What can I expect out of the credit card companies?
Date: Wed, 10/13/2010 - 12:51
My friend is in over her head with credit cards:
Chase - 13,019.13
Barclays - 25,596.98
Bank of America - joint account with mom - as of last month 11,195
She just graduated school a few months ago and working as a massage therapist so she is not bringing in much money yet. She has no savings-- about $800 in her bank account right now. No home equity, nothing. She currently can't pay her monthly minimums which are around $1200/month (I think).
Here is what we are looking at doing:
Keep the card with her mom current. It has the lowest balance and we don???t want to tarnish her mom???s credit score. We won???t pay it off right now, just keep it active, so that after she is done settling with Chase and Barclays she can rebuild her credit quicker.
For Chase and Barclays she has been a great customer for years and they have made a lot of money in interest off of her (I???m still exploring the exact amount). She can???t meet her min. payments right now so we are going to use a DIY debt settlement program. That said she has no money for settlements and her family cannot help her either. I have read things on here about 120 day offers, and 150 day offers. If she gets an offer does she have to pay the full amount of the settlement immediately? If so,she does not have the ability to do so. Will they allow payment plans for her settlement and if so what kind of timeline typically? She thinks she can can have around 12,000 together in one year.
Thank you for all your help!
Settlements are generally required to be paid over a 90 day peri
Settlements are generally required to be paid over a 90 day period, with the first payment being due shortly after the agreement is made. Has your friend looked into a hardship plan with her creditors? She may be able to get both her interest rate and her monthly payment reduced. If she could do that for 6 - 12 months, perhaps she could build up a nest egg with which to settle?
I am not familiar with hardship plans. How do they typically wor
I am not familiar with hardship plans. How do they typically work? Do they ding your credit score? And do you have to pay the full amount?
Things called "hardship plans" vary. With most creditors they l
Things called "hardship plans" vary. With most creditors they lower the interest rate and give you a payment that will have the debt completely paid off in 5 years. Other creditors simply lower your payment amount and/or interest rate for a set period of time like a year.
I found that the hardship plan on one of my cards had the payment higher than what I was already doing so it was useless. Sears/Citi just lowered my payment to $81 per month for a year and the interest rate at 0%. If it's not paid off by the time that expires, the interest rate goes back up to 29.99%.
So in other words, she will need to call into the companies and see what they have available.
Lot's of questions... Please help... Do you think that it'd be
Lot's of questions... Please help...
Do you think that it'd be easier to try and get the credit card companies to do a "hardship" plan before you default on the cards? Or is it better to default on a payment and then try to talk to them about the "hardship" plan?
With the "hardship" plan, do they expect you to be able to pay the total amount within the year of the lowered payment per month and interest rate, or do they lessen the amount of debt as well? If you're still paying them a little bit a month, then does that go towards all the debt, or are you basically just paying them interest until you can pay them a lump fee? If you're still going to be paying a considerable amount for the "hardship", would if make more sense just to save that money and try and negotiate for a lump sum settlement?
Which is going to look worse on the credit score - defaulting and trying to negotiate with the creditors and paying a lump sum 6 to 12 months down the road, or attempting to negotiate with them for a lesser settlement and a hardship plan?
If you're able to come up with about 30% of the debt within 6 months, and able to pay that to the companies with a lump sum settlement - what would you estimate the risk would be of being sued before that?
Greetings, If you want to settle then you've got to default. T
Greetings,
If you want to settle then you've got to default.
The ccc's will do very little to help you at all.
Read these forums.....over and over again.
Plan you actions and then put into action your plan.
Chase (me down) and boa-the snake are fairly easy to settle at 120 days plus.
I don't know about barclays, but search the forums.
When you go into a hardship program the interest is lowered considerably and sometimes the time period is extend to five years on the hardship plan.
Yes, the creditors may imply or actually sue you.
Some of the creditors are more likely to sue than others.
Please register and pm me for further information.
Regards,
King "Kash" Jabba Labba
