Skip to main content
index page

Going down the debt settlement road

Submitted by Chuck on Wed, 01/16/2013 - 15:34
Posts: 6
Credits:
[Donate]

I've been checking out the forum here lately and have some questions. I've looked at different sites and have a general idea of what I should do, so I'm here looking for some help.

I quit paying on my 4 cards in the summer. Had all the cards for at least five years. Previously made calls to get the rates lowered will not luck. Barley paying more than the interest and I had to make the hard choice to do something drastic to get out of this.

Can I expect to make settlements at 20%?

The first Chase is quickly approaching charge off

Chase - $10,000
Cap One - $12,000
B of A - $16,000
Disc  - $9,000

I have spoken about once a month with each card explaining my hardship. The calls haven't been too bad.

While making calls back to explain that things haven’t changed Disc made a settle offer of 60%. I just talked to the bigger Chase acct and they offered 50%. Is it better to get this done before Charge Off or wait to deal with the collection people.

Any suggestions as what to do next?


Jared, I will keep your ideas in mind when the time comes and I'll post what happens. Thanks!


Submitted by on Mon, 01/21/2013 - 12:29

( Posts: 202330 | Credits: )


Jared, I will keep your ideas in mind when the time comes and I'll post what happens. Thanks!


Submitted by on Mon, 01/21/2013 - 12:09

( Posts: 202330 | Credits: )


Jared - the Cap One has already Charged Off. I plan on still calling them every week to explain my situation and try to get an offer from them.

Chase will CO at the end of March, their offer is at about 43 per cent.

BofA is offering about 30 per cent and will CO this week also.

Thanks for coming around the different forums and helping out!!!


Submitted by on Tue, 03/26/2013 - 06:38

( Posts: 202330 | Credits: )


I did ask for an exception. They said I already had one and they wouldn't review a second exception until the 60 days for the first one were up. I'm thinking of waiting until after CO to see what happens.

For Cap One, right now "enough" is the orig balance, so no. I should probably be able to round up enough funds to settle with 3 payments over 90 days at about 40%.


Submitted by on Fri, 03/29/2013 - 11:49

( Posts: 202330 | Credits: )


It'll be difficult to settle the Chase credit card at 20%. It is better to accept the settlement offer. Get this done before charge off. 


Submitted by on Wed, 01/16/2013 - 20:39

( Posts: 202330 | Credits: )


Thanks for the responses. Jared, that makes a lot sense with the negotiations. The thing is that one charges off about 4 weeks before the next. The last three will charge off close together. Sounds like if I settle the first it might hurt my chances for better settlements with the next 3.

Should let the first charge off and then try to settle all four together? What if the offer is really good on the first, should I take it? Looks like I need to find a crystal ball to look into the future.


Submitted by Chuck on Thu, 01/17/2013 - 12:36

Chuck

( Posts: 6 | Credits: )


Hi Chuck, glad to hear things are moving along. Capital One can be a bit tricky. A lot of times they will not negotiate below the principle balance previous to charge off. I just checked my data and most of the settlements I've worked out directly with them, were right after charge off with the Recovery department.

Also Chrissyhen is correct in stating that they do tend to litigate a bit more than most creditors. However, again looking at my data, only 3% of the Capital One accounts that I have negotiated were with law firms.

Please keep in mind that my approach to debt settlement is different that the rest of the industry, as I only offer debt settlement to people who can settle right away. So this data is relevant to you and your situation, since you're attempting to do just that.

The sif percentages that I achieved with the Recovery department ranged from 29% - 60%, with an average of 46%.

So, still try to negotiate with them. You never know, they may be having a rough quarter and may deviate from their typical protocol. But once the account charges off, you should be able to strike a deal with the Recovery department.

Also, depending on the balance, you may find it logical to re-age the account instead. If the balance isn't that large and the payment is affordable, re-aging the account will bring it current and will allow you to have an active trade line that is reporting active payment history on your credit report.

After settling all of your debts, it will generally take you a couple years to rebuild your credit. The idea with the re-age is that instead of it taking you generally two years to acquire new credit, you would immediately have an existing trade line that in theory will help you rebuild your credit score more quickly.

I hope this isn't considered spam, I wrote an article that discusses re-ages in detail. You'll probably find it helpful. http://www.avoidbk.com/what-is-a-re-age/



Submitted by Jared Strauss on Sun, 02/24/2013 - 18:14

Jared Strauss

( Posts: 74 | Credits: )


Well, they have all gotten in the same line. Now they are all set to Charge Off at the end of March. Three have all made offers of about 50% except Cap One. Does anyone have any ideas on how to get Cap One to talk settlement?


Submitted by on Wed, 02/20/2013 - 07:36

( Posts: 202330 | Credits: )


No problem. You're looking great!

With Cap One you want to be as assertive as possible. So when you call, make them an offer. If the collector rejects it, go up the ladder.

Pay close attention to the Cap One because they do have a history of going legal from time to time.

Chase may go a bit lower. I've been getting 30% at your stage of delinquency pretty consistently lately.

The 30% on the B of A looks good. You may want to jump on that before it charges off.

Keep us posted. You're doing really well!


Submitted by Jared Strauss on Tue, 03/26/2013 - 13:33

Jared Strauss

( Posts: 74 | Credits: )


Hi Chuck, 


Nope, it's actually going to be a lot simpler than that. Just call them and make a payment on the account. The payment will need to be for the amount of your normal minimum payment. You shouldn't have to pay anything beyond that amount. I would wait to make this payment till you're about 5 days from charge off. This way you don't end up spending more money than what's necessary in case you end up getting the cooperation from your other creditors before then. But, if you end up needing additional time, by making a payment you'll buy another month on the account. 

In respect to what to do if the offer is too good to pass up, attempt to negotiate it to be paid over a few payments. Make the first payments equivalent to your normal minimum payment with a balloon payment to be paid at the end. This strategy will allow you a lot of flexibility and protection. 

 


Submitted by Jared Strauss on Sat, 01/19/2013 - 09:39

Jared Strauss

( Posts: 74 | Credits: )


Ideally you want to settle before charge off. However, what you should do next is review your ability to settle these debts at the same time. If you settle these debts one by one, you run the risk of encountering uncooperative creditors due to your previous settlements. 


When you settle your debts one at a time, your future creditors will see your previous settlements. If you were trying to apply for credit with them, this would be good. But it has the total opposite effect when you're trying to negotiate a settlement.

The reason why is it changes how collectable you are. When you still owe everyone, you're in the worst possible shape, thus your creditors will be less confident that they will collect from you. And in turn, be more negotiable. 

When they see that you have already settled other accounts, they will be less negotiable because they know you want to pay because you have demonstrated that with your previous settlements. 

Rule number one in any negotiation is to never appear that you want what the person you're negotiating with has. 

The other issue is the landscape of your hardship changes. Today you're a guy with almost $50,000 in delinquent debt. If I were trying to collect from you under that situation I would definitely be more negotiable than if you have $30,000 and a previous settlement or two. 

Anyway, just some food for thought for you...

In respect to the percentages, you could probably do better. 


Submitted by Jared Strauss on Thu, 01/17/2013 - 10:52

Jared Strauss

( Posts: 74 | Credits: )


Settled with BofA today at about 27% of original balance. I don't have the money to settle with Chase for what they're asking. We'll see what happens after CO.


Submitted by on Thu, 03/28/2013 - 20:03

( Posts: 202330 | Credits: )


I was able to settle my account with Discover for 36 per cent of original balance just before charge off. Glad to get this done, now on to the others (and the taxes). Getting close with Chase and BofA, hopefully this week. Still nothing with Cap One.


Submitted by on Mon, 03/25/2013 - 08:13

( Posts: 202330 | Credits: )


they are one of the hardest to settle with -- you can let them charge off and deal with agencies if you want -- it depends on if you have the money to settle -- I haven't seen anything under 50 - 70 percent with them -- they also sue -- they just send one of mine to an attorney in state -- good luck


Submitted by chrissyhen1 on Wed, 02/20/2013 - 09:22

chrissyhen1

( Posts: 151 | Credits: )


The Chase CO account was assigned to Viking.

It went to 25 per cent of current balance within our first couple of discussions, 5 per cent LOWER than I offered Chase before CO - wow! But it didn't seem like it'd go any lower, so I got that one done.

3 down, but still nothing doing with Cap One. It's with their Legal Front End department.

Here are the settlements (of original balance) so far -

Discover - 36 per cent
BofA - 27 per cent
Chase - 27 per cent (after CO)

Thanks to all who comment and help out around here. Beginning to see a little light at the end of the tunnel, but running low on funds. Don't know what to think about the Cap One account.


Submitted by on Sat, 04/13/2013 - 11:17

( Posts: 202330 | Credits: )


Absolutely gorgeous job, Chuck! So what are the vitals on the Cap One? How long has it been charged off now? Have you made an offer? Did they counter offer?


Submitted by Jared Strauss on Sat, 04/13/2013 - 12:37

Jared Strauss

( Posts: 74 | Credits: )


Thanks. It feels good to have some these done!

The CO was in March. I have stuck with an offer of about 25 per cent, both before and after CO. Their offer after CO was for about a grand less than the original balance.


Submitted by on Sat, 04/13/2013 - 19:56

( Posts: 202330 | Credits: )


I bet it does! Well, if your goal is to resolve it rather than dragging it out, you may want to create a "what if" scenario.

Something along the lines of...

"I realize 25% is really low, what if I could get a family member to lend me a bit more? I might be able to raise an additional XX percent. However, I'm not sure, and I obviously can't go asking for it, without knowing if that will be an acceptable amount. So is it?"


Submitted by Jared Strauss on Mon, 04/15/2013 - 15:43

Jared Strauss

( Posts: 74 | Credits: )


I asked Key bank for a settlement they were very nice and sent me a letter stating they want the following:
Hardship Letter with reason I can't pay
Settlement offer letter
Pay stubs and other income sources.
Is this reasonable? Should I just send the first 2 documents and tell them I won't send pay stubs.

US Bank said they will charge off after 120 days. How would it affect my settlement if I make one payment and let it re-age. At least it would give me more time to come up with the money. They said they would only settle for 80%. I think I'll call back next week and see if they would take a lower %, since it's closer to the 30th. Discover said they would only take a direct withdrawal. I had someone suggest that I open a new acct for that sole purpose. Is this a good idea?


Submitted by cinderalla on Thu, 04/18/2013 - 18:28

cinderalla

( Posts: 13 | Credits: )


It is not unreasonable for them to ask you for proof of hardship by showing your pay stubs....collection agencies will often demand the same thing. You are asking for hardship...prove it to them.


Submitted by SOAPLADY on Thu, 04/18/2013 - 20:53

SOAPLADY

( Posts: 17315 | Credits: )


Hi Cinderalla,

I meant to post sooner, I've been super busy. First off, the 401k is untouchable. The only entity on Earth that can come after your 401k is the IRS. That's it.

In respect to pay stubs, I would offer tax returns instead. This way your 401k won't be as obvious.

Also, on that note, I noticed in a previous post of yours that you were considering using your 401k to settle your debts.

I also noticed the board offered up the common wisdom of not touching it. I'm going to offer you a different perspective.

Depending on the situation, for some people, a 401k loan to settle debt can be a logical solution.

A lot of it depends on your alternatives. Like in your situation, how long do you think it will take you to settle your debts without using your 401k?

Will you have to settle them individually, rather than simultaneously, if you don't use your 401k?

The deal with borrowing from your 401k is you want to be super careful about analyzing the risks, outcome, and affordability. Whether or not it ends up making sense is entirely situational.

And the only way to really figure it out is to become aware of the risks and calculate the impacts.

I've created a guide for people in your situation to help you do so.

Borrowing from 401k to pay off debt - How to make sense of it

Please feel free to use it and to follow-up with any questions.


Submitted by Jared Strauss on Sat, 04/27/2013 - 13:00

Jared Strauss

( Posts: 74 | Credits: )


Well, still not able to work anything out with Cap One.

They say it is scheduled to move on to attorney in a couple weeks. I was able to increase my offer a little and they said that they made an exception to offer me a 70% settlement. But that's quite a bit more than I have available.

Guess I'll see what happens further on down the road.


Submitted by on Thu, 06/06/2013 - 10:19

( Posts: 202330 | Credits: )


Thanks for the response Jared. Guess I'll never know what could have happened with the re-age.


I could do about 50%. I will give that a try.


With Cap One, would it do any good to make a very small payment now? It's been charged off already. This might keep it from going to the attorney. I have no idea.


Submitted by on Fri, 06/07/2013 - 15:25

( Posts: 202330 | Credits: )


It probably would, but since it's charged off your credit won't start to rehabilitate until it's completely resolved.

You're not as far off as I thought on the settlement. You're welcome to call me on Monday and we can call them together 3-way. No charge.


Submitted by Jared Strauss on Fri, 06/07/2013 - 23:03

Jared Strauss

( Posts: 74 | Credits: )


Jared - Thanks! I would like to take you up on this.


I've been able to get another loan from a family member to increase my settlement offer. I've gotten this close and figured I'd do whatever I could to complete with all CC.


Submitted by on Sun, 06/09/2013 - 05:46

( Posts: 202330 | Credits: )