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Is paying a settlement by bank wire safe?

Date: Mon, 02/22/2010 - 08:28

Submitted by anonymous
on Mon, 02/22/2010 - 08:28

Posts: 202330 Credits: [Donate]

Total Replies: 31


Hello,

I'm about to settle an account with a CA and they are asking for a bank wire. Is this safe?? I mean, If something happens down the road like if the acct. gets sold again, will I be protected?

Please let me know.

Thanks


Quote:

Originally Posted by Unregistered
Hello,

I'm about to settle an account with a CA and they are asking for a bank wire. Is this safe?? I mean, If something happens down the road like if the acct. gets sold again, will I be protected?

Please let me know.

Thanks

You should get a settlement acceptance letter first. Make sure the letter contains the account number, the current balance, the original creditors name, the amount accepted for settlement in full for the above referenced account and the date the settlement payment must be received by. Make sure that the letter also states that the creditor will update your credit reports (experian, equifax and transunion) to reflect that the account has been satisfied. IF YOU don't have a letter drafted by the company and accepted by both you and them, the money you send may be applied only as a payment and the remaining balance will still be owed.

Keep a copy of the letter for your records so if in the future, a collection company does attempt to collect, you can produce it.

If the forgiveness of the debt is more than $600, you can expect to receive a 1099c - and you may owe taxes on the forgiven debt. However, if you owe more than you are worth at the time of settlement, you most likely will not have to pay the tax (speak to an accountant).

As for a wire - a "one time" authorized wire to make the payment shouldn't be an issue. If you are required as part of the settlement to make several payments you can either call up each time a payment is due and authorized a "one time" wire authorization or send them out certified funds (make sure you send it by registered mail). Never authorize an ongoing ACH.

Hope this helps. Let me know if you have any other questions or issues. You can always try and get the creditor to remove the negative items on your reports (just get it in writing) but most often they won't. They should report that the account is closed, "paid for less than owed" "paid/settled", etc.


lrhall41

Submitted by nole on Mon, 02/22/2010 - 08:53

( Posts: 58 | Credits: )


My pleasure. Just make sure that when you settle, you can deliver on your end. Don't be rushed or pushed into anything that you can not perform on. If you are making payments towards a settlement and you miss one, all bets are off. They can keep the money and apply it towards the original balance and you would be back to square one again, etc. You can now use that settlement to help you settle the other accounts (if it was for a good amount) ;)


lrhall41

Submitted by nole on Mon, 02/22/2010 - 09:15

( Posts: 58 | Credits: )


My first time too!
When Citibank and I agree on a amount,
I shall ask for;
In Writing
A settlement acceptance letter,
Stating my account number,
Current balance, All over limit and late fees removed?
Stating they will contact, my credit report (experian, equifax and transunion) to reflect that the account has been satisfied/settle.
Is this all?


lrhall41

Submitted by on Mon, 02/22/2010 - 13:12

( Posts: | Credits: )


All over limit and late fees removed? - well, if you are settling the account for a flat amount, this wouldn't apply. When you do negotiate start off with the total that was originally owed (before you became delinquent and from your last payment) - not at the figure they want (all the late and other junk fees tacked on) - be polite and nice.

Yes, you want them to agree to update your credit reports with the credit reporting agencies reflecting that the account has been settled/closed - you can try to have the lates removed but most likely that will not happen. Once the account is settled and closed you can start working on rebuilding your credit.

Original creditor name
account number
current balance
acceptable settlement amount - due date -

Get everything in writing and never make a payment or agree to make a payment until they generate the letter.


lrhall41

Submitted by nole on Mon, 02/22/2010 - 13:50

( Posts: 58 | Credits: )


Quote:

Originally Posted by nole
All over limit and late fees removed? - well, if you are settling the account for a flat amount, this wouldn't apply. When you do negotiate start off with the total that was originally owed (before you became delinquent and from your last payment) - not at the figure they want (all the late and other junk fees tacked on) - be polite and nice.

Yes, you want them to agree to update your credit reports with the credit reporting agencies reflecting that the account has been settled/closed - you can try to have the lates removed but most likely that will not happen. Once the account is settled and closed you can start working on rebuilding your credit.

Original creditor name
account number
current balance
acceptable settlement amount - due date -

Get everything in writing and never make a payment or agree to make a payment until they generate the letter.

Great advise Nole. Thank you. Chase wants an agreement over the phone, then a "pre-authorized" amount 10 days after the agreement to be taken directly out of bank account AND then 93 days to pay the entire amount off<

lrhall41

Submitted by Jenf on Wed, 02/24/2010 - 06:57

( Posts: 7 | Credits: )


Quote:

Originally Posted by Jenf
Great advise Nole. Thank you. Chase wants an agreement over the phone, then a "pre-authorized" amount 10 days after the agreement to be taken directly out of bank account AND then 93 days to pay the entire amount off<

Nothing is really the "norm" - it depends on your conversation(s) with them, the age of the account, who you are talking with at the time, your situation, etc. As long as you get it in writing first and you can keep up your end of the deal, it's not unheard of. I'm sorry, what was the balance owed to Chase again and what are they willing to settle for - then I'll give you my opinion....


lrhall41

Submitted by nole on Fri, 02/26/2010 - 04:35

( Posts: 58 | Credits: )


We owe $14k, this is our business account. They haven't agreed to any amount, I want to start low, 30% and see where we go from there. I continue to read all the post and am very thankful I have come across this website. I do have one other question that is puzzling me. I know to get the agreement in writing AND have someone from the creditor sign it. What scares me is, how do we know if the person who signs the agreement is legiate and has the authority to do so? Should the agreement list the "original" amount owing? couldn't this be used later even if you do come to an agreement for less? In reference to your comment above, once in agreement is this faxed to them for their signature and then they return and you sign? and send back? Do you request the original from them or will a fax suffice?
I know, a lot of questions---but just trying to get everything in order before I proceed with them.
ON ANOTHER NOTE: for those of you working with Advanta, their internal collection department is called "ACT=Advanced Call Center Technologies", sneeky. I found this out when I called, Here's what they offered us 30% off of a $33k balance, but had to be paid within 30 days...ALSO a multi-plan for $13,157 paid in 6 months. They indicated $1100 had to be paid today or go to charge-off, but we haven't agreed to anything.


lrhall41

Submitted by Jenf on Fri, 02/26/2010 - 10:18

( Posts: 7 | Credits: )


Wire for settlement:

If you read a book put out by someone who successfully settled their accounts, don't think I can name him here, he says NO to a wire transfer if you are disclosing account numbers at any bank. There is no reason you cannot send overnight cashier's check. Don't do anything without settlement letter in hand.


lrhall41

Submitted by st8ca on Fri, 02/26/2010 - 11:15

( Posts: 45 | Credits: )


Quote:

Originally Posted by st8ca
Wire for settlement:

If you read a book put out by someone who successfully settled their accounts, don't think I can name him here, he says NO to a wire transfer if you are disclosing account numbers at any bank. There is no reason you cannot send overnight cashier's check. Don't do anything without settlement letter in hand.

Dont do anything without settlement letter in hand. Solid. No Wire transfer for a lump sum settlement - sending overnight cashier's check instead. Maybe. The logic behind that is if the "collector" is collecting on several accounts (that you may or may not know about yet) - and you happen to settle 1 with them, they now have the banking information, etc. They can't go back and take more money - a wire transfer is a one time shot that has to be authorized (or can be recurring if you authorized). IF you are dealing with the original creditor and it's the only account with them, I wouldn't worry about it. IF you have several outstanding debts and they are in collections, then sure, send them a payment overnight - registered or certified or trackable, etc.


lrhall41

Submitted by nole on Fri, 02/26/2010 - 11:44

( Posts: 58 | Credits: )


Quote:

Originally Posted by nole
Dont do anything without settlement letter in hand. Solid. No Wire transfer for a lump sum settlement - sending overnight cashier's check instead. Maybe. The logic behind that is if the "collector" is collecting on several accounts (that you may or may not know about yet) - and you happen to settle 1 with them, they now have the banking information, etc. They can't go back and take more money - a wire transfer is a one time shot that has to be authorized (or can be recurring if you authorized). IF you are dealing with the original creditor and it's the only account with them, I wouldn't worry about it. IF you have several outstanding debts and they are in collections, then sure, send them a payment overnight - registered or certified or trackable, etc.



nole, great tips! You really clarified some points for us rookies. Is there anything we should be careful in not disclosing to the creditor while in settlement discussions? I don't know what kind of questions they would ask, but what are some things we should not tell them... other than bank account information. Thanks


lrhall41

Submitted by tygger on Mon, 03/01/2010 - 12:04

( Posts: 42 | Credits: )


Quote:

Originally Posted by tygger
nole, great tips! You really clarified some points for us rookies. Is there anything we should be careful in not disclosing to the creditor while in settlement discussions? I don't know what kind of questions they would ask, but what are some things we should not tell them... other than bank account information. Thanks

First, let's understand the cycle: Here's a brief summary -

What happens when you stop paying your credit card bills? Plenty. After the first week or so that you are behind you will get a phone call and a letter in the mail. The phone call will be someone just calling to see if everything was ok and that maybe you overlooked making your payment to them. They were just ???worried about you???. The letter will say pretty much the same thing. You may have ???overlooked??? your payment this month. If you already sent it in - we are sorry for the inconveinence. If not, could you please make those arrangements?

Once you become delinquent on your payments, the clock starts to tick.

Like many industries, banks have their own language. Once you start getting behind, your debt is put into ???buckets???. If you are 30 days delinquent, you are put into bucket 1. If you are down 30-60 days, bucket 2. If you are behind 60-90 days, bucket 3. So on and so forth. As each month passes the value of their asset (the amount you owe them) decreases. They know from certain formulas and historical data, what % of the loans will continue to go bad and at what point they will work out additional options to ???cut??? their loses.

When you hit bucket 2 - expect a lot of phone calls and more letters. Some creditors will be nice and immediately start to offer you ???alternatives??? if you are having problems. Others will be more forceful and use threats of reporting you to the credit reporting agencies. Same for the letters. Your interest rates may also increase, up to 30% or more in some cases and you will also be charged ???penalty fees???. NO settlements are usually offered at this time.

Bucket 3 - more calls and letters saying the same thing. NO settlements are usually offered.

This will go on for about 180 - 210 days and really prior to the asset reaching 6 months, very little would be offered to settle the account for less than what was owed.

The credit card company, under general accountancy rules, may not keep an asset on their books past the 180-210 day period, if they are not receiving ANY payments. If something isn???t worked out by 6 to 6 1/2 months (generally), they are going to have to ???charge off??? the debt.

A ???charge off??? is really an accounting term. It means the debt is delinquent enough that the credit card company/bank no longer feel that the debt will perform as agreed. Once that happens, it can no longer be listed on their books as a "receivable". That means that it is no longer an asset and must be reported as a loss. Banks are required to do this so that investors, shareholders, etc. are not deceived by the balance sheets or the true financial state of the company.
Once it has reached the ???charge off??? state and the debt is reported as a loss - you still owe the money. They just are not reporting it as an asset any longer. Once that happens, if the debt was not settled, the bank will usually send that debt to 1 of 3 places.

It will go to an attorney for a law suit - remember, banks hate this option. They are not in the habit of spending ???good money to go after bad???. This tactic can usually lead to a consumer filing for bankruptcy, also not a good result for them. In addition, they know that they have a while before the statute of limitations runs out and they have to sue to protect their right to collect (this can take several years) so why not give the other options a try first. Plus, they make more in interest and penalites. If anything, it???s going to go to option #2 and #3 before attorneys get involved.


It will go to a collection company. Sometimes an internal division, sometimes an outside company. Sometimes the outside company will get to work on the file for several months and if they are not successful, it will go back to the banks internal division. It all depends on the amount of debt, the creditor and your file. If an outside collection agency gets the asset, they will normally receive anywhere between 30-50% of whatever they recover. They really only recover about 7 - 10% of all outstanding debt they are managing within the first 1 to 2 years.


It will go to a debt buyer. Debt buying is a billion dollar industry and most people have never heard of it - so it warrants a little background - Debt buying really got its start during the Savings and Loan scandals of the early 1980???s. When the FDIC took control of banks that failed, they needed to find investors that were willing to purchase the banks assets. This included the bad debts or delinquent assets as well. What is called a non-performing asset (it???s not generating money). Like any other industry that is involved with debt and collections, it has also doubled in size over the past several years. Debt buying isn???t just for failed banks. Regular banks sell off their debts to debt buyers if they feel that the losses vs. the time to recover them, doesn???t meet their mathamatical formulas vs. selling the debt off to someone else.


When a debt buyer purchases a debt, they buy them in ???strips???. Basically, they agree to take a group of debts - a ???mixed bag??? for a predetermined price. Kind of like buying a trunk full of baseball cards for a fixed price. Some are just junk and some have value. These prices are usually negotiated on a yearly basis. A debt buyer may agree with a bank to pay ???x??? amount for ???x??? amount of bad debt.

Now there are a lot of debt buyers that don???t have that type of money. So, there is a secondary (smaller) market. The large debt buying companies take the debt purchased and have their own mathmatical and historic formulas that they apply to the debt they purchased. They basically ???cut up??? the strips and resell the ones they don???t want to smaller debt buyers for even less than that.

Now the cost to purchase that debt can range from .04 to .14 cents to the dollar and they buy a lot of it. Debt buyers purchase well over $100,000,000,000. (yes over 100 billion dollars) of bad debt each year for about $9 billion dollars. 70% of all debt purchased is credit card debt.

SO WHEN THE BANK CHARGES OFF THE DEBT, THEY RUN THE NUMBERS:

Let???s say that a bank is owed $5,000 (the asset). The banks understand, by using historical data and internal formulas, that as each month passes, the value of the asset decreases (as the debt gets older they know the less they will recover). Will they make more if they keep it in collections or sell the debt to a debt buyer? Sometimes it???s better to get ???quick cash??? in the door than hold out for long term returns.
If they sell the debt to a debt buyer:

Debt Buyers will take some of the files and turn them over to their collection companies or attorneys and the cycle starts all over again. As the files get older, the value of those assets decrease and they again, resell those debts to other buyers, etc. It goes on and on. There are even some debt buyers that purchase nothing but debts that are beyond 4-6 years old. Normally, if a debt is older than 4-6 years old it is past the ???statute of limitations??? - meaning the time has ran out for them to be able to legally sue you and collect the debt. Most people don???t realize this and they end up paying money they should not legally have had to pay or just want to get it settled to get the debt off of their credit reports (show as ???paid???). Even though they may not be able to sue you once the statute of limitations has ran out, that doesn???t mean that it can???t stay on your credit report for 7 years. So, they know a certain % of people who are looking to make a major purchase will settle the debt to get it off their reports.

Unfortunately, there are what are called ???bad debt buyers??? - they routinely report that the debt is new, starting the 7 year cycle over again on your reports - making it difficult and challenging for the consumer to obtain the relief that they are entitled to. They also sue people when the statute of limitations has ran out - scaring most people into settling their debts or sometimes they don???t even give notice to the consumer about the law suit and get a judgment against them anyway.

Now, if a debt buyer purchases your debt from the bank. They may have only paid $500 for the $5,000 but, you still owe the full $5,000.

So now you know that you will get phone calls, letters and that eventually your debt has to come off the books. During this time frame, your interest rates will usually increase and you will be charged additional ???penalty fees???. You will have ???late payments??? reported on your credit report. After the debt is taken off of the books, you will have a ???charge off??? listed on your reports. Once it goes to collections, you will have the collection company listed on your reports. All of these ???items??? that are reported, negatively effect your FICO score.

This never ending cycle will continue until you resolve the debt so let???s turn our attention back to figuring out how and when to settle.


lrhall41

Submitted by nole on Mon, 03/01/2010 - 12:18

( Posts: 58 | Credits: )


Quote:

Originally Posted by tygger
nole, great tips! You really clarified some points for us rookies. Is there anything we should be careful in not disclosing to the creditor while in settlement discussions? I don't know what kind of questions they would ask, but what are some things we should not tell them... other than bank account information. Thanks

What do to about the phone calls - Again, this is a "readers digest version" - The biggest complaint I normally hear is about the phone calls. Most people are told to avoid them and I disagree. Avoiding the calls will only make them increase. You should always keep an open line of communication with your creditors and collectors. If the debt is still with the original creditor (the bank), there is very little you can do about the calls anyway. The original creditor does not have to follow the rules under the Fair Debt Collection Practices Act (FDCPA - attached on page x). They have an absolute right to contact you. What you need to understand is what you should and should not say when talking to them. Here is what you should tell them for the first couple of months, if it is your intent to settle the debt and it is still with the original creditor:

Bank: ???Mrs. Smith, you are aware that you have fallen behind on your payments and we need to know what your intensions are.???

Mrs. Smith - ???Right now, income is very tight and I am having difficulty just paying my regular cost of living expenses???. ???I am hoping that things will change and if you could wait until things improve that would help me out a lot - maybe over the next few month my situation will improve???.

Now the bank can tell you about your credit report being damaged or that your privileges are suspended, etc. Just say that you are sorry and completely understand. They may also suggest that they have special programs that they may be able to offer you. AT THIS POINT the only offer you should take is if they are willing to suspend your payments for a little while, say 60 days or so. They may or may not do this but it???s worth a try. It will stop the phone calls for 60 days and give you that additional time to save, etc.

If they are offering any other type of assistance that is requiring a payment, don???t do it. It???s going to end up going to them and not to your balance. It is also going to keep your account active which means it may cost more to settle the debt in the long run. We???ll explain more of this later on in the chapter.

Explain each time when you get a call that; You are doing the best that you can but you just don???t have any money to pay anyone right now. Be very polite and stick to the point.

As we said above, at the early stages (if you just stopped making payments) say for the first 4 to 5 months, any offer that involves any type of payments that does not settle the debt at .40 cents to the dollar, should be politely refused:

Mrs. Smith - ???I really appreciate you trying to work with me but right now I do not have any funds available to work anything out with you. I wish I did because I have always enjoyed our relationship and really want to make sure you are taken care of???. ???Maybe in another 30 to 60 days, my situation will improve and we can work on those solutions together at that point in time???.

If you notice, the language is NOT HOSTILE. Being polite and genuine about wanting to help the bank out an appreciating their efforts will go a long way in the negotiation process.

If the bank starts to ask for any ???updated information??? such as work numbers, bank accounts, do you own a home, etc. Don???t tell them. They will use this information for their collection efforts later on and also to determine the real value of the account (the asset). Simply keep them on task. You may respond:

Mrs. Smith - ???Well, I don???t really understand what that has to do about my situation and I really have to leave to pick up my son/daughter - or I???m sorry, my child needs me right now let???s discuss that when we talk next month - have a great day and I really appreciated your help today. Thank you???. and hang up the phone.

Here is the way I look at having to take the phone calls - If you stepped back for a minute and pretend that you had no more credit card debt. A person offers you a job where all you have to do is talk to 3 to 5 people a day and explain when they call that you don???t have any money available for them. Maybe 5 - 10 minutes out of your day. That???s your job. You get paid to take these calls. You even get paid if you don???t take the calls and over time, they will start to be less frequent.

The job will last up to 2 years. At the end of the 2 years, you will receive a check for $15,000 - would you do it? 5 to 10 minutes a day - if you feel like it - and make $15,000. Most of you would.

Well, that???s what you are doing. By taking the calls and saving your money up, you are priming the creditor for settlement which, if you owed $30,000, could easily save you $15,000 or more. Your future self is paying you, so deal with the phone calls.

The bank, as time continues to tick, will start to run out of options. They will have to send it to the other 3 places we talked about. Which in turn, decreases the value of the asset. They will tell you that they will have to ???charge the debt off??? soon if something can not be worked out.

For the average consumer, if you have the money available, the best time to settle would be with the bank directly, just before the debt ???charges off???. If this is the case, then start negotiating. Tell them that ???I???m so sorry that you are being forced to charge off the debt. That???s not really fair to you. What would take if I could borrow some money to get this settled for you???? They normally will suggest . 60 to .80 cents to the dollar. So if you owed $5,000 - they will ask for $3,000 to 4,000.

Explain that there is no way that you can come up with that type of money. ???IF I had $4,000 I would have been able to continue making my regular payments with you and there is no way that I could ever borrow that much???. I may be able to borrow $1,500 if it could help you settle the account.???

The bank may or may not take it. If not, remember, you know that if it goes to charge off, they will get much less, so hold firm. The bank is just doing it???s job to get as much money in the door as possible. Any offer greater than .40 cents to the dollar isn???t that great and you have a better chance of settling the debt with a debt buyer or collection company. You may explain: ???I really appreciate your offer but I just don???t have that type of money available. You could offer me .50 cents to the dollar and truly I would be thankful, but I still don???t have that kind of money. The last thing I want to do is to commit to something that I can???t deliver on. It???s not fair to you???. (keep boosting up their ego). They may say that they are only authorized to offer you .60 or .80 - Ask if they could ???HELP YOU??? speak with a supervisor and maybe they could make an exception. You really do want to take care of them but you really can???t afford that much???.

If you don???t have the money available to settle, there is nothing you can do about the debt being ???charged off???. The only way to prevent it would be to send them money or work out a payment plan which defeats the purpose of getting out of debt.

Be sure that if you do accept a settlement with a payment plan option that you make the required payments on time.

It should be noted that these are your debts. Only if you feel that you are getting a good deal and you can afford to, then settle the debts. It doesn???t matter if you settle for .20 or .50, it???s what you feel most comfortable doing. If you want to end the process and settle for a higher amount than you could have gotten, go for it. Just make sure you can live up to your end of the agreement.


lrhall41

Submitted by nole on Mon, 03/01/2010 - 12:25

( Posts: 58 | Credits: )


What to say or not to say to the creditors - Don't start in with your life story - explain that you lost your job, had an illness, whatever it was that created the hardship - Explain that times are tight and borrowing from family just to survive, whatever. Point being...

Control what information is communicated -
Don't give a collection agent any personal information. Don't tell them where you work, where you bank or your checking account number. When they start off the call by saying, "I just want to update or confirm our records; can you confirm your work number or bank account information"? Don't tell them. You can be polite and say, I'm sorry, what can I help you with? The more that you remain in control, polite but firm, the better chances you will get what you want out of the negotiation. The more private information you give them, the easier it will be for them to pursue you if you can't work something out.
Putting it simply, if you have to go through the process of suing someone, would you spend your time going after someone that you had very little information on (don't know their banking information, where they work or even if they are working, etc) or someone that you could easily follow-up on to get your money? So, control the information you provide, don't give up personal information and remain polite but stick to the task at hand. The more in control you are, the more likely you will be successful.


Another tactic that I've recently encountered with a client is that the collection company started leading into questions - each time the client would ask "why that was important" they said Oh, it's part of a survey that we are doing to help out consumers in general ; some of the questions - DO YOU FILE YOUR TAX RETURNS WITH H&R BLOCK - DID YOU GET A REFUND LAST YEAR, ARE YOU EXPECTING ONE THIS YEAR, ETC. Simply stick to task, use the excuse that your baby is sick, you have to run out - you want to call them when things improve - or please call me in 30 days....I WISH THERE was more I could do for you and I appreciate your patience and understanding. I hate that I am having to go through this and I hope we can work something out so you guys are ok....


lrhall41

Submitted by nole on Mon, 03/01/2010 - 12:35

( Posts: 58 | Credits: )


Quote:

Originally Posted by tygger
nole, great tips! You really clarified some points for us rookies. Is there anything we should be careful in not disclosing to the creditor while in settlement discussions? I don't know what kind of questions they would ask, but what are some things we should not tell them... other than bank account information. Thanks

Ok - last tip for the day

Tape the call if you can -
State laws vary for taping a phone conversation. Most of the States require "one party" consent, meaning you. Other states require "two party" consent, meaning that you have to tell the collector that you are recording the call. If you want a safe bet, tell the debt collector that you are recording the call. If they continue to talk, they have given their consent. If they are offended or get pushy, simply tell them that you are very concerned about the account and you want to make sure that you don't forget anything important. Who could argue with that? Someone that doesn't want to get caught violating the FDCPA I would think....Violating the FDCPA can come with some stiff penalties, not to mention you may be able to sue them. Heck, you may end up having them owe you money. No joke. I've seen it happen may times.


lrhall41

Submitted by nole on Mon, 03/01/2010 - 12:37

( Posts: 58 | Credits: )


Nole,
Thank you very much for taking the time to provide this valuable info. It's really nice having it neatly in one place.
I know when I speak with OCs, I get very nervous and tend to rattle on. I now keep a notebook with me with a note on it saying "stick to the facts only - be polite, honest and don't give too much info." I think this will help me going forward. When we tell our hardships, how much do they document in the file? Last time I spoke with an OC, I told them that husband is on permanent disability and I have been out of work over a year and really don't see any changes in the near future but I would talk with them every few weeks to update.
I am embarrassed and feel bad about our situation, this is the first time in our life we have had this type of hardship; I hope to be able to work out some settlement with the OCs and begin living without credit. Again, thank you.


lrhall41

Submitted by on Mon, 03/01/2010 - 13:34

( Posts: | Credits: )


Quote:

Originally Posted by Guest-567
Nole,
Thank you very much for taking the time to provide this valuable info. It's really nice having it neatly in one place.
I know when I speak with OCs, I get very nervous and tend to rattle on. I now keep a notebook with me with a note on it saying "stick to the facts only - be polite, honest and don't give too much info." I think this will help me going forward. When we tell our hardships, how much do they document in the file? Last time I spoke with an OC, I told them that husband is on permanent disability and I have been out of work over a year and really don't see any changes in the near future but I would talk with them every few weeks to update.
I am embarrassed and feel bad about our situation, this is the first time in our life we have had this type of hardship; I hope to be able to work out some settlement with the OCs and begin living without credit. Again, thank you.

Keeping a notebook helping you stick to task is a great idea! I know it's hard but really, this is just stuff. OC call you because that's their job - you should never be embarrassed or feel bad, it is what it is. Spend more time focusing on the positives. Always be polite. Now, if they start to pester you and make you feel embarrassed, etc. then you have an absolute right to protect yourself. Everyone has to play fair. If you have no assets, and your husband is on disability and you are not working - then most likely there is nothing they can do to you anyway. I would be more apt to look at your future instead of worrying about paying a credit card bill when you no longer have the ability to pay. How much debt do you have? What do you have in retirement? Any assets? If you do get another job, is it a good paying job?


lrhall41

Submitted by nole on Mon, 03/01/2010 - 13:45

( Posts: 58 | Credits: )


Quote:

Originally Posted by tygger
nole, thanks for the great tips. Your posts should be stickied! Do you work in this industry?

Well, feel free to ask the powers to be to sticky me I guess :) I appreciate it. Yes, I work in the debt settlement, cccs and bk industry. Really want people to understand that at the end of the day, they have more power than the believe and don't have to live with the stress that comes along with debt.


lrhall41

Submitted by nole on Tue, 03/02/2010 - 10:15

( Posts: 58 | Credits: )


Youre definitely a great resource. I appreciate you sharing your knowledge, even though you could rather be making businesss off of us. It sounds like you truly believe we can do this on our own. If that's the case, when would you recommend a client come see you (or a debt settlement company) vs doing it themselves?


lrhall41

Submitted by tygger on Tue, 03/02/2010 - 11:27

( Posts: 42 | Credits: )


Quote:

Originally Posted by tygger
Youre definitely a great resource. I appreciate you sharing your knowledge, even though you could rather be making businesss off of us. It sounds like you truly believe we can do this on our own. If that's the case, when would you recommend a client come see you (or a debt settlement company) vs doing it themselves?

While it is true that I would rather have someone pay for my years of experience, at the end of the day you can do this yourself. Just like with most things in life, you look at what your abilities are and you have to know your limitations. I have no problem building a cabinet but most likely couldn't frame a house as well as a person who did it for a living.

With debt settlement, you are going up against people who's primary job is to recover as much money as possible or at least limit their loses to the minimal amounts possible. Unfortunately, to be honest, if you hire a company that charges you fees (everyone has to make a living at something) to help fight for you, you have to weigh the costs vs. your time to do it on your own vs. your ability vs. what you would save if you did it yourself.

Come to think of it, that really applies to anything that you would pay someone to do. Fix your car, operate on yourself, represent yourself in court, fix your toilet, etc.

The downside of paying someone to do DS for you - you will pay about 15% of the debt under management. Sometimes as low as 10%. Sometimes a company will only charge you on whatever they save you - it could be 15% to 20%. At the end of the day, you can expect to pay about 50-60% of what you owed originally (settlement + fees). It's just how the math works out. The national settlement average is about .32 to .37 ctd. If you pay 15% up front of the debt under management or a % of the savings it all works out be about the same. DS is also not for the meek. It's tough making sure you keep your cool, you say the right things, know if you are getting a good deal with a particular creditor and it's especially hard to save the money on your own (not putting in a bank account that you normally wouldn't touch) to build up a settlement reserve.

Let's look at the payments up front - not all companies "front load" their fees. Some will actually make sure that a majority of your savings payments are going towards your savings and not fees. Unfortunately, there were a lot of people that got into the debt settlement business because they saw the opportunity to make money. They have no idea what they are doing. They create a good looking website that spits out what you want to hear, making it seem easy. They guarantee just about anything. They don't care if you were better off doing cccs or bk. They'll tell you that you only have to make a small payment, don't worry it's ok if it takes you 60 months. They will stop the creditor calls, etc. It's not good. It's just a business opportunity to them. At the end of the day, these companies do more harm than good. That's why you see so many complaints out there. I actually participate on this site because I do care. Taking a few minutes out of my day won't kill me and I know that there are a lot of people this helps. It's also my way of showing that not everyone is in this for the money or to make a pitch or a sale and that not all DS companies are bad. You have bad apples in any business.

So, at the end of the day, you have to ask yourself, am I better off doing this on my own - can I handle the calls and save what I should and is it really what I should be doing - only you can answer that. It's when a person can't say in confidence that they can do this effectively on their own or that it's worth paying someone to do it for them, would I recommend they hire someone.

Just make sure that the company tells you what you need to hear, rather than what you want to hear.


lrhall41

Submitted by nole on Tue, 03/02/2010 - 12:23

( Posts: 58 | Credits: )


Quote:

Originally Posted by nole
How much debt do you have? What do you have in retirement? Any assets? If you do get another job, is it a good paying job?


I responded once, but it did not post.....redoing it (Sorry if it does post twice)

Again, thank you for your valuable info and you are right I need to focus on the future. We have about $33K in cc debt in addition to medical bills. We live in Texas (non-garnishment state with few exceptions). We do have a retirement acct that I thought about cashing out to pay down the debt; however, everything that I have read on the Net discouraged this action.

I understand that it is business, and creditors are just trying to get paid. I get depressed and frustrated, but I know I will get through this and hopefully can work out a settlement that I can live with and will be acceptable to the creditors.


lrhall41

Submitted by on Tue, 03/02/2010 - 12:36

( Posts: | Credits: )


Quote:

Originally Posted by Guest-567
I responded once, but it did not post.....redoing it (Sorry if it does post twice)

Again, thank you for your valuable info and you are right I need to focus on the future. We have about $33K in cc debt in addition to medical bills. We live in Texas (non-garnishment state with few exceptions). We do have a retirement acct that I thought about cashing out to pay down the debt; however, everything that I have read on the Net discouraged this action.

I understand that it is business, and creditors are just trying to get paid. I get depressed and frustrated, but I know I will get through this and hopefully can work out a settlement that I can live with and will be acceptable to the creditors.

Guest-567 - send me a message privately and I will give you my contact information. I'll talk to you for free and see what strategies you can employ. If you want to. It's just too much to continue to review via post. Maybe we can talk and then sum up a generalized strategy that others who maybe in your own similar situation can employ...


lrhall41

Submitted by nole on Tue, 03/02/2010 - 15:05

( Posts: 58 | Credits: )


Quote:

Originally Posted by nole
Guest-567 - send me a message privately and I will give you my contact information. I'll talk to you for free and see what strategies you can employ. If you want to. It's just too much to continue to review via post. Maybe we can talk and then sum up a generalized strategy that others who maybe in your own similar situation can employ...


nole, I tried sending you a pm also, but it wouldnt let me. I wanted to know what company you are with and how much you charge if I decided to go with the settlement company route. Thanks


lrhall41

Submitted by tygger on Thu, 03/04/2010 - 08:46

( Posts: 42 | Credits: )


nole, I have a question about when to open up communication and make a offer on the phone. Had my cc for yrs and they never ask to updated phone numbers. Now I just have a cell phone to save money but they don't have the number. Just went over 120 days late so I wrote them a letter and made my first offer. No reply yet.
Otherwise other then a late notice I have had no other contact.
On my recent bill it did say my account was now closed.
I feel at this point before I call and give them my phone number and make a offer I shall wait until it goes over 150 days?


lrhall41

Submitted by on Thu, 03/04/2010 - 13:11

( Posts: | Credits: )


Nole, I am trying to work out a settlement with a CA. We came to an agreement over the phone and so I asked them to send me a letter. the letter they sent seems very open ended. Nothing in it seems to say the debt will be settled, but kind of seems to me that it looks more like a payment. I have written a letter that is much more solid and states without question that the debt will be settled with the payment we agreed on. I am a little concerned though after reading your advice in this thread. You say that the letter should always come from the CC/CA company and not the debtor? Why is this so? I asked the CA for a less open ended letter and they said that this was all though had? Should I call back and demand they send me a better agreement?
Thanks!


lrhall41

Submitted by ryansdad1 on Sun, 03/07/2010 - 09:08

( Posts: 4 | Credits: )


Quote:

Originally Posted by ryansdad1
Nole, I am trying to work out a settlement with a CA. We came to an agreement over the phone and so I asked them to send me a letter. the letter they sent seems very open ended. Nothing in it seems to say the debt will be settled, but kind of seems to me that it looks more like a payment. I have written a letter that is much more solid and states without question that the debt will be settled with the payment we agreed on. I am a little concerned though after reading your advice in this thread. You say that the letter should always come from the CC/CA company and not the debtor? Why is this so? I asked the CA for a less open ended letter and they said that this was all though had? Should I call back and demand they send me a better agreement?
Thanks!

The letter can come from you - just make sure that there is a company name/persons name/title - and a statement that they have the authority to sign the letter - The reason why I recommend that it comes from them is that it's more difficult for them to deny any letter or agreement, if it was on their letterhead....but coming from you with them signing it, isn't a problem either.


lrhall41

Submitted by nole on Mon, 03/08/2010 - 06:54

( Posts: 58 | Credits: )