Bank of America – Settling My Charged Off Credit Card and Debt Collectors
I do have some knowledge of credit repair/collections/debts, etc, but I have some specific questions that I don't have answers to and there is a disconnect that happens in my mind when I begin trying to figure out where they truth actually is with respect to collections/charge off procedures, etc. I want to take the necessary steps to clean up my credit, but there are serious issues that I am having because there was about $35,000 of credit card debt that I let go, spread over different credit cards and I don't want to make mistakes tackling this issue.
Therefore, if you don't mind, I will ask several questions:
1) Part A: When a consumer (such as myself) stopped paying a credit card account....i.e. Bank of America...and it is 3 months past-due, am I correct that at that point, it sits in the internal collections department of BofA? (I had this happen to me, but not sure if this is correct).
Part B: After this account was Charged-Off, did BofA sell the debt or did it assign the debt, and how would I know?
Part C: Since a Charge-Off is a Write-Off (and in this question - BofA), usually doesn't the bank, BofA write the ENTIRE amount off their books as uncollectable debt and get covered by FDIC for the entire amount, and if so - how then can they sell the debt to a collection company if they already got paid...or do they only sell 10% of it for (i.e. - 10 cents on the dollar for the entire amount) and get covered for the other 90%?
2) Part A: I noticed that on my report there are charge-offs and open collections. In speaking to mortgage lenders, they expressed a concern and told me that all my open collections would need to be paid if I wanted to buy a house. Are these open collections assigned by the original creditor or was the debt purchased, and what about in the case of charge-offs....if it was a write-off, how could a collection company purchase it?
Part B: (Sort of mimics part A, but slightly different) When it says "Collection" on the report, not "Charge Off", does that mean this is a newly created collection item after the sale, after the Charge-Off occurred by the original bank, or did this collection report, while this was with the original creditor?
3) How would I know when specifically to use the debt-validation tactic? (as I read your blog on backfiring and I don't want it to backfire on me)
4) Is there a point in disputing an item that is being reported by a collection agency/original creditor, if there is still a balance being reported? (wouldn't they verify it anyway?)
5) Part A: Statute of limitations normally is 4 years from last DLA date....should I wait until this expires to try to delete the item or would it not matter? (as after 4 years they legally cannot collect on it)
Part B: Is there a point in settling a collection/charge off account (if this is reporting under different collection agencies), if the original DLA expired on the original bank account, or is there no way to stop them from selling/assigning and selling again to new collections...and how can I permanently stop this process?
If you can answer all of these, you are a hero because after reading too many forums and all kinds of sources, I still cannot fully understand the truth about this and where should I begin.
Thank you for your time and I really appreciate your help in advance.
What are the pros and cons of settling my charged off bank of America credit card that is with a collection agency?
—Adrian
Short answer
Bank of America tends to keep an unpaid card with its internal collection department at 90 days, but it does assign accounts out before charge off, and it can sell them after. Call the bank and ask who has the account now. Charge off is an accounting entry, not the end of the debt.
Key points on this page
- To find out which way your account went, call Bank of America and ask who it was placed with or sold to. If the balance was sold to a debt purchaser, that buyer may have sold it on again.
- You can also run the name of the company contacting you against the usual suspects in debt collection and debt buying, to work out whether they are an assignee or a buyer.
- Charge off is an accounting function. The debt remains collectable, and there is no FDIC insurance on charged off credit card debt. The FDIC insures depositor funds.
- Only one party should report a balance owed. If a debt buyer reports a collection account with a balance, the original creditor should show no balance owed to them.
- Disputing a valid entry is usually a waste of time and postage. A dispute works when the reporting is inaccurate, out of date or erroneous, or when the furnisher never responds to the investigation, in which case the item should be deleted.
- Debts past the statute of limitations often settle at the steepest discounts. Never let the collector know you need the account resolved for a home loan, because they will not go as low. If you are not resolving them at all, a cease communication letter, sent certified with return receipt, triggers rights under federal and state law.
1a. Bank of America does currently tend to keep accounts in internal collection departments when the credit card has not been paid for 90 days. That is not always the case though. BofA can and does assign unpaid credit cards out to assignment collectors prior to charge off.
How to Find Out What Bank of America Did with Your Unpaid Debt
1b. You can find out which way Bank of America went with your account by:
- Calling Bank of America and asking who your account was placed with or sold to – just keep in mind that if your credit card balance was sold to a debt purchaser, that buyer may have sold it off to another debt buyer.
- Running the name of the company trying to collect from you against a list of usual suspects in the debt collection and debt buying world and identifying whether the company is likely an assignee or buyer.
BofA insurance claims against the FDIC for charged off credit card accounts:
1c. Where are you getting your information about banks insurance claims with the FDIC? The FDIC insures depositor funds.
Banks charge off credit card debts that remain unpaid. If they sell the debt right away or later on, they would make an accounting adjustment at that time. Charge off happens as an accounting function. If Bank of America is later paid through a debt collector they hire, or sells the debt for say 9 cents on the dollar, they adjust the accounting.
You mentioned you are somewhat confused after reading many web sites and forums. I would suggest not putting too much value into anyone of them that gave you an impression there is FDIC insurance for charged off credit card debts.
Charge Off Shows on Your Credit Report From the Original Lender
2a. In this instance Bank of America. A debt collector may report an additional entry at some point as well. If a debt buyer is reporting the collection account, the debt buyer will show a balance owed, while the original creditor would need to show there is no balance owed to them (as they sold it off). Be sure your debt balances are not being reported as owed multiple times to multiple places.
Just because an account is charged off does not make the debt noncollectable. Charge off is an accounting function. The debt remains. As mentioned above, if something is paid on the debt after charge off, the amount paid, if received by the bank, will cause an accounting adjustment.
Debt buyers purchase charged off debts. It is a practice that became popularized after the savings and loan crisis in the 80’s. They buy the debt because the bank is a willing seller. The legal transfer right is your original creditors.
It is possible to purchase a home with unpaid collection accounts. Lending standards have tightened some. It is not too surprising you are being told that unpaid collection accounts are a barrier to a home loan. The barriers are set by the lenders and underwriting standards. The underwriting can change a bit from lender to lender or even from person to person. Resolving the accounts by settling them may indeed be required though.
Collection Agency Shows Up for the Same Account on Your Credit Report
2b. Accounts below that heading are all collection accounts. Accounts that appear there are generally going to be accounts sold off or assigned out to a collection agency.
Charge off is an original creditor reporting item and would appear in the banks trade line they have on your credit report.
Debt validation is your right:
3. Requesting a debt collector or debt buyer validate sets a few things in motion.
My cautions about debt validation are generally (but not always), aimed at someone who wants to resolve old credit card debts by settling them for less than the balance owed. If you want to verify the amount owed, or that the debt collector is the proper party to negotiate with, you can do that over the phone with your original creditor.
How and when a debt validation request would backfire on someone who wants to settle a debt will be situational. There is no way to cover this caution well without knowing a great deal more about who the debt were with originally, where they have been placed for collection along the way, and who has the debt now. If you would like to provide all the details about the accounts in a comment reply below, I can get into more useful feedback.
Credit report disputes:
4. There is a point to disputing an entry on your credit report. It requires your dispute be investigated.
If that investigation turns up inaccurate, out of date, or erroneous reporting, it gets fixed. If there is no response to the investigation efforts of the credit reporting bureaus by the furnisher of the information (bank, debt collector), the item should be deleted. If sending a dispute just because you don’t like something on there, but the item is valid, it would likely be a waste of time and postage (though not always).
Credit Cards in Collection and your states SOL
5a. If the statute of limitations is past in your state, disputing collection entries for credit card bills will run into the same issues as in item 4 above.
The longer its been since a payment was made on the account your disputing, there may be a slight increase in the percentage chance you get an item removed because no one responded to the credit reporting agencies investigation request.
A balance being reported as still owed on a collection account is not going to be the only validation metric. You could have a zero balance being reported by Bank of America, and no one else reporting the account at all. That would not mean you can easily dispute away the charge off entry on your credit report.
Settling Credit Card Debts Past the Statute of Limitations
5b. If old charged off credit card debts are passed the statute of limitations for you to be legitimately sued in order to collect, and the accounts are with debt buyers and collection agencies, it may still make sense to settle them for less than the balance owed.
In your case, you are looking to purchase a home but underwriting suggest you settle the old debts before being approved. Settling debts that are past the SOL for you to be sued are often done at the steepest discounts. Just be sure you are up to the negotiations and never let on that you are trying to accomplish something other than just settling and moving on with your life. If a collector is aware you have a credit purchase or credit report need, they may not go as low in the settlement they agree to otherwise.
The shelf life of unpaid debt:
There is really not much you can do to permanently stop the next debt collector or debt buyer from getting your debt and at least making one attempt to collect from you.
Bankruptcy is probably the most thorough way to eliminate collection calls and letter, but even then, collection calls can happen.
If your debts are passed the SOL for legitimate lawsuits, and you are not going to attempt to resolve any of the debts, you can always write cease communication letters to any debt collector or debt buyer you hear from. A cease communication letter triggers certain rights under federal and state laws. It’s the epitome of telling the collection agency or debt purchaser to go pound sand. If they don’t follow the law after receiving the cease communication letter, you can pursue them for collection violations. Be sure to send the letter certified mail return receipt requested and keep the green card and a copy of the communications you send in a safe place in case you need them later.
For more information about some of the topics covered above I would recommend reading:
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
I’d like to add that my CITI card/account isn’t even listed my credit report from the big three credit reporting bureaus. Additionally, nothing has been paid on that account in more than 8 months, so I should assume it’s been charged off, correct?
More info: My credit reports show that none of my accounts have been turned over to collections agencies.
Citi will have charged off the account at this point.
Not all debt collection agencies or debt buyers send information to the credit reporting agencies.
Yet another Michael here with a question 🙂
I have outstanding debt with 4 different credit cards and had to stop making payments when the minimum monthly payments reached more than 50% of my salary.
Three of them have been charged off as of this month (roughly $500, $750 and $4,800, respectively). The other one is the largest, CITI, has a balance of $36k and has not been charged off. Additionally, the “lovely” people at the office of John Frye in Virginia have been calling me 10+ times a day to try and collect the CITI account–including calling my employer (in addition to my direct work line and cell phone) to reach me.
A few questions:
1) What actions should I expect from debt owners that have charged off the cards (Discover, Capitol One and Chase)? As another Michael mentioned, I too am in a state with a 4-year statute of limitations, but I’m not anticipating any major purchases such as a house or car for many years to come.
2) What advice might you have in dealing with the CITI account and the John Frye collectors? (I’ve read online that typically sending a debt validation request to Frye will get them to stop trying to collect, or they won’t respond in the legally required 30-day period, because they often do not have the official ownership of the debt in order to collect–still don’t completely understand that.) Have you an idea as to the % of the amount owed that CITI may be likely to settle for in the current economic climate?
My wife has been unemployed with no income at all for 5+ years, which is one of the main reasons I’m in this situation, and had an unexpected medical needs that cost a couple thousand dollars. Note: Her name is not on any of the accounts and my name is not on the house (which she owns outright).
I’ve spoken with a bankruptcy attorney and of course he thinks that’s a good solution (it means business for him, after all). But I see that as a last resort.
Thanks in advance,
Michael III
Michael – 10 collection calls a day is harassment from the John Frye debt collectors. My first suggestion would be to speak with an experienced FDCPA attorney about your options for holding them accountable. That won’t help with the underlying debt, but it would help nonetheless.
Current Citi bank settlements can range between 35% (seldom), up to 55%. The collector involved at this point can impact what you settle for. Lets say you split the middle on your settlement. What are your timelines for coming up with that amount of money?
Regarding the other 3 accounts, Chase settles the most favorably, while Discover and Capital One are more aggressive. Capital One will even sue for less than 1k debts. Read this article that ranks your banks for debt relief. All of the settlement targets referenced will still apply to you based on what you shared so far – other than the Citi credit card with Frye.
Bankruptcy can be avoided, no doubt. But it is a good idea to calculate the costs of doing that. Right now I would estimate that cost at about 18 to 20k.
If you need help locating an experienced FDCPA attorney, send me an email with the name of a nearby larger city (email the address you get these comment notifications from). The type of attorney you want to speak with about this typically offer a free consult. If you do work with them on any FDCPA violation they tend to not charge you anything, as their fees are paid by the other side.
Curious: Do you have any accounts with Bank of America?
Michael B., thanks for the quick response and information. I do not have any accounts with Bank of America and my banking for the past year has been through a credit union.
It’s good to hear that Chase settles favorably since the $4,800 one is with them. Discover and Capital One are the small ones ($500 and $750).
The John Frye calls are quite the spectacle. You get the full spectrum of “good cop/bad cop.” After the threatening-sounding messages are left (and you don’t reply) then they have a calm person try. I’ve read that by contacting Frye’s partner (Michael Katzen) and citing potential legitimate bar complaints, some folks have in the past year successfully worked out a 10% deal. (People on the net say Frye’s side of the business “slums” the debts while Katzen is the more legitimate lawyer.)
I can’t afford any bulk settlements–which I’d previously thought was the only option. However, knowing that monthly installments can be an option helps a bit. Regarding CITI specifically, if they settled for 40% I could pay it off in 3 years, without crippling my life (just making it difficult).
The bankruptcy attorney I consulted with gave me an estimate of around $2,800 for my specific case. But I have concerns with how they can take anything you inherit (up to your debt) if you are left anything in a will within 180 days of filing bankruptcy. I’d be crushed if a family heirloom vanished because I filed and a relative passed away in that time.
Anyhow, I see on the credit reports that due to the charge offs, my credit will be scarred notably until 2020 already and bankruptcy would only be 3 additional years–and would open up more options for credit going forward, knowing that no other creditor gets “first dibs.”
Should I first discuss the matter with the Frye people to see what can be done with the largest debt and then gauge what’s feasible?
I’ll follow up via email regarding finding an FDCPA lawyer.
You are going to be hard pressed to get a a 40% settlement with 36 months to pay on the Citi account. When I see something like that it is with one of the larger and more established debt buyers.
Regarding bankruptcy: What I know of your situation, and were I in your shoes, I would be looking at:
1. Get the bankruptcy over with as soon as possible.
2. Resolve all smaller debts via settlement, and only file BK if sued on the Citi account.
Talking with the Frye firm is a next step, but the current aim of 40% with 3 years to pay is not a realistic goal. But you could get a more pliable discussion going if FDCPA violations were brought into the picture by a skilled attorney.
What do you think is the likelihood of CITI bringing suit? How typical is that?
Michael – This is a difficult time in the collection of debts to answer your question with confidence. At one time Citi was the most likely to sue (not too many years ago). That changed recently to unlikely, and now with some signs of uptick, but not enough to say the trend and policy has changed. There are huge increases to being sued if Citi sells the account off to certain debt buyers, like Unifund.
Dear Michael,
I recently found I had a $42,000 debt to BOA when I tried to get prequalified for a loan to buy my family and my first home. I have never had a BOA account ever! I do share the same name with my father and obviously for a time the same address. I believe my stepmother had the account and my father was an authorized user on her account. Is it possible they connected it to me for sharing the same address and name and not go by ssn#?
I have sent a dispute online to equifax and nothing has happened, but a few automated responses. Can you please tell me if it would be better for me to go in person to a branch of BOA and speak with a manager or write a letter? Does BOA have the ability to help since they filed the debt incorrectly to my credit report, or should I just persue equifax? Any info you can send would be greatly appreciated!
Rocky – Is Equifax the only one reporting this, and not Experian or TransUnion?
Yes, it is unfortunately all too possible to have a mixed file like this occur. You should definitely dispute the account as “not mine” directly with any bureau reporting it. You should also copy Bank of America with your dispute. I recommend you send your dispute in writing certified mail return receipt. Keep a copy of your letter and the returned green card. Depending on how both BofA and the credit reporting agency responds, that may come in handy.
If you do not get the correct result from your efforts on the first try post a comment update here and lets go from there.
QUESTION: if the credit collection company files a lawsuit BEFORE the statute of limitations runs out.. AND AFTER the statute runs SERVES you.. is it still a time barred debt? .. can they still get a judgment against you? (supposing you show up in court and contest the suit, as a time barred debt?)
Larry – Generally you need to be served within the SOL. I would speak with an experienced debt defense attorney in your state about this in order to get an answer you can be confident with. Most of this type of attorney will offer an initial consult for free, so no reason not to make the call.
Be certain you participate in the court process. This means answering the complaint etc.
Is this a Bank of America credit card that was sold to a debt buyer?
yes I believe so, FIA card services (don’t know who they are, but I am told that they are bofa. They sent me an “affidavit” and no original papers. I sent the second letter, and they have not responded ..yet. The kicker here is that I “think” BofA bought out MBNA, who bought out Chevy Chase VISA.. this goes back (I think) .. to 1987.
Here is my idea: I challenge them on the original documents. They cannot produce them. I dispute the credit agency filing with this fact, saying that they have not been able to produce the original paperwork, and therefore the debt is not valid. Would this then result in the credit reporting agency DROPPING the creditor from my credit report. ???
I was reviewing my Credit Report and noticed a concern. As 99% of the rest of the world does, i googled to see how i should proceed to correct my issue. I’m hoping you can provide some tips but ANY information/advice will be greatly appreciated. Here goes…I had a BofA credit card in 2004. Due to a car accident in 2008 i racked up 5084.00 on my cc. I was able to pay the minimum in the begining but then fell behind with all the interest. I offered to pay the debt minus the interest. BofA was unwilling to work with me with payments to the point they didn’t even want nothing less than my minimum due (very aggravating). So simply said the account was charged off in May 2009 to a differnt bank/agency. At this time, the new agency was willing to work with me and i started a payment plan. I was paying on-time so it was a big surprise when i was then contacted by a collection agency saying they are now handling my account. So i started another payment plan and was out of debt by late 2010. I know i should run my report every year but i didn’t. Well now i want to purchase a house and i knew BofA was going to appear. It shows the two collection agencies with the statement “paid in full, 0.00 balance” but BofA shows “CLOSED, 700 past due since May 2009”!! Do i still owe this when the account was “charged off”? How do i go about correcting this? Do i contact BofA or dispute my credit report via NCAC? Also i had to claim the difference of the settlement offer (1000.00) on my taxes as additional earned income as well. Again any help or advice you provide is greatly appreciated.
Sally – The negative reporting as a result of the missed payments and the account charging off will remain for 7.5 years from the date you missed those payments. The means the collection accounts AND the Bank of America account will fall off at the same time. The 700 dollar past due sounds like what typically shows as the payments you missed back in 2009. But if there is indeed a balance showing due of 700 (not the amount you were late), you can dispute that off.
Paid collections will have varying degrees of impact on your credit score. 24 months after the debts are shown as resolved is a great benchmark to figure into fairer priced loans and credit products. This of course assumes all other credit reporting items were kept current, no late pays, credit diversity etc., remained consistent.
See this report about taxes on settled debt,
*Does the fact that I entered into an agreement to have my credit cards cancelled, and pay a monthly amount at a reduced interest rate.. CHANGE the date for the statute of limitations?
*Does the debt get classified as a different kind of debt? , and therefore subject to a different statute of limitations?
Larry – Did you enroll in one of the Bank of America hardship repayment plans? When did you drop off of the plan or begin missing payments? Typically your first missed payment on the credit card will begin the SOL.
Entering into a reduced payment plan does not classify the debt in a different way. What are your goals with this account? What are your concerns around the SOL and classification of your account>
Yes.. I signed 4 credit cards in june of 2009, into the hardship program (bofA.. 2 chase cards and hsbc).. so I had 4 charge offs and the last payment was in august of 2009. I want to run the SOL.. and then call them and make a deal … and clean this up.. (can’t remember if it was august or sept. .pretty sure aug.. I will check my credit report to find out, however the credit report is NOT clear or easy to decipher).. I REALLY appreciate having someone to talk to about this.. can’t thank you enough.. Larry
Thanks for the additional detail. So you are hitting the 4 year mark since you last paid on the credit cards. Are you in a state with a 4 year SOL on credit card debt (unsecured revolving open accounts)?
At this stage you will be dealing with debt collectors and/or debt buyers. Negotiating settlements right now, or after the SOL expires, will not change the savings much (depending on who has the accounts). If you are ready with the cash resources to knock them all down, you could do that inside of a month if you wanted to.
in Utah.. one of the cards collection companies sent me a letter.. and I am responding with a request for all documentation.. I have been told that after the 4 years they can still try to collect.. but they cannot get a judgment.. I have been living without credit. and am getting good at it… I still have an address in California.. and plan to go back there shortly.. my residency is not fixed.. I have both… I will be ready with cash in about 2 months.. just want to make sure if they serve me.. that they cannot get a judgment….
Larry – Okay. 4 year SOL for both. If you are served before the SOL expires they could still seek a judgment. If served after the SOL passes you would still have to file and answer and defend the suit to the point of getting it dismissed for being brought passed the SOL.
I like your plan of requesting validation with only maybe a month or 2 left on the SOL. If it is a debt buyer you are hearing from on the collection, you will have a better shot at deferring collections for a bit, and then circle back to settle with much less pressure.
I am from California working in Utah and back and forth so much that even I am not sure where I am from anymore… both are 4 years. Negotiating is one thing.. my hesitation is that I don’t want to incur any judgments.. so I want to sail passed the SOL date. then in a couple of months when I have the cash.. settle.. I have become accustomed to having NO credit..
At this point I feel that I will have the bargaining hand… they all jacked up my credit cards to 30%.. I had NOT missed a payment in 30 years.. kind of like taunting me to fail.. were the big banks betting against me? not happy with the entire scenario… all good credit got me.. was to make me a target for unscrupulous credit mongers..
I hear ya. Credit is a utility that can turn into something more like a noose rather quickly. Once you get to the place where you are ready to negotiate the deals, locate the debt collector or buyer you are dealing with using the search box at the top of the page. You should be able to find a page with a current discussion for dealing with them. You can post comments and get feedback for each.
Micheal,
Where do I start??? I have two accts with B of A that total 41k. We were charged off on both about a year ago. We didn’t hear a thing from them. We are looking to buy a house within 6 months. I can’t purchase as I had a short sale last august. About 5 months ago We were recommended to establish a payment plan so the underwriters can see a history of payments with B of A. We set up 100 payments interest free. Unfortunately with these payments my wifes DTI is too high. I called them today to see about a settlement. I was offered one at 60% and I declined because I couldn’t make that work. I asked how low could they go and I got a 57%. Which is still too high. I said that I was looking for a 30% range. And they said no way. I got the feeling that it was friday night 10 min before close and she wanted off the phone.
Should I cancel my payment plan and see what happens next? Do I let go to a third party?
Thank you for time
St
st – A good amount of underwriting on home loans use Fannie and Freddie criteria. You may not qualify under that structure this soon after a short sale. And I sincerely do not think paying 100.00 a month on balances that size is doing anything for you. Who was it that recommended you take the course you are on?
I am confident you can do better than the 57% settlements. Are you prepared to fund lower settlements in the 30% range right now, or would that take you some time?
Michael,
Thanks for your reply.
To clarify, We are making 100 payments @ 410 monthly. The short sale is in my name only and my wife is on the BAC accounts as a joint acct.
We are trying to qualify for the house using my wifes income only. Thats why we need to get the BAC accounts settled to free up the DTI ratio.
If we were offered 30-35% we’d be more than happy to settle. As I said They said no way to the 12k I offered them on friday.
What should the game plan be???/
Thanks
ST
ST – You have an interesting situation, but one that is navigable if you allow for some time in order to achieve your goals.
100 payments of 410 at zero interest would not be a program set up directly with BofA unless this is some pilot test program. OCC guidance on these reduced payment plans on full balances are not allowed to be designed to last more than 60 months if the accounts have not been charged off. Who was the plan set up with/through? How many payments into the plan are you right now?
If you can answer those questions, I can reply with more useful feedback.
Michael,
The accts have been charged off. The are with the internal recovery dept.
We are 5 payments in at this point. But we need to settle ASAP
Thanks
St
Okay. Here is the catch 22. You need to settle to get the DTI in line, but also need to stop paying in order to get the amount you can afford to settle for to get through the system. WIth the account already reflecting charge off on your wife’s credit report, there will not bee too much more damage credit score wise, but there may be some. Working with internal recovery after charge off will not be like waiting for 5 missed payments to settle at the best rate with Bank of America prior to the account charging off. You will need to miss one or more payments to get to the settlement you need. And you may not reach that settlement with the Bank of America recovery department. It may be reached with an outside debt collector. That will not necessarily be a bad thing – just a different thing.
Is 60 to 90 days ASAP enough?
Michael,
60-90 will work. What else should I do besides ending my payment plan?? How often do I contact them to seek a settlement etc.???
ST
ST – If it were me, and I could fund the targeted offer right now, I would be proactive by calling out every couple weeks. I would also recommend you work one on one with a pro to guide you through the process. You can call in and consult with a specialist I recommend on the site and learn more about the value of that type of guidance at 800-939-8357 ext. 3. Knowing what to do, what to say, and what not to say in your negotiations, is a good resource to have.
Bank of America sent me past due account to collections in June 2013. About $13,700. The calls from collection agency GATESTONE have just started coming in. How would suggest I handle? I can come up with about $4k cash for a lump sum, but I don’t think they’ll settle it for just $4k. I am fully employed, but income is off 40% the past 8 months. Got behind on payments and rest is history.
How to settle BOA debt – sent to collections
JM – 4k to settle that Bank of America balance is not out of the question. A more realistic expectation would be anywhere from 500 to 1500 more.
You would call Gatestone and let them know you never intended to fall behind, but your income was cut in half without warning. You have tapped every resource you can and can maybe come up with 3600.00 if the account could be considered done. Don’t talk in percentages, Just round dollar figures. Do not expect to hear yes on the first call. You could expect to hear a counter offer. Do not agree to anything. Just that whatever number outside the realm of your ability will be impossible to come up with. Do not expect to get this done in one phone call.
Do not go into much detail about your finances. If the call goes in any direction you are not comfortable with, come up with any excuse to end the call (someone at door, son or daughter calling etc).
You will want to read about getting settlement letters, and how to pay settlements.
Do that and lets go from there.
I spoke with GATESTONE / FIA Card Services and followed your directions to a “T”. I said, “Never intended to fall behind – income is cut in half without warning. I’ve tapped every resource to try and keep up with payments. I can maybe come up with $3,600, if they account could be considered done.”
The rep drilled me for personal financial information. I provided none. He kept saying that he needed it as leverage in order to submit the $3,600. I held strong and provided no personal financial information – stating repeatedly that all I have to say is what I’ve already said. I then repeated myself several times. He finally stopped asking the personal financial questions and then played a pre-recorded 1099C recording and said that he will let me know if they can accept the $3,600 as settlement. He also asked me several times I would simply go back on the payment plan and I said NO. He also asked me how quickly I may be able to come up with the $3,600. I said, “I’m not sure – maybe 14 days, and that’s a maybe.”
The difference of the settlement will be reported to the IRS as income, correct? 1099c form will be sent to me and I will then be responsible for taxes on that difference, correct?
Thank you in advance for your continued assistance. I greatly appreciate your knowledge and correspondence.
JM – I posted the above comment for you. Sorry you had difficulty with the site. Thanks for the update. Stick to your guns. Follow up in a couple days if you do not hear back.
See this report on how you may or may not owe taxes on forgiven debt when settling. The 1099c being sent to you and the IRS by the creditor/collector is real enough. How you calculate if you will owe tax or not is simple to determine.
Please do keep me posted on how this turns out.
Hello Sir my question is I did a Short sale almost two years ago about $70000 was charged off by BOA and is showing up on my credit as a charge off I would like to possibly negotiate with BOA to offer a settlement for maybe 5% of the balance to get the charge off, off my credit I don’t know what Dept to contact because the short sale Dept is saying they have nothing more to do with it and the Cust Service Dept is telling me to contact the Short Sale Dept it’s a big run around can you please advise me on who I can deal with in regard to BOA any help is appreciated
Cornell – If your goal and purpose for settling is to get the charge off Bank of America is reporting to the credit bureaus removed from your report, it will not happen. If the goal is to settle in order to get the amount to reflect a zero balance owed in order to improve the DTI on your credit report, and make progress rebuilding credit from there, that would be realistic.
5% is not a typical settlement to get approved. Was there a promissory note signed for the 70k in order to push the short sale through?
To the best of my recall B of A had me on a 60 month program and before entering the program some late payments plus introductory rates ending had me at 29% I think. So, needless to say, things were getting out of hand at an alarming rate. Presently the interest rate is 4%. I would love to settle the debt but have no one who could lend me 4,000, so don’t feel that option exsists.
I have considered going bankrupt but talked to MMI today and they advised I go ovr my budget with them and take another look at my account.
I think I’ve been considering allowing the one account to discharge to free up some money and then to hopefully have time to regroup and repay that debt at a lower monthly amount. What I’m trying to understand is would that just be creating bigger problems in the long run? I would like B of A to lay it out to me, as in “we discharge this debt and so and so collection agency will soon be calling”. But I know the people who answer the phone for B of A are instructed to encourage me to make that minimum and not abandon the account and then they move on to the next guy. As for MMI my guess is they prefer not to advise me to allow the discharge even if like you mentioned, they could eventually help me work with a debt collector. Or maybe they are all giving me good advice, to somehow make the payments?
Debt is a nightmare, but there are times I wonder do I opt to finally pay my dentist some money and buy my kids some things they need or do I try to keep my already bad credit from being worse?
Carolyn – Thanks for the additional info. At the current 4% interest rate BofA set, and when contemplating paying the balance back, the monthly payment is not going to get much more affordable. 4% can only be lowered to zero percent and the balance amortized over 60 months in these creditor direct repayment plans. Those are parameters set by bank regulators, not bank of America or MMI.
Letting the credit card with BofA charge off and hit the collection pipeline can create bigger problems in the long run. But those issues can be managed along the way. It is not so much the issues down the road I want you to think about (though you must), but the affordability of what you are doing now, with this, and other debts.
I want to encourage you to read a couple of articles that will give you a bit more perspective on what happens with the BofA account if it remains unpaid, and also consider the affordability of the path you are on, along side the short, mid, and long term impact to your credit (and access to new credit products).
What type of debt relief can you afford – This brief exercise will help you understand if the path you are on now is mathematically sound given your income and budget.
What banks do with unpaid credit cards. This is the stuff Bank of America is not laying out for you clearly.
Solutions for debt and access to new credit. Surprisingly few debt relief service providers will lay out the facts of credit scoring and access to credit in the way this article does. Compare your future credit goals and needs with your income after reading this. Credit scores bounce back, and your debt load can prevent you from getting any new credit just as much, if not more, then a lower credit rating will.
Paying back your debt is always sound advice, but only when you can afford to. Not being able to pay the dentist, or provide basic necessities like shoes for your children (whose feet seem to grow out every week – been there), suggests you look for other ways to trim the budget, and if no wiggle room exists, consider alternatives to the debt management plan you are on.
Post any questions or concerns you have in the comment sections of each of the above linked articles, or return to this one and post them here.
Hoping for some help please! I have been in a debt management program and half way through. Before I signed on with MMI I had two accounts with Bank of America in a debt program. When MMI created my program with them I didn’t realize B of A wouldn’t accept the terms because of being in a program with them already. So, B of A declined the offer but I had MMI continue to send them money as it was all I could afford to do and figured better to keep trying. Presently one account is in good standing but one account for roughly 13,000.00 will be 90 days past due if I don’t make up the minimum payment. I have been told this would lead to the debt being discharged which they told me would be very bad. I am making my payments to MMI by what feels like a miracle each month. I understand the mark against my credit the discharge will be but I am not going to be buying I home as I am very lucky to eventually be inhierting the house we now rent. I don’t plan on using anything but my debit card for purchases and we buy old, used cars so don’t see new car payments in the future. My question is, should I let that account go the route of being discharged? I know it could be sold to a collector and that I would enter into paying them but could that be under more affordable terms? Can they charge interest and can they garnish my wages? I live in California by the way. To pay 500 less to MMI for that B of A debt would give me some breathing room I must admit. I would like to pay my dentist some money and buy my kids some shoes!
When I talk to B of A or MMI I come away more confused and need some facts from someone unattached to either enity please! Your help deeply appreciated, thank you!
Carolyn – It is a fairly consistent policy for bank of America and other card issuers to not offer monthly payment reductions through consumer credit counseling agencies, like Money Management International, when the bank has already enrolled you directly into one of their internal plans. Couple questions:
Is the lower monthly payment option Bank of America set you up with internally temporary, or were you told this could go for the life of the balance at a fixed monthly amount for 60 months?
What was the interest rate on this BofA account prior to agreeing to anything else direct with BofA?
What was the interest rate reduced to in the plan?
If you let the 13k account with BofA go unpaid for a few more months it will charge off and get dropped into Bank of Americas collection pipeline. That means your account will either be assigned out to a contingency collector, sold to a debt buyer, or at some point sent to an attorney for collection. You will have options to resolve the debt along the way, or get with MMI to see if the debt can indeed be folded into your debt management plan with them once you know where the account is placed. Contingency collectors and debt buyers (even collection attorneys in some instances), do set up affordable monthly payments long term through credit counseling agencies.
You can also look to settle this account if it is not rolled into your plan. I would target about 4k for the settlement. If you can tap a friendly resource for that, it is something to consider a couple months from now.
I should point out that your being in a position where your DMP payments are being met monthly, but you are unable to afford basic necessities, suggests you could be one hiccup away from not succeeding with the repayment. Have you looked at all of your alternatives?
Hi Michael (so many Michaels on here is getting a bit confusing),
Few things here. First and foremost, I appreciate your replies to the comments as well as your original article. Very helpful.
I’m in the process of re-building my credit after a recent apathetic approach to my credit and election to live with cash. I was recently added as an autorized user on an account with an $18k limit and $400 balance with 15 years of on time payment history. Unfortunately, it only raised my credit score one point and now has one of the reasons for my score being that I have recent accounts opened. Does this make sense? One point seems a little low for the kind of account history. Would being added as an authorized user be classified as a new account? No other accounts have been opened for at least three years.
Also, I have a BofA credit card that was charged off early last year. I checked my score today (as I do almost weekly) and noticed that the ONLY change was BofA changing the remarks from charged off as profit and loss to charged off purchased by another lender. My score somehow dropped 42 points because of this change! How could this be?! The balance now shows zero (I understand because it was sold). Is it the update that’s making it look brand new again? Very frustrating when I look forward to tackling this issue. From reading what others have had to say it’s going to prove very difficult to do anything but settle and wait the remaining 3-4 years for this to fall off from reporting. Ouch.
Any tips, advice or insight. FICO isn’t exactly a company you can call and complain to and there doesn’t seem to be much outside of hiring an attorney to explain this stuff.
Thanks in advance,
Michael
Michael – It can take 6 months to season a new entry on your credit report. That is not what is dragging you down though. The recent Bank of America credit card charge off is what is killing your credit. I want to be sure I understand what happened to you. Your comment reads like:
Credit card with Bank of America charged off in January of 2012.
Nearly 18 months later an update of that account shows up as having been sold to a debt buyer.
Is it the debt buyer reporting a new entry that you are looking at? Is there a debt buyer collection entry on your credit report? If so, who is it?
Settling a collection account and getting it updated on your credit report as zero balance owed does not mean another 3 or 4 years for your credit score to improve. Far from it. You can have far better success than that.
What is the balance owed on the account? Who owns it? What is your score now? What credit goals do you have for the next 24 months?
Side note: Most attorneys are not versed in credit reporting. Hiring one, unless they are an FCRA expert (very few focus on this area in their practice), would be less than productive.
Hope this works when I post it. You can see I ran my report on 5/22 and then 5/29. As I mentioned this is the only change in my report but my score went from 638 to a 596! I don’t know who bought the debt and they have not posted anything on my report to date. The account originally charged off just over a year ago. They apparently updated in November and again this last week and it seems to be hurting my score each time.
Do you have any information about my authorized user account moving my score from 637 to only 638? If you prefer, I’m happy to directly send you screen shots of my TU report. Thanks for the help. Can’t tell you how much it’s appreciated!
BK OF AMER Old – 05/22/2013 New – 05/29/2013 Comparison
Account No.: 73** 73**
Condition: Derogatory Paid
Balance: $1,946 $0 (-$1,946)
Type: Credit Card Credit Card
Pay Status: Collection/Chargeoff Collection/Chargeoff
Past Due: $547 $0 (-$547)
High Balance: $1,946 $1,946
Terms: — —
Limit: $1,500 $1,500
Payment: $0 $0
Opened: 10/05/2005 10/05/2005
Reported: 11/14/2012 05/20/2013
Responsibility: Individual Individual
Remarks:
Charged off as bad debt
Profit and loss write-off Charged off as bad debt
Purchased by another lender
Late Payments (last 7 years):
30 Days Late: 0 0
60 Days Late: 0 0
90 Days Late: 0 0
It can take some time for the addition of the new account you are authorized user for to have an impact. That impact is muted by the charge off. It would have been better to have resolved the unpaid debt with Bank of America before adding the authorized account, or to have resolved it with the debt buyer that will likely show up in the near future. You would then better be able to gauge the full benefit. You are set with a scenario where your credit can recover more rapidly, but not until other fresher negatives take on a more stale and aged affect.
If you would like to try to avoid the debt buyer showing up on your credit report as a fresh negative, you can call Bank of America and inquire as to who they sold it to. Then work out a settlement and pay it.
You can enter the name of the debt buyer in the search box at the top right of this page and likely find an ongoing discussion you can add to. If there is not a page dedicated to the collector/buyer, you can start one by using the “ask Michael” link at the top of the page.
Michael – Brilliant. Thanks a million for the replies. One question remains regarding my BofA charge off. I verified that it originally posted in my credit report in December of 2011. How could the update this past week seem to refresh the charge off and impact my credit as though it were a very recent charge off? Thanks again.
It could be that because Bank of America just recently sold the debt, and updated the reporting to reflect now zero dollars are owed to them (which would be accurate and required reporting), also adding the fact the account was sold off to a factoring company with it, hit you with the “freshy”.
So my score can diminish each time they update the information? The purchasing company of the debt has yet to post anything to my report. To my understanding, when they do it can’t pull my score down because it’s for the same charge off. Seems like I’m being punished repeatedly for the same charge off that originally impacted my score negatively in Dec 2011. Is this a situation you would recommend contacting a consultant? Thanks. I’m glad I discovered this site. There is a lot of beneficial information in its contents.
Pretty much. The new information is showing that Bank of America made a debt sale, and with that comes a certain amount of freshness to what was already a bit stale – depending on how long ago the charge off happened.
A new collection item is… new. Its fresh. This can, but will not always, impact the credit score. When you settle a negative trade line it also brings freshness and a brief, but often minor, credit score drop (though this will no longer occur with the new Vantage score model rolled out earlier this year).
Yes, you are continually hurt by a charge off. I have written about the “double jeopardy” aspect of collections and credit reporting in the past, but for other sites. It gets worse with what can be viewed as “triple jeopardy”, which is when someone is sued for collection – judgment entered in court record – data miners pick up the judgment and report it to the major credit reporting agencies where it becomes part of your public record section in your credit report (a whole new 7 year reporting shelf life too). All from the same credit card account that went unpaid.
Whether or not you need a consultant to help you accomplish your goals can depend on what you are looking to accomplish and how soon. I can help you get where your going with general information and specific tips for each creditor or debt collector you are dealing with – right here in the comments of this and other pages of the site. But generalities are not always what is needed, or are they going to catch subtleties of your situation and goals that working one on one will help to maximize results. We do offer access to work one on one with a specialist to help you get where you are going. Its affordable, and you get to work with someone just like me. Call in for a consult to learn if there is value for you: 800-939-8357 ext. 3
Michael,
Great to speak with you as well. Your input was very well received and I’m putting all of the pieces together and will be ready come June.
In the mean time, I have a couple more curiosities if you don’t mind?
Hypothetically speaking, but knowing my primary goal and assuming I am successful in reaching an ideal result. In the 6 months or so that it may take to re ailigne my credit, would having a friend or family add us as an authorized user help in building things back up?
Also, are medical collections ignored when it comes to mortgage underwriting?
Again, I cannot thank you enough for your time and professionalism.
Mike – Adding you as an authorized user on a long established, higher credit limit, low balance owed type of card has proven to be a good method to either help establish, or reestablish credit and bump a credit score after a time. I would not look to do that until you get the old charged off Bank of America credit card balances settled. You do not have to wait for the credit report to update with the fact there is now a zero balance owed, but waiting until the accounts are negotiated and paid. This would help prevent the appearance of any flags the debt owner may view as a reason to hold out for a higher percentage deal.
When it comes to current underwriting and mortgage approval, just about any outstanding balance on your credit report is going to be part of the DTI calculation that can impact loan approval and rates.
Michael – Thank you so much for the great article and your offered accessibility.
I am in a similar situation and would appreciate your feedback, as I am getting anxious.
I have two B of A accounts that I unfortunately walked away from when things got tough in 2008/09. The mentioned accounts both last active 08/2009, totaling close to 43k. After refusing the drastic BK, I have spent the last 2 years doing everything I can to re-establish my credit profile, from paying what I could to credit restoration, two years later, I am not much closer than I was when I started.
I also am trying to provide my family with a new home, but am unable to find financing. Here in Texas our SOL is 4 years and am super close. I would like to know my best bet going forward? I spoke to a couple of lawyers, but am unable to trust another process like that. The accounts show charged off and zero balance from B of A, and balance due from the collection company, so it was sold off. Will it do me any good to contact B of A to negotiate, or are they out of the picture?
Its going to be a long 3 years if there is not much else we can do.
I appreciate your time and effort.
Mike H.
Mike – If Bank of America is showing a zero balance owed them on your credit report, they sold the credit card debts off to a debt purchaser. Contacting Bank of America at this point would be for the exclusive purpose of confirming with them who they sold the debt to.
You can negotiate with the new owners of the debt, or any collection agency they have the debt placed with, just as easily as you could with Bank of America. In some instances it is even simpler to resolve debts at this stage.
With your stated goal being home ownership, the SOL is not going to mean much for you to accomplish that. The outstanding credit card debts are going to skew your debt to income calculations whether the SOL has expired or not. This will impact loan approval. Especially with the qualified mortgage rules set to go into effect 1/1/2014.
If settling the debts will help you achieve your goals and you want to learn more about, and prepare for that, post a follow up comment with answers to the following:
What are the balances on each account?
Who is collecting or showing up on your credit report (other than BofA) for each balance?
What amount of money can you pull together to resolve the debts (right now or over a period of months)?
Thanks for your reply!
So, with the SOL coming up, that gives me leverage in making them go away? If I were to write them and remind them that the 4 years are up and have no intention of paying them a cent, does this help or hurt me? If it helps, how so?
I was referred to a lawyer as I mentioned, he said he thought he could help, but am assuming that he will only help with the settlement and charging me a ton?
My disgust lingers, because at the end of discussions with B of A their final settlement offer was $4,000, for both accounts combined. Unfortunately, I didn’t have the money at the time and couldn’t burden anyone else with my problems, not to mention I did not foresee this haunting me this far down the road. When I worked in mortgage, most things 12 months out was ignored, but i have no one to blame, but myself.
Desperate to get from under these two accounts, I could probably afford around $5,000 in order to settle and hopefully have them deleted.
The current accounts are owned by Asset Acceptance. Account #1 has a balance of $37,915 and Account #2 of $8,225. Those totals must include interest and fees, as my limit was 34k and $7,200, I believe.
Mike – The SOL would only prevent the new debt owner from filing a legitimate lawsuit to collect on the old Bank of America accounts. If the SOL passes, but the debts remain as unpaid on your credit report, you are still going to be hindered from accomplishing home ownership.
Writing to any debt owner to let them know that the SOL is almost up and that you are never going to pay them is the opposite of productive. As in – don’t do it.
You really do not need a lawyer, me, or anyone to settle the credit card debts. You can do just as well, and perhaps even better, on your own, and without the fees. If a debt buyer were to sue you for collection, that would be a good time to connect with an experienced collection defense attorney.
Bank of America made a great settlement offer to you back then, no doubt about that. At the height of the economic downturn a few years ago, BofA saw record credit card defaults. In response to that, they offered never before heard of low settlement offers. Many CRN members were able to see 15% settlements. A few were settled with BofA for a little less than that, like your offers. Those days are over. Current settlement trends with Bank of America in 2013 are between 25 and 40 percent. I know that means nothing on your accounts, because you are dealing debt buyers, but I want later readers of this page to understand the offers made to you back then, are not realistic expectations today. Also, don’t brood on that offer passing you by. An offer is only as good as your ability to fund it.
Mortgage approval with really old credit card debts like yours with BofA are pretty 2006 now. With the qualified mortgage rules dictating debt to income ratios that will factor in unpaid debts, loose lending standards of the past will not likely be repeated, or at least anytime soon.
You will be hard pressed to get a 5k deal out of Asset Acceptance on those balances. I won’t say it is impossible, I have seen some things get through from time to time. But that target is not generally a good expectation. Any expectation of settling and getting them deleted from the credit report WOULD be unreasonable. Getting them to reflect zero balance owed and resolved is all you need to work toward your goal of a home loan though.
If you are serious about settling these old BofA accounts, and want to talk strategy with me, let me know in a comment reply. I will send you an email with my direct line.
Every ounce of me is dedicated to conquering my past. I would love to discuss approaches with you.
Good to speak with you today Mike. Post any additional comments or questions you have as they come up.
Hi Michael,
I have a old PAID/charge off from Amex. It’s about five years old. Is there any chance of getting this charge off removed?
Luis – You can always try disputing a negative item off of your credit report. It is best to have a valid reason to dispute it. Is there anything about what is being reported that you question?
Old resolved collection accounts lose potency to hurt your credit scores and rating. How long ago was it that you paid this? What credit goals do you have in the next 24 months?
Mr. Bovee- I have been trying to get them on the phone for days now to reach their internal credit bureau disputes department but I have been unsuccessful. My husband had a short sale through BOA and it “falls off” his CBR in 06/2014, I was calling to see if they could remove it early since the co signer had it removed abut 6 months ago. Any suggestions?
Gina – With the date for this to fall off the credit reports so close, what is the reason you are in a hurry to get it gone sooner?
I have just a few last questions for you Mr. Bovee and then I’ll let you move on. Again, I really appreciate the time you have taken w me and the advice you have shared. If down the road they should offer me a settlement, and, I am able to start saving to be prepared for such, how much do you think I would need to settle a cc debt that is slightly over $18000 w BOA? Obviously you don’t know for sure but from your experience is there a dollar amount or a a percentage I should be trying to negotiate towards? Also I have read that a settlement is typically done in 3 or 4 payments over the course of 90 days..is that correct?
Take Care..Tony
Tony – It is not so much an issue of them offering a settlement. That is a process that is better done in a planned and prepared way. If you were not experiencing something of an anomaly with Bank of America already, my feedback about settling with them would be much more direct and the outcome much more predictable.
If after their count of 180 days, they are still drafting payments, then you are still good to go on the plan they set up with you. Look at your bill and be sure you are not being charged late fees, or any other type of fees.
If they do drop your account into the typical collection pipeline, your target settlement amount will be different based on where it lands. I see Bank of America credit card settlements ranging between 25 and 40%. That is based on real time data as of today.
If you want to drill into the details some more (which I will need some additional insight into stuff you may not want to post online), I can speak with you on the phone. Let me know if you are up to that and I will email you my direct line. Lost in the 50’s weekend here, which is my favorite weekend of the year in my little corner of the world, so Monday would be the earliest opportunity to connect.
I’m concerned too! I just checked the new statement that came out and it’s not good news. It’s showing my next payment of $420 due 6/15 and once again my past due balance as $1600 with a total of $2100 to bring the account current. At this point do you have any advice for me? As I’ve said it took 3 ppl last time for them to tell me nothing was wrong on their end. Are there 2 different repayment types of plans? One for hardship and one just a repayment plan or something? Perhaps I’m in the wrong one?
I really appreciate you taking the time to help me w this. Thank You!
Tony – There are several different payment plan and settlement options with Bank of America. From what you have shared, you were set up in the 60 month repayment plan at a reduced interest rate. It just was not set up in their system correctly. Here are the options I see:
1. Keep hammering away with phone calls until they correct this to show that your payments were reaged.
2. Get a similar monthly payment through a debt management plan using a credit counseling agency who has much more direct communication channels open with Bank of America.
3. See what happens after you cross over the line BofA has you set for to charge off your account. If you transition into their internal recovery department or FIA services, you can likely get set up with good settlement or repayment terms.
Credit card settlements with Bank of America at this time are favorable. You can save a great deal, but would have to raise cash for it.
“Recommitting” never did I hear anything about that. I’m now totally confused. Is what you’re saying that they entered into a 60 month/$420 month agreement that is basically only good for a year? Can they change the terms of our agreement after 12 months or is it just me signing something saying I still agree to our terms?
I’m not very happy w the way BOA does business. At one point in the past few months a rep tells me they can settle this acct for $12,000 then a month later another person tells me they can’t settle for less than $16,000. It’s almost as if one hand doesn’t know what the other is doing over there.
Tony – The 12 month payment commitment is done over the phone. You would get a reminder letter in the mail a couple days after the 12 payment was drafted. Nothing to sign.
I really think your account is not set up correctly in BofA’s hardship plan. That is why you are going through what you are. Bank of America would not offer a settlement at all if your payments were being recorded correctly as on a managed plan.
If you are serious about settling with Bank of America, based on today’s trends, the numbers are much better than the 12k you were quoted. But that is not an option when you are working with them while on their payment plan.
I am still concerned that your account could be charged off and dropped into the collection pipeline.
UPDATE:
After several minutes and 3 people later I finally spoke to someone who acknowledged that rolling that past due into the account had happened in the past however it does not any longer. She had no explanation as to why this practice has been stopped. She also said she didn’t have any solution for my situation other than for me to start paying down the past amount owed. Failure to do so in a timely manner could result in the credit card debt being charged off she told me.
Now here’s the kicker…I generally make my payment the day before it’s due on the 15th. This month I made it on the 10th after speaking to the supervisor. Miraculously….I just looked online to find out that my payment had posted to the cc account and it had changed my past due from $16oo to $1200…meaning the payment I made was applied toward the past due amount. This hasn’t happen at all in the past 10 months that I have been on the repayment plan. Not really understanding the what’s and whys of it all but happy to see movement in that past due amount and hoping it will put a stop to any charge off action.
Thanks for your help!
Tony – I would not expect for it to stop any system charge off action based on what you shared. I am a bit surprised by what you shared Bank of America having told you. It is not at all consistent with the hardship repayment plans they have been offering direct to their credit card holders for years. It would also fly in the face of how Bank of America offers to reage credit card accounts that get enrolled into a credit counseling agencies debt management plan.
My sense is that either what is occurring with your account was not explained to you very well, or they saw the error – fixed it – and you will make normal progress on your hardship repayment plan from here.
Were you told you will have to recommit to the repayment plan with Bank of America every 12 months? This “recommitting” yearly did become part of these types of direct to consumer payment options more recently.
I have $19,000 in credit card debt with Bank Of America. Back in August, when the card balance was just over $22,000 BOA agreed to a repayment plan of 5yrs at $420 a month. At that time I was 4 months past due and had an overdue payment of just over $1600 due. I noticed after making each payment of $420, that the balance of my debt was slowing going down however the statement always showed the past due balance of $1600. The statement also showed that the next payment due was the $420 along with the due date the following month for it. Anyway..I made the payment agreement in August as stated and since then I have always paid the $420 on time. In the past few weeks BOA has been sending letters and calling me constantly. When I returned their call I was told that past due balance was not being paid off and therefore if I didn’t pay more each month then the account would be charged off. Now I’m making the agreed $420 payment each month on time and if I could have paid more than that then I would have agreed to more. I can’t so I didn’t. How in the world can I be expected to pay down the $1600 past and why are they expecting me to when it wasnt part of our original agreement. I guess my question is what do I do now? Do you believe they will charge off my account even though I’m paying on time?
Thanks for your input,
Tony
Tony – When your Bank of America accounts were enrolled in the 60 month repayment plan, the 1600 should have been rolled into that. That is normally what happens. I cannot say why it did not in your case.
Call Bank of America and ask to speak with a supervisor and explain the situation in order to get your payment situation worked out. Please post an update here with what happens.
Yes, as silly as it sounds, if this does not get corrected in their system your credit cards with Bank of America could be charged off and sent to outside collection agencies, or sold off to a debt purchaser.
Hello…my sister had a mortgage loan thru Bank Of America. It has been charged off…she continues to live in home. Bank of America told her she can stay in home for as long as she wants, but to pay property taxes. How can she settle on this charge off? She has been stressing since 2009. She wants to keep her home….Bank of America told her she cannot short sell nor settle on account because it was charged off. Need Help with this.
Thank you bunches 🙂
Isabel – I am not sure what Bank of America may be referring to as charged off debts, even HELOC’s and the like, are settled routinely. I am sure there is more to the story, and probably more than would belong in the comments section of this post. If you and/or your sister would like to call in for a consult, we offer them for no cost. Just dial 800-939-8357 ext 3.
Michael,
I have a second mortgage on my credit that shows a charge off with a balance of $102,000 owed. This home was foreclosed on in 2009 and eventually sold by foreclosing lender in Nov. 2011. This home is in Nevada which I believe SOL is 6 years. The foreclosure doesn’t show up on my credit report because they didn’t respond to the dispute so it was deleted. The CO still shows up which obviously affects underwriting for getting a new home loan ( I was told by WF bank that it must be a minimum of 4 yrs after the the home was sold to be eligible for a new loan). I had contacted an attorney and they stated that the second mortgage SOL to collect in Nevada is only 6months (like the 1st mortgage) after a foreclosure but I’ve read that they may have the entire 6 years from date of 1st default to legally collect. Which is it 6mos or 6 years? The 7 years to fall off my credit is Mar. 2016 (plus 180days = Sept/2016) and the 4 yr window being Nov. 2015 from date of sale. I’ve attempted to negotiate with Greentree with no luck. They are willing to settle for $50,000. If I had that kind of $ I would be in that situation. Would it be worth trying to settle for say 10% since SOL has expired or just wait it out til late 2015/ mid 2016. I’d like to purchase by next May so I don’t want to do this unless I must. Any advise? Thank you so much for your informative posts.
There are different reasons why a second would stay collectable for the full 6 years. The attorney you spoke with about Green Tree being passed the SOL already would have the most reliable feedback if foreclosure law is a regular part of their practice.
If it were me,and if I were certain I could not be sued, I would hold on for the 4 years the Wells Fargo rep said is their standard for a new home loan (after the sale), and use any money I would have paid to settle the charged off second mortgage as part of the down payment on the new purchase.
What would be the reasons a second could still collect for the 6 years? I thought the assembly bill (AB 273 I think ) limited 2nd mortgage holders to a 6 mo SOL if foreclosed after July 2011. What would be the exceptions to the rule and how would I know where I stand in all that?
The attorney you spoke with before would be a good resource to help you drill down into the why’s and how’s your second mortgage would be passed the ability to sue. Some states will apply different treatment to seconds when they are purchase money vs cash out refinance loans.