Settle before or after charge-off?

Hi!
Settling will have a negative effect on your credit score regardless of when you do it - before or after charge off. I would suspect that waiting until after charge off looks a bit worse on your credit report, but regardless your credit will take a hit no matter what if you settle.

That being said, no question it is more cost effective to settle with FIA before it goes to charge off. If you wait until your accounts go to an outside collection agency, you will probably have to fight for a 50% settlement. Bank of America typically will settle at 20% of the total balance (they will combine both accounts) if you settle when the debt is at least 120-150 days past due.

If I were you I would call them back after you hit the 120 day mark. Explain that the only money you can come up with is the money you will get from your tax refund. If they are convinced that this is all that you really have, they will most likely get as close as they can to that number. I settled a $40K debt with them last month (Feb) for 17%!!! My account (actually it was 2 accounts but they combined them) was around 120 days past due. I kept in constant communication with them from the month I stopped paying them until the day we settled. It can be done!

I too was concerned about my credit when I started all of this but my credit wasn't exactly stellar to begin with due to my debt to income ratio being out of whack. When I thought hard enough about what matters more to me....a good credit score or being free of debt....well the answer was a no brainer. When all of this is over for me I will look into credit repair, which I know will happen it just might take a few years.

Good luck to you!

How did you get a 17% settlement offer?? BofA is playing hardball with me. They seem to think I have more than I do. I have nothing. I have called them again. Now the 40% offer somehow changed to 90% even!! I just don't know what to do. I don't want to file for bankruptcy.

I have heard that some people have had better luck towards the end of the month...they're trying to make their numbers...give a call next week...around the 25th.

You mention that these accounts are about to be charged off. Are you certain of that? Exactly how past due are you? BofA will hold on to your account until it is 180 days past due. If you wait until you are around the 150 days past due you will have better results with them. My account(s) were around the 120 days past due mark when I received the 17% settlement offer. The only thing I can tell you that I did was I kept in constant conversation with them from day one, and I am not using any sort of settlement company. I waited for them to bring up the subject of settlement and when they did I jumped on it. They were throwing numbers like 35% around at first, and I told them I would have to use tax refund money (true) and possibly borrow the rest (also true) and get back to them. When I called them back I offered a set dollar amount (which happened to be 17%) and basically begged them to accept it. They then said they would have to review my account and get back to me; they did, and said yes.
Oh and yes it was closer to the end of the month when it all happened.
Good luck!

Thanks for the replies. I have other cards, but 3 are with BofA. Two were both last paid in mid December, the other was paid in January last. I pulled my credit report last week and they are showing as 120 days past due. They sent me the notice saying they are about to be charged off, so am just going by that mostly.

I would really like to get these cleared first since they reflect a large portion of my debt. I'll try the end of the month. Should I be waiting another month? I don't have enough saved anyhow. I was thinking about trying my other accounts and coming back to this, but I really want the big BofA over with as soon as possible.

The others (between hubby and I) are Citibank (on insurance plan though, so no payment due while unemployed), Chase, Discover, GE Money. Want to tackle GE Money and Discover next.

I have 3 accounts that total around 100k. They first started to offer settlement to me around the 3 to 4 month mark and the first offer was 35%. Held out, didn't have that kind of money to pay. They offered structured repayment, lower interest etc. I didn't bite. Finally in Feb, I offered 15 K, today I received an offer of 15k payable over 4 monthly installments. These I am considering...