they file a lawsuit against me? How will it work? Any one here has any thoughts?

Your credit score is going to take a hit, making it hard to get approved for future loans if you decide to settle your debts. you will have to pay upfront money to the debt settlement program you do not have, that does not make any sense.

yes, your creditors can file law suits, they have a right to try to collect their money. when and who will file law suits, that is very difficult to predict.

Have you spoken to your creditors and expalined your hardship? let them know why you are having difficulties paying them.

Also, another avenue to explore is to negotiate settlements personally and avoid the extra fees you will have to pay a debt setlement company. based on your total debt you are looking at at aretainer fee of about 4 to 5 thousand dollars up front, preferably the first three months you are in a debt settlement program. Add to that about 20 to 25% commission on every settlement you reach. Do the math on 50% savings, plus the 4 or 5k in retainer fee.

Also, the amount of debt you have will not be settled, I guarantee you this, before one or two of your creditors especially Citi decides to file a lawsuit.

Please speak to an attorney about your situation, a debt settlement program is not the best option for you unless you know you will have about 50% of the total debt to settle all of your accounts anywhere between 24-36 months. Add to that debt settlement compnay fees, late fees and interest fees. I would be careful hooking up with a debt settlemetn company just to cah in on ht eup front fees on your total debt.

Best course of action, speak to attorney or settle your own debt.

Pretty much all of the credit card companies have hardship programs. Some may offer to put you in a program if you call them now and explain that your wife has lost her job. Some won't offer you a program until you start missing payments. The programs vary by creditor, but most last about six months to one year, they will reduce your interest rate to somewhere between 0% and 10%, and they will require you to pay 1% per month of your outstanding balance at the time you enter the program.

I'm not sure about the personal loan and the car loans, but it doesn't hurt to ask. I was able to get put on a hardship program for my mortgage, and it reduced my monthly payment by almost $600 for a period of three years.

If you decide to do debt settlement, as others have said, I would definitely consider doing it yourself. However, you do run the risk of lawsuits. One of our creditors started threatening a lawsuit at about 3 months past due and another one at about 4 months past due. We've now had to file BK, so I don't know whether they would have actually followed through with the lawsuits, or whether they were just threatening.

It looks like you have no assets but your income. These are just a couple options I can think of but they will completely wreck your credit and make it very difficult to get a home in the near future until you clean your credit but it will cost you the least amount of money.

The way I see it you are putting out 3k/4.3k monthly which is 70% of your money and I don't know if that even includes car and rent. If it doesn't include car and rent then that is a huge percentage going to unsecure debt. I think you have 2 options that you might be forced into even if you don't like them.

Option one is to bankrupt it which I rarely recomend. I am not a big fan of BK and the new laws make it worse.

Option two is quit paying it and stash that 3K/month in a shoe box. As you build money start trying to settle with the lower amounts first. I would always offer them 50% of the balance you had due at default. Don't include the BS fees in the offer. If one starts to file a suit then bump them to the top of the list if you can. If it is a large amount of money like a 20k one then you may have no choice but to eat a judgment. The kicker is if any of them get a judgment then the worst they can do is garnish up to 25% of your take home pay which is way way less than that 70% figure. Basically this option will free up your money so you at least have some breathing room to live and work on settlements.

You are going to have to start really concentrating on a strict budget especially since you lost an income. You need to elminate any monthly bills possible. I would consider things like eliminating a car and or downsizing, getting rid of cell phones, cable and other monthly bills that are more luxuries.

Can you please explain me this : " The kicker is if any of them get a judgment then the worst they can do is garnish up to 25% of your take home pay which is way way less than that 70% figure "

If one of your creditors does sue you and does win and get a judgment against you, then they can use that judgment to get a garnishment of your wages. However, the maximum allowable garnishment if 25% of your disposable income (take home pay). I think what Dollars was saying is that the 25% of your take home pay would end up being less than the total amount you are now paying to your creditors, so you would still come out money ahead.

Maximum garnishment.. is it 25% every month or 25% of the annual salary ? On the other hand I have 2 different chase cards.. would there be 2 different lawsuits or one? If they offer me settlement then would it be on the 16 k I owe or I will have to negotiate for the 12k and the 4k seperately?

Appreciate your feedback!

Maximum garnishment is 25% of your disposable earnings (usually your take home pay) each pay period. That is the amount that would be deducted from each paycheck. Even if there were two (or more) lawsuits, 25% is the maximum that they could deduct per pay period. Whoever was not the first creditor to file a suit would have to wait in line behind the first creditor before they would be able to garnish your wages. (It's not 25% per creditor; it's 25% TOTAL.)

I'm not sure if Chase would lump the two cards together if they decided to file suit, or whether you would be able to negotiate them together. Maybe someone else has some experience with this?

If I am successful in negotiating what does that account show up on my credit history. Any thing that I can negotiate with the creditors to show a particular thing on my Credt history?
Which is the easiest CC co. that can be negotiated.. I am thinking to startingwith that one first. How are US Bank and Amex ... any experiences to share?
Thanks

Also, Will there be a situation where I would have to goto Jail ? Just curious

I dont think you would go to jail. The worst situation would be 25% granishment. Since these are unsecured loans the creditors took a risk when they lent you so much money.

As far as negotiating you can negotiate any thing, But I personally feel that the steps you take is stop paying for 3-4 months and then look for what offers you get when you make one and be prepared with the settlement amount. I am not sure which is the easiest CC to neogtiate with.. they are all a pain :)

Sorry to get back so late but I was gone over the weekend.



Others have covered it but what I meant is the most you could have taken by law per pay check via garnishment is 25% and that includes all of your creditors combined. So if one sues and successfully garnishes 25% then the rest are out of luck until the first one is paid off. Basically you could default on everything and just save money to settle with the ones that try to get judgments 1-5 years from now and the rest just run out from the SOL. This will destroy your credit but with your wife not working now your situation is about to explode anyway. According to your figures you are paying out 70% which in my opinion you will not be able to sustain on an annual income of 65k especially if it does not include your rent and car payment. You said you were paying 3k/4300 to debt which is 70%. That leaves you with $1300 to pay for food, shelter, car and utilities which will be very difficult. That is why I suggested either defaulting or bankruptcy.

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I will about $10000 in 401K after taxes and penalties. If I withdraw those can I just call the lower balance creditors without missing a payment and get those taken care of ? Cards like Chase sony - $4k , Citi Prof -$3k and Citi PP- $6k, per your suggestion can offer $2k, $1.5k and $3k and I would have some balance provided the offers are accepted. which I can start dealing with others OR I can target American express that I owe 19k and has 19.99 apr and deal with them first. What do you suggest?

As I was thinking when I call customer service is there a particular department that I talk to or is there a settlement department ?

I doubt that you will be successful at negotiating a settlement for less than your full balance unless your payments are delinquent. The creditors figure that if you are managing to stay current with your payments, then why should they settle for less money.

Your creditors are not going to settle unless you default on them. To get them to settle for 50% you will have to be at least 3 months late and even then it may not be late enough. Another option is to call them and apply for their hardship programs but all those do for you is lower the interest rate for a period of time up to 1 year usually. They won't lower your balance at all and unless they give you a 0% rate which is pretty unlikely then your balance will remain constant or continue to grow even while on hardship. Basically if you are paying like a good little debtor then they won't budge much.

I think what this comes down to is how important is your credit score to you. As a warning you are about to get a very reserved opinion about our credit industry that probably even some of the debt fighters here may not agree with. In my opinion the entire credit industry including our banks suck. They can take most of their credit and shove it up their behinds. The only kind of credit I find useful is low interest mortgages and maybe student loans. I think it is unethical and should be illegal to loan money at rates over 7% + prime or roughly 13% in todays lending economy and don't even get me started on all the BS fees they have conjured up. The rest of it is crap and your best bet is to just stay away from it.

The dilema I see is you don't own a home. If you wreck your credit then it will take some time to repair before you can buy a home conventionally. So here is the important question. How long before you intend on buying a home? If it is over 5 years then you can wreck your credit and repair it and be back on track before that time. If it is in the next 2 years then you will need to float along on minimums and do your best to pay down the rest which might be very difficult given the debt to income ratio. I wouldn't recommend buying a home with your debt burden anyway though. If you do then something will inevedibly go wrong in the house and you won't have the money to fix it. In my first year of home ownership my AC blew up which cost 8k to replace and my dishwasher broke which cost $600 to replace. Luckily I had a home waranty which covered most of that. In my second year I had 3 fresh water leaks in my piping to the second floor which destroyed my first floor ceiling. It cost 2.5k to fix everything with no help.

The reason I brought up your credit is because I think one of the biggest mistakes a person can make is to either borrow from their 401k or cash it in early. I would personally rather wreck my credit than erode my retirment savings. Basically if your credit is going to be shot anyway then there is no reason to give up your retirement over it. It might be different if you could settle all the debt but 2/3 will be left so really whats the point. I also don't reccomend shifting unsecured debt to your home via second mortgages either even though that isn't your case.

If you can't make the minimums and still function then I would let everything default. I would then stockpile all the extra money you can come across in a shoebox and start making settlement offers. I would start with the lowest amount owed first and offer them 50%. I would work my way up the list until one accepts and then start the process over as you save up more money. I think any path you decide to take will be difficult and I wish you the best of luck in whatever you decide.

I am not planning to buy a house for atleast 3-4 more years if I do I would on my wifes name who has a clean credit history and hopefully she has a stable job for atleast 2 years by then.
And I am not going to cash out my 401K. Please keep the suggestions coming. I still need some feedback on which credit cards cos. are easy to deal with as far as debt settlement as compared to others.

My wife and I did the same thing except we used my credit. Her credit was shot so we left her off the mortgage and the deed. I received the loan without any problems.

Unfortunately she kind of screwed me over and took out some loans in my name about 1.5 years ago that I did not know about. Most of those have since been paid back after me ripping her pretty good but two of them are still in default. I will eventually settle with the last 2 when I have the cash but money is tight right now because she has been in and out of work.

I really don't know who is necessairyly easier to settle with. Part of it depends on which schlep you get on the phone. If you don't like their attitude then hang up and call back and you will get a completely different schlep. I would just set a percentage you are willing to settle for and start offering that percentage to each one. I would probably offer 30% and negotiate to 50% or less. When one bites then get your letter outlining the agreement and send them a certified bank check. If you call one and they start acting abusive tell them you got other creditors to call and make offers to so you will get back to them in 6 months once you save up more cash and hang up.

You should deffintely read Nascardevils post about settling debt. It is a great read and will help you a lot if you are going to be a do it yourself type like me. I think the debt settlement companies charge too much for what they do and you can easily do what they do for free. Basically the only reason to pay them is if you just want someone else to field the calls but if you can put up with some harrassment then it will be much cheaper for you to settle on your own.

When you called was there a specific no. that you call? or just use any cust service no.?

Here is a link to Nascar's post about debt settlement:

http://www.debtconsolidationcare.com/settlement/how-to-negotiate.html

You can just call the customer service number when the time comes and ask for the collections department. If it has to go to a different department from there, they'll transfer you or give you the number to call.

I always just call whatever 800 number I have laying around and let them route me around for a while. Eventually you will get someone that was hired to settle for the company.

The key is to relax and don't worry to much about it. Time is on your side in these cases. It will take them months to years before most of them sue and some may never sue which will run out the SOL. The collectors will try to make it sound like it is really urgent but if you don't get the deal you want after a couple minutes of talking live on the phone with one then tell them you will have to move on and make the same offer to your other creditors. After that hang up and call them back in a few weeks money permitting.

Be prepared to receive a ton of collection calls at all the numbers they have on file especially once it leaves the OC. If the CA calls your work then I would recommend you simply tell them they are not allowed to contact you at work. Once you put them on verbal notice it is a 1 if they continue to call at work. I personally keep my home phone and cell phone number private because I don't like receiving any kind of calls including sales and collections. I think maybe 3 people know my home number which I barley use and about 50 know my cell number. I never give either out for business transactions like to credit cards, banks and so on. I figure my phone number is none of their business. If they require one then I give them one that I don't use anymore.

Get familiar with the FDCPA, the FCRA, state collection laws, state SOL, the DV letter and the C&D letter. If you receive a dunning letter you will want to DV that collector right away. Since all of these are fresh debt then the first CA that calls will be legit but it will keep them on their toes and let them know you are not afraid to deal with them.

If they get really abusive then you can threaten and or send a limited Cease Comm allowing only contact via mail but this makes it harder to negotiate and makes it more likely you will get sued. That is what I did to the two I still owe because of what my wife did. I sent them a C&D and told them if they could come up with a contract that was signed by me then I would negotiate knowing full well that no contract exists. They told me they did not have to produce a contract to validate the debt and I told them that they could either produce one now or I would request it during discovery phase but one way or another I will get a copy of the contract and if they can't produce one then they will lose. I suspect I will eventually either get sued or the SOL will run out. It has been at least 2 years and I have heard nothing out of one and very little out of the second.

A friend of mine was listening to radio ( I believe some money talk show ) where a person like us got his debt settles in 5-6 months. the key to his deal was that he was from Norway and he said that he was going to leave the country and he wanted to get it settled asap. The creditors knew that they had no chance to gain any kind of money on unsecured loans so they had to be aggressive and get something out of him real soon. They also threatened him to not allow him leave the country by law enforcement and he maintained the stand that he didnt care. I just wanted to share this tactic and see what are your thoughts on it. Especially me not being an American one can easily make out from my accent and name, I am wondering if this would fly.

Also, is there anything that really would the creditors do to prevent one from leaving the country?

Moving to another country permanently is a pretty strong bargaining chip in your favor but it you ever came back you might find some nice judgments waiting for you if you did not settle prior to leaving. As long as no criminal charges are involved then a creditor would not be able to prevent a person from leaving the country. A civil suit, judgments and liens can't even keep a person from leaving the country. It was an empty threat.

Virtualdeal,

You sound like a smart person, is there any way your wife can work at least part time and help take some of the stress off? Remember it will take money to settle accounts, consolidate, etc.. so getting your wife back to work is essential.

Before you drive yourself crazy with all the possibilities, have you had a sit down with a lawyer, accountant or financial advisor that can clear things up a little bit for you?

All the advise you get on this forum is nice and all, but remember most of us were in debt once and we are only speaking from our experiences which are totally different than yours. Seek professional help and do not sign on with any program that will require you to pay them money tohelp you out, look for non profit help in your state.

Amsterdam, I dont know if it was a compliment or a comment about me being smart. But looking at my debt I dont think I have done a good job managing it at all. As far as my wife working, it's not going to be possible for atleast 6-9 months as she has to take care of the child. I can manage to save atleast 20k in the next 6months and get ready for negotiations while they start, after about 3 months.

If you can save 20K in six months, that gives you a good start on having funds to negotiate with. The method that Dollars outlined seems like a good plan for you. Good luck!!

Virtualdeal, are you sure Pentagon Federal is not a federal institution. I have not heard any one settled debt with Penfed. I would make sure of that.

I am not sure if that is federal institution. But I am positive that its just like any other bank just that it has the name pentagon federal. Any ideas anyone?

Also, make me think is it difficult to negotitate with credit unions as compared to cc companies?

PenFed is a CU no affiliation with the US gov't but all banks are "Federal Institutions"

If one of the CC sues me, do you know what are the lawyer fees in general ? Can I self represent myself and accept the decision of 25% garnishment? I am not really sure about the process of what happens if creditors sue.. .can some one please explain!

At this stage in the game it doesn't hurt to have information on the suit, summons and so forth but I wouldn't worry about it too much. You have quite a bit of time before you get to that point. It will take a year of no payment before you get sued at a minimum probably but often times it is much longer. I am 2 years out on the debt my wife created and I have heard very little from those companies. They were for 5K and 7K.

You can represent yourself. I don't know how much a lawyer would charge for representation.

They will send a summons listing their complaints that you can respond too. You will want to dispute the amount and then require them to give an itemization of each item that contributes to the amount they are filing for. I would also require every item that is on the DV letter be satisfied. At that point you can dispute all fees, penalties and interest after the charge off amount. You could also try to dispute penalties and interest prior to charge off but I don't think you will get it removed. The goal is to get the judgment amount as low as possible because it will probably be double the amount you actually benefited from the credit card because of fees, penalties and interest. I would not accept a default garnishment. I would just let them get the judgment and then try to get either a repayment plan or let the judgment sit until they go back to court and file for garnishment. You can always make settlement offers through the entire process including after that get a judgment. I would start at 30% and try to not go over 50% of the charged off amount - the BS fees. If they get a judgment then you will probably have to go over 50% though especially since you have an income they can garnish. If it is a second judgment then that card may be more willing to settle if you are already being garnished at 25%.

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Late fees, over limit fees, etc. You might want to note what all of your balances are BEFORE default. That way you will have a starting point that includes only what you owe before all of the junk fees start getting added.

However, a point to keep in mind. . . if a creditor does sue you and win, all of their fees plus attorney fees and court costs will likely be included in the judgement against you.

Also, remember that when you default, your interest rates will go up and those fees will therefore increase also.

I have not made payments for USbank and Amex. I have been getting calls from USbank but did not answer but Amex i got the first call today and am wondering if I am doing the right thing by not answering. If I answer what do I say. Do I say I intend to settle debt or just tell them my situation and let them tell me an option...
Thanks

you need to be open with your creditors as much as possible. I called Amex who I owe $64k and they stopped calling for 1 week....give them your story.....its better than avoiding. They don't know you from Adam.....give it a try....honesty works especially when you don't have the money.

I wouldn't tell them that you intend to settle your debt. I would just tell them that you are going through a hardship right now and you do intend to pay your bills, but right now you don't have enough money.

If they think you could pay them but you aren't, they may be more likely to initiate legal action. Once your debt gets far enough past due, they will probably start offering settlements. If they don't offer, then when it gets closer to charge off, you can tell them that you have some limited funds to settle your accounts, and you are going to give first priority to those creditors who are most willing to work with you.

I missed a payment on my sony chase card and I also had Chase platinum with $12k balance on it and $4k available credit. Now when I log in to chase account I only see the sony card the platinum card is not on the account at all.
Just curious what might have happened?

That's a good question! I never had that happen. Even when I canceled one of my Chase cards, they said that it would still show in my online account unless I changed it in my profile to not show. And even after I was late, I could still view my cards.

maybe try to re-register the account and see what happens

First of all... get on the phone with your creditors and try to get them to lower your interest rate. This will save you a lot of money and reduce your payments. Especially if the finacial hardship is temporary. If you need help call me (Link & phone number removed by Shazzers as solicitations are against TOS rules).

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Just wanted to update:
I have been getting calls from all the collection departments of various cos. and I have been telling them about my situation. I have missed 2 payments on most of the card and each one has offered me a hardship program, but havent got any offers to settle debt yet. I keep asking if there are any other options but always get pointed to debt consilodation or the hardhsip program.

Should I initiate debt settlement amount or wait for them to ask me about it? Or send them a letter and offer an amount ?

Thank you!

I would wait awhile longer. I don't think you will start getting settlement offers until you are at least 90 days past due, and maybe closer to 180 days. If you make the offers this soon, I think they will probably be rejected because, at this point, the credit card companies are still hoping that you will get back on your feet and start paying them.