Welcome to CRN’s Debt Settlement and Negotiations Guide. This guide makes up the largest portion of the debt relief and credit guides published on this site. That’s because debt settlement does not fit into a tidy package like consolidating credit cards, consumer credit counseling, or bankruptcy. I thought it important to have an introduction to debt negotiation due to the amount, and variations of content, you will find here.
The concept of settling unpaid debts, like credit cards, is not overly complicated, though it is certainly something that cannot fit on a single web page. And once you introduce the different stages of debt collection; and how to negotiate with debt collectors vs settling with your bank; or outline what you can do when settling collections in the court; the content for the debt settlement guide grew larger, and continues to expand.
Credit cards are the most common type of debt that can be negotiated and settled for less than the total balance owed. Much of the debt settlement guide focuses on this from of unsecured debt for that reason. But there are many other types of debts that the guides can be applied to. You will find guides related to settling business debts, medical bills, personal loans, and more, throughout the site.
Get the Most Out of This Debt Settlement Guide
We highly recommend you read through the debt settlement program in order. This will allow you to gain the maximum level of understanding of what credit card debt settlement is, how it will work in your specific situation, when settling debt works best, or even why you might want to avoid debt settlement all together. This recommendation includes any of you reading who may have committed to settling credit card debts that you stopped paying some time ago.
Following the recommended outline for settling credit cards is suggested because:
- Debt settlement, as it is explained by the media, and what is probably more than 10,000 websites, often does not scratch the surface of the topic (it cannot be explained sufficiently in a single article).
- A debt settlement company selling their program to anyone who will listen will often fail at giving you a detailed outline of what they are trying to sign you up for. Opting instead to put profit or sales commission goals in front of your need to be adequately informed.
- You should understand the fundamentals of settling debt so you can weigh the benefits and the drawbacks with clarity – before negotiating and settling debt yourself, or hiring a professional.
Following the way we have laid out this section, no matter what stage of collection you might be in (and especially if you are still current with payments to creditors), puts you in the best position to succeed with debt settlement.
Once you complete your review of our debt settlement guide, you will know more than the majority of sales people who are the front line for selling debt negotiation to the public.
Before You Jump Into Debt Negotiation
CRN advocates settling credit card debt as a personal financial solution. We have provided debt settlement education and debt negotiation services since 2004. We are good at it. We have made our customers, members, and readers good at it. We are also not your Aunt Mildred’s debt settlement company (no offense Mildred).
We have decided to create and publish the online debt relief program for many reasons. We may fully lay out more of the reasoning in a later update to this section, but for now, here is some of the considerations we have in doing this:
Debt settlement works for the right person and the right situation. Debt settlement does not work for the wrong person, nor does it work well for the wrong situation.
We decided to create and publish this guide so that you can tell the difference between whether settling credit card debts is right for you, and if it is, when, why, and how much of your money to put into this method for resolving debt. We hold nothing back. We offer our support freely to the public through dedicated feedback in the comments on virtually every page of the site, and on our DebtBytes YouTube channel.
If we can save you from making uninformed debt and credit decisions that can hurt, rather than help you, we want to. If we can save you money when you settle credit card debts, we will.
What is Debt Settlement?
Debt settlement is what happens when you negotiate a payoff for less than the total balance you owe on a debt. The lower payoff amount will be something the creditor or debt collector agrees to document and accept from you as payment in full. The lower negotiated amount should be something you can afford to pay in one lump sum, or over time if it is a term settlement agreement.
Negotiating and paying a lower amount to settle debts you are already late with is very common. There are elements to settling some types of debts that you can set your clock to because the process can be highly predictable. And there is both safety and comfort in this predictability.
Settling credit card bills, and other debts you cannot afford to keep up with paying, is a pretty straight forward concept. And so is determining whether settling with creditors and collectors is right for you. Let’s start by narrowing down the basic principle of the 3 most common debt solutions to one sentence each.
- Consumer credit counseling and payment consolidation is based on the principle of “What can be paid – should be paid”.
- Debt settlement is based on the principle of “Paying something – is better than nothing”.
- Bankruptcy is based on the principle of “What cannot be paid – won’t be paid”.
If you are looking at debt settlement as a way to deal with problem bills, it is likely because you are in the middle. You cannot fully afford the debts you have now, but can afford something, and would prefer to manage the situation outside of bankruptcy.
How Debt Negotiation Works
Each of your credit card lenders will have a policy for how they handle collecting on accounts that go delinquent. Some of these policies include:
- Getting you back on track by offering reduced payment hardship plans that may be temporarily extended to you for 3 to 12 months, or applied over the life of the balance in a 5 year payback schedule. Read more about credit card hardship payment plans.
- Debt collection efforts internal of the banks own recovery department.
- Charge off your debt as noncollectable and place your account with a collection agency who will bug you over the phone and through the mail to get you to pay.
- Placing your account with a debt collection attorney.
- The legal rights to collect from you could be sold to a debt buyer.
Debt settlement is a method to resolve unpaid credit card bills for less in every one of the scenarios above. That’s as complicated as the debt settlement process will ever be.
It’s the “how will debt settlement work for me” and “is debt settlement even for me” questions that make for the details.
Is Settling Debt Right For You?
Ahhh… the details. Yes, getting the best deals, and the most from settling debt, is in the details. And the details when negotiating and settling can change from one creditor to the next; from one collection stage to the next; and most certainly from one personal set of financial concerns to the next.
The majority of what happens in the process of settling credit card debts is controlled by the policies, procedures and protocols that are set up by your creditor or outside third party debt collectors. Knowing the policies and procedures for each of your accounts you will settle, in advance of the settling, is a huge benefit. You simply plan ahead financially for the settlement opportunities that will be presented, and make the right moves along the way.
You can use this site to help you settle your debts on your own. We offer upfront education about the debt settlement process, supplemented by on the ground and “right now” details provided free in the comments section of this website. And you can get one on one dedicated professional feedback by requesting an expert debt settlement consult over the phone.
We know that many people are freaked out by the concept of negotiating and settling credit card debts on their own. You also have access to professional debt negotiators, and often at the most reasonable cost found in the industry. If you would like to talk to me, Michael Bovee, about that, you can reach me at 800-939-8357, choose option 2.
In the next section I will bluntly outline who debt settlement is right for and why debt settlement is a race. You may already be in the race and not know it.
Continue on in the debt settlement guide to How and Why Banks Settle Credit Card Debt with You.
As you will see throughout the site, I respond to reader questions and comments throughout the day, so feel free to post below for feedback.
This Debt Settlement Guide includes:
An Expert Guide to Credit Card Debt Settlement (you are here)
How and Why Banks Settle Credit Card Debt with You
Types of Accounts to Include in Your Debt Settlement Plan
Why Settling Credit Card Debt is Like a Race
How to Settle Credit Card Debt Quickly
How to Talk to a Debt Collector
How to Negotiate Credit Card Debt Successfully Yourself
7 Largest Credit Card Banks and How They Settle Debt
Get Debt Settlement Letters and Agreements from Collectors
Paying Debt Collectors After You Negotiated a Settlement
Hi,
My question is: Is there an optimal amount of time to wait after the last payment made to call and try to settle a credit card account?
I generally have found the earliest, and most opportune time to call to negotiate settlement, is after 150 days late.
Hello Michael, First of all than you for taking the time to respond to these comments. I am trying help my mom. She received a letter about a judgement she had against her that is now 16 years old. The original amount owed to Discover was only $8k but now since its so old they are saying she owes $30k!
My mom only has like $9k max to her name and we are unsure what to do. They sent a letter saying she can pay a lump sum of $24k or arrange a payment plan. She doesn’t have $24k as mentioned above.
Could we try to offer a $9k settlement as this is all the money she has?
What is the lowest you can usually settle for once it’s in the judgement stage.
This was a default judgement as my mom didn’t know what to do back in 2005 and this was also right after my father passed away so it was a difficult time.
Thanks again for any advice. The lawyer handling the case now is shafritz & associates.
Check out this resource about settling judgments.
What state does she live in?
Does she own a home?
Hello. I have a Wells Fargo business credit card that hasn’t been paid on in 2 years. My brother was using it and paying it until he didn’t. It is not on my credit report I think because it is a business credit card. The balance is 9K. They recently called to offer a settlement. They have not sent a letter or called until now. What % do you think they would settle for?
The settlements we see on Wells Fargo business accounts range between 30 and 60 percent of the balance owed.
If Wells Fargo has your account with a collection law firm the settlement amount could be higher.
There are instances where Wells holds out for detailed financial information related to the business and the personal guarantor before approving a settlement.
I tend to suggest getting help on Wells Fargo accounts.
You can schedule a call to talk strategy with me by clicking the get help tab at the top.
Michael, I’m currently 90days behind in Amex and I called zwicker and associates. Their best offer is 55% they say is Amex lowest floor. 22k and they will accept 11,900.
But they said I need to give them bank account info first before they can send me a letter in mail regarding settlement amount.
Should I just take the 55% now and call it a day?
Settling for 50% with a collection law firm is typically a decent outcome.
I would still want the letter before paying.
You can set the payment up for end of month, which will give time for the letter to arrive before the payment pull date.
What chances do you think if I call Amex themselves and offer 45%? Instead of 55% from Zwicker. Or will Amex not talk to me since they sent to zwicker?
Amex will direct you to Zwicker to resolve your account.
Hey Michael, we spoke a couple of weeks ago on the phone. I’m trying to settle with chase currently and I’m about 160days late now. I made the phone call today to offer 3k on a 14k balance and there asking for income after taxes and monthly expenses to look into my settlement offer. I would prefer to not disclose either of this to them as I’m prepared to settle with them cause my financial standing is now fine. Is this a necessary step, they also threatened to send me to an attorney. Thank you
It sounds like your Chase account is on the attorney track, or they likely would not have mentioned this.
I am finding settlements on accounts in this situation are between 35 and 60 percent.
If providing details they ask for will cause them to question offering any settlement, were it me, I would not provide that.
You may be stuck with less than optimal settlements in these scenarios, or wait for charge off, and see what can de done shortly afterward.
There are ways to do this still, but with assistance, and I understand you prefer to be DIY on this.
Hi!, I just received a letter from Midland Funding LLC asking for payment.
Since I didn’t know who they are I got a TransUnion credit report and noticed
they are there:
Midland Funding LLC
Placed for collection 07/03/2018
Balance: $2,338
Pay Status: In collection
I moved to Mexico in 2015, I have a Personal Mailbox (Nevada) as main address and still
do some remote work as self contractor that I receive into a virtual wallet and
then manually deposit into my US bank account, not much though, but it’s enough here.
How should I proceed?, will they sue me? can they levy my account?
What should I do if they sue me and I’m out of the country?
Thanks!
If Midland thinks you still live in Nevada, they may still try to sue you.
If they think you live in Mexico, I do not think they will try to sue.
If your account is not with an attorney for collection you can settle this favorably.
DO you have a goal to resolve this?
I don’t have a goal right now, this came out of nowhere, and as you can imagine, my live is very different now. Is there a way to let them now I’m out of the country?, I don’t have plans to come back in the near future. Thanks!
If it were me, and I were worried about being sued in the states when I am no longer here, I would call and tell them my new contact points, and my mailing address in Mexico, and that I do not intend to return.
I called Midland today and told them I’m out of the country. Thanks for the advice Michael!
Hi Mr Bovee,
I have a Credit One charge off showing a zero balance on my credit report, and I need it off so I can get a mortgage loan. I’m willing to pay it in full, but don’t know how to go about it. It was sold to Midland, who then took me to court for the $910, but I got the judgement in my favor and didn’t have to pay. Within 30 days the Midland collection was deleted from my credit report.
My question is will Credit One even take payment for the deletion of the charge off, or do I have to deal with Midland?
Talk to your loan officer for the mortgage.
Credit One is a zero balance charge off, who you cannot pay, as they sold the legal rights to the debt to Midland Funding.
Midland not showing on your credit means it should not flag anything for resolving prior to a loan going through.
If you have to resolve the debt with Midland, for some odd reason, in order to get your home loan through, you can call them to work this out.
Hello,
Found your youtube video and seeking your advice.
I filed bankruptcy in 2011. First and second mortgage discharged along with credit card debt. We wanted to keep our house and attorney advised to keep paying the first mortgage but not the second. So that’s what we’ve been doing for 9 years now.
However, the second mortgage lien originally with CitiBank, was transferred to a debt buyer, United Guaranty. So because of bankruptcy, they cant collect on the debt, but still hold the lien and wont release it. They could foreclose on the home, but unlikely since they would also have to pay off the balance of the first mortgage in order to start foreclosure proceedings. They send me a letter once or twice a year to settle. I send a written reply with a 10% of balance offer and never hear back.
If I ever want to sell or refinance, this lien will need to be settled. Luckily, I don’t need to do either, but I do know that down the road in 10 years or so, I may want to sell and move to a smaller home after I retire.
When the lien was transferred to United Guaranty, the balance was about $20,000. They have never offered less than $15,000 to settle the lien and they have actually sent letters stating a balance of over $45,000 with interest and fees.
I have my last statement from Citibank that shows the balance and always use that as my starting point with them.
During this pandemic, do you think the lien holder now would be more accepting of a settlement amount of 30% to 50% of the balance? I’m tempted to contact them and make one very good offer of $10,000 to settle and release the lien and see what their response is. However, since it’s been 9 years and they don’t seem very aggressive to collect, sue or foreclose on the house, perhaps I should just wait it out more?
I think things will get much worse related to mortgages in the near future. If it were me, I would wait until to home loan default numbers go way up after the different forbearance plans end. That could give you time to save up more cash too. Hopefully you hit your goal, but having more in case you need it is just good planning.
I have the below past due since 2017. In what order should I settle?
Chase
Discover
Macy’s
Barclay- mercury something now
Care credit
Bank of America
Volkswagen
Express
What are the balances owed?
Have any accounts gone to collection law firms to date, and if so, which ones?
Have any been sold to debt buyers, and if so, which ones?
I have no idea at this point. All stopped contacting me about a year ago. VW holds the highest balances
You can often see the balances owed on your credit reports, and debt buyers will show up there to. Let me know those details and we can go from there.
Hi Michael, I currently have 10,377.11 with Porfolio Recovery Associates. I received a letter saying the account was transferred to the litigation department but no attorney has reviewed the particular circumstances of my account. I am currently furloughed due to COVID, but the thought of being sued scares me, should I contact them to try to settle now?
I would suggest scheduling a consult with me using the tab above the comments. Settling with Portfolio Recovery, and getting time to pay, appears to be necessary in your situation, and that can be trickier than when dealing with creditors.
FYI, Mellissa. In the last few months I settled several debts with PRA.
I settled them for 70%, 77% and 60% respectively.
I do not claim to be an expert. I wish I was. I think they milked me up one side and down the other,
but that is an FYI. That was after already paying perhaps 20% of the respective total balance over a period
of 2 to 2.5 years. When I saved enough, I decided to settle.
The total owed on those accounts was $9,300 and I ended up settling for: $6,185. I am fairly happy,
but I was not well informed. I hope with the help you get here, you will be able to do much better.
I wish you all the best. Hope you do better than I did.
Hello. I have about $12,359 debt from William & fudge, Inc. It is a student loan. I was wondering if it’d be worth it to settle now for pennies on the dollar, if I missed that opportunity prior to the economy healing, or if I should wait until the extra $600 unemployment benefit runs out at the end of July. Ultimately, is now a good time or should I wait?
I think recovery expectations will soften even more in the fall, so if it were me, and I was not in a hurry, I would wait.
Hi Micheal, Thank you for all the information. I was hoping to find out something about settlement expectations with Mariner Finance. I owe about $ 6500 on a personal loan – I have been two payments past due for about six months. I found information on my other creditors and have actually been in contact with most of them . I was just wondering if Mariner Finance was going to be a problem. Thanks
Mariner Finance is one of the more aggressive lenders right now. I have seen them sue to collect in a matter of a few months. The settlements are not all that great either.
With COVID things could soften up, but I would try to gather as much funds, as quickly as possible, to be ready for this one.
If they sue you can defend the collection to buy time to pull money to settle together.
I have cc debts from 2012 that I gave not paid on since 2016 , are these debts still collectable or is there a statue of limitations I can rely on.
I’m in Utah
There is a limit of 6 years since you stopped paying in order to legitimately sue in Utah to collect on the debt.
Passing that time limit does not render the debts uncollectible, they just should not sue.
Debt that passes your states SOL, and then passes the 7 year credit reporting life, is often referred to as zombie debt.
Hey Michael just updating you and your followers on my progress specifically with discover. 21k balance. Which I settled today for 50% in one lump sum. I waited until around the 150 day mark to reach out and begin discussing my situation with discover. My initial phone call the agent offered me numerous payment plan options including matching my payments dollar for dollar example would be if I made for $400 payment she would match it and then my account would become current after 4 months. They were very persistent on getting some type of payment even if just was a monthly minimum of a couple hundred before I got off to the call. The original agent told me there were no settlement options on my account I did press a little bit on this and I call back 2 days later and spoke with someone else who told me that a settlement was now available at 60%. I explained I couldn’t afford that and gave them a brief description of what I had available for funds I told them around the 40% mark via a loan from a family member and while she did not give me that option on the phone she told me there could be options down the road before charge off. The interesting part is the day after that phone call and I don’t know if the info I gave her triggered this but all of a sudden 3 settlement offers became available in the discover mobile app where they offered me 3 payments for 60% 2 payments for 55% or 1 payment for 50% due by may 31st. The other alternative was a $330 payment over 60 months which would waive my late fees and extra interest at a 0.99% APR. The 50% was doable and based on my research was a pretty competitive offer so I tried just out of curiosity to call 2 more times to see if they would budge maybe go to 40. But it looks like either internally 50% is now their lowest or my account specifically with the balance and what not 50% was the lowest. The reason I say this is every agent and I spoke to was clear that they have no power over altering the settlement amounts that it systematically done.
Overall it’s a relief to settle my largest balance and it was a surprisingly easy and pleasant experience dealing with discover takes a little persistence and I have to go pretty much up to the finish line I’m 4 days away from charge off but you can get decent results and you are absolute correct they are very unique in how they deal with you.
Congratulations, and thanks for posting about your experience Max. It helps later readers.
Michael:
I recently received a settlement offer from a subsidiary of LVNV (Credit Control, Inc.) for 40% of the amount owed to the original creditor. The original debt was charged off 5 years ago, and under the heading “Important Disclosures” the settlement offer states, “Because of the age of your debt, LVNV Funding, LLC cannot sue you for it.” Three questions:
1. Should I negotiate for a greater discount? (I have the money to pay the 40% right now, but I don’t want to leave money on the table if I don’t have to.) What does your experience with LVNV suggest in this case?
2. What, exactly, does “LLC cannot sue you for it” mean in practical terms? Is it an admission that my debt is now a “zombie debt” and essentially non-collectible by ANY debt collector? If so, why did LVNV make me a settlement offer?
3. Assuming I pay the 40%, what wording should I require LVNV to put in the settlement agreement that will improve my credit score the most? Paid As Agreed? Paid in Full? What wording gives the most “bang” for the buck?
Many thanks. Your web site and videos are incredibly helpful.
Every state has its own statute of limitations that limits how long a collection action can legitimately be brought to the court. It sounds like yours has passed, but that does not mean the debt is immediately no longer collectable. They can still write to you, and call, and also credit report for 7 years.
The reason to settle at this point would likely be credit reporting. A paid collection on your credit will allow you to move on and accomplish credit and finance goals. If you do not have any meaningful ones in the time this will be aging off your credit, you could let things lay.
I too would try to get this lower. You may not be able to, but it is worth a shot. Another 10% off a debt with LVNV collectors that cannot be sued upon would not be out of the question, but be prepared from them turn down any other offer too.
As far as paid as agreed, paid in full stuff, that is just not all that meaningful to get caught up in. More on that here: https://youtu.be/Q7nwb8PvzPk
Dear Michael,
I had written before.
I have debt with Capital One ($3,621.13)
I had been making monthly payment of $100 but they still sent me a email saying that I was being sued in December 2019. Even though, I had being making payments since September 2019.
I won’t be able to make any payments this month due to health reasons and not working.
I have watched your videos in many of them you advice not to attempt negotiating too early after you are no longer able to make payment. You also mention that one is too meek, will lose their temper or get threaten not negotiate with the collectors.
I also don’t have the finance to hire a lawyer to file a defense for me. I also don’t have enough finances to pay 50% or 80%.
From a lot of articles you mention that timing is essential. I am having trouble which steps to take and when.
I really feel stressed with no way out. My health only continues to suffer.
Do I just call the lawyers and offer the $600, I have?
I would really appreciate it if you could advise me on a clear course of action.
Thank you very much,
Awa
You will likely not succeed with that offer.
You may end up sued, and even a judgment against you before you save up enough to settle.
You have the option of a payment plan, but you want one written up formally, not where you send in what you can afford, without an agreement in place.
Do you have other debts than this? If so, what do they all add up to?
I have a $755 electric bill to Gexa that I can not pay, I’ts technically not past due yet until the 18th of February. This company is awful They do extreme price gouging. I’ve switched companies but I’d like to try and settle with Gexa, I could possibly do like $300. I’ve worked very hard to repair my credit over the last 2 years and this would undo all the work that I’ve done.
I would try to work out a payment plan with them.
Settling utility bills is often done with collection agencies, but waiting for that to happen will often also mean waiting for it to hit your credit reports and drag you down.
I have the following situation with Chase: Last payment Aug. 01, 2016, Current Payment Status: Charge-off, Amount past due: $3010
Based on my scenario, is best course of action calling them and try to settle for something like 1000?
Thanks for any advice you can provide.
I have a letter from a collection agency looking for 1200.00 from u.s. bank. I don’t have any paperwork on the credit card use for the last 4 yrs. When I reached out to u.s. bank they said I would have to speak to their collections agent. How do I get the detailed records of this debt?
What is the purpose for getting the detailed records?
Do you have a goal to resolve the debt? If so, who is the collection agency contacting you?
If your goal is to settle, yes, I would call Chase and work through this with them by trying to settle for less.
Get it in writing before you pay.
Know that Chase can sometimes not bend as far when settling with you, as a collection agency working for them would have a couple years ago.
My husband and I have spoken to a BK attorney- chapter 13 is what we would need to do because of our income – we have settled with a couple of accounts but have about 10 or so more to start working with- My husband was served with a judgement filing and we know there is another one coming – we are lost- BK would give is 290 left after paying our normal bills and the BK – that is not going to work – We can pay some each month to start to settle more debt but we just have no idea what to do
You are welcome to click the get debt help tab on any page and go through the steps to schedule a call with me, or one of the counselors. We can review your situation for you and see if we can build a plan for you to stay out of chapter 13.
I can say this..you’ve come to the right place..I would HIGHLY RECOMMEND speaking with Michael…just taking to him takes 90% of the fear away..not to mention just an extreme straight shooter. Gives you the confidence that you can totally handle this ( settlement ) on your own or he will guide you through it pretty much every step of the way…
Hi Michael – I have roughly $118k in total unsecured debt between credit cards and personal loans, all in my name only. Although I’m current with all accounts as of today, because of a recent personal situation I will start to fall behind significantly in the next month and beyond. I’m looking into debt settlement as a way to tackle the situation. Once I stop paying on the accounts, I’ll have about $2,200/month that I can devote to saving/paying settlements, which feels like the 24-month timeline would be aggressive but doable. I’m comfortable with DIY settlement on many of the accounts, but would love any feedback (especially for which ones it might be better to engage outside help) before starting the journey. Here’s a breakdown of the $104k in balances I’m thinking of doing debt settlement on:
Chase Credit Card: $23,000
Lending Club Loan: $19,500
Upstart Loan: $19,000
Wells Fargo Visa Card: $16,500
Best Egg Loan: $8,500
Avant Loan: $5,500
American Express Gold Card: $5,000
PayPal Credit: $2,500
Mariner Finance Loan: $2,500
Regional Finance Loan: $2,000
Accounts I am considering NOT including:
1. Discover Card: $7,000 balance, opened in July 2019 as a balance transfer card at 0% interest until Sep 2020
2. 5/3 Bank Credit Card: $3,500 balance, opened in August 2019 as a balance transfer card at 0% interest until Aug 2020
3. Fortiva Credit Card: $1,000 (plan to pay off in next 60 days)
4. Citi Credit Card: $1,700 (plan to pay off in next 60 days)
5. Capital One Card: $700 (plan to pay off in next 60 days)
Any thoughts/feedback/suggestions would be greatly appreciated!
I would encourage you to schedule a time to talk over your strategy with me. You can do that by clicking the get debt help tab on this page. You have some aggressive creditors, and Chase just started suing again last month, for the first time in 8 years.
You can do this, but to maximize savings, and lower risks, you will want to be as aggressive as you can be with saving up to settle a few of these in the early innings.
You can also reach me at 800-939-8357 ext 2.
I live in Pennsylvania and I have a $530 credit card debt that got sent to collections. My problem is that I have been in contact with the agency to set up a payment plan, but I am trying to verify if the company is real before I pay the debt. And also, if I don’t pay by a certain time how long do I have before they take it to court? By the way, Collection agency is Global Management. Any advice is greatly appreciated.
Who is the original creditor? You can call them and verify who they have your account out with for collection.
When did you stop paying the account?
The original creditor is Credit one Bank and I stop paying about 12 years ago. I called credit one to verify the debt but it was sent to Cach LLC, but I haven’t called Cach LLC to verify yet. Is there any way I can have the debt sent back to the credit one bank and deal with that way instead of with collections?
Just seeing this Greg.
I would not pay a 12 year old debt, but would dispute it off my credit as being to old to be on there. Here is a guide for disputing items off your credit: https://consumerrecoverynetwork.com/dispute-tradeline-diy-credit-repair/
Of all my credit card companies I’ve dealt with, Credit One is the closest to a borderline sham company. Hopefully this was all resolved peacefully.
My husband and I have a mountain of credit card debt primarily with Chase and BofA. I mean like $80000 we have been juggling around with balance transfers and promotional rates. We are current on everything but the promotional rates are starting to expire and it is clear that even with a pretty good income, the situation is not sustainable (minimum payments currently $1400-1500). Realistically we are not going to be able to settle for much more than 30% of all this debt. My question, how likely is it these debts will be sold and how long before that happens? Is it better to wait in order to try to negotiate lower amounts? How likely are we to be sued if we can’t settle for more than 30%. Thanks!
At the time of my reply, neither Chase, nor Bank of America, sell unpaid accounts to debt buyers. They haven’t for many years.
You have a decent shot at getting these done for 30%, but 40% is more common (as an aggregate between the 2).
I do have someone here that can help you do better, but there is a fee for the service. Add that in, and you are probably right where you need to be.
I am trying to settle with Citibank and Discover. I may have mentioned settlement too early with discover as I was only about 90 days late/ Do you think I have a chance to settle with them. My wife went with a debt settling company which charges huge fees to do the settlement from you. I choose to do on my own
I would wait until I am between 150 and 180 days late to talk to Discover about settling for less.
Does your wife have a Discover card as well?
I had a rough patch back in 2005. I received a judgement in SC from Bank of America on 7/15/2009. Due to my lack of understanding of how all this works I thought once judgement was off credit report I was good. I owned no property when judgement was made. I purchase my house in 2013 and now am attempting to refinance when title search found a judgement on me. The judgement is not attached to my property. I think in SC after 10 years the judgement is no longer enforceable and can not be renewed. How should I handle this? I do not believe bank will refinance unless judgement is settled.
Have you talked to the loan officer and shown them the judgment entry date and the law for how long a judgment in SC is good for? You may want to exhaust that angle before trying to settle this.
Thanks for explaining that the debt will either be negotiated to a lump sum or a term agreement, depending on what we can afford to pay. I wasn’t very responsible with my credit cards, so now I’m in a bad situation where I’m unable to pay all of my bills. I’m glad I read your article because you helped me see why using a credit card settlement service could really help my situation!
Please e-mail me and help me make the right decision on my finances.
I recommend building a user profile full of your debts by clicking the get debt help tab at the top right of any page on the site. Once you add your debts you are dealing with, click on talk with an expert in your profile to schedule the day and time you would like for me to call you to go over options.
Michael, if we do debt settlement our own, how to avoid paying tax on the cancelled debt? Last night my friend told me I would most likely get a 1099 from IRS regarding the forgiven debt.
You can avoid paying taxes on forgiven debt whether you settle debt DIY or get help. Read that link to learn how that may apply to you.
The tax implications are different for each of us.
Mike, I have two cards that I have been behind on and have missed a couple payments and made a few payments here and there. I realize this is not helping me at all. Just paying those small amounts are like throwing pebbles at a freight train. I have not fully read all your steps to settlement but it seems like I should just not pay and wait. one balances is 25K with chase and the second is with citicard and is 13K. Should i change banks because I do my banking with chase. I would like to do a settlement over a chapter 13 I am not able to do ch 7 because my house has to much equity in it according to Illinois rules. I do not want to lose my house. I have no other bills that are behind or late. I recently took a significant cut in pay and my wife has been working part time due to child care cost being so extensive we felt it made more sense for her to stay at home. any suggestion would help
I would be working on a plan to save up 35% of the Citibank balance in the first 12 months of delinquency. If you can do it quicker (between 6 and 12 months late), that would be great. I would then focus on settling with Chase after that, and at around 30 percent (sometimes lower).
Can you do that?
I recently called professional collection consultant in CA for a judgement against me for 10k that was filed against me in 2012 for a old credit card that the original balance was 6900.00 I offered them 3k and the collector was not helpful at all told me that they can take 5500 and would rather sit on it then settle for less . My question to you is is this a good offer from them and if it was you would you accept it ?
Judgment debt is hard to negotiate to half off, and you are close to that. If it were me, I would take a deal that was around 50% on a litigation file.
I was served and didn’t go to court my bank account was garnished for about half of what I originally owe the creditor. My bank is holsing the money they took out of my account. I wanted to know if I could still settle? Could I just let them have what they already took and call it even? And how do I do that if I already have a judgment ruled against me?
You cannot let them take what they are already going to get (unless you successfully contest that with the court), and call it good. They will want the rest. You can negotiate a settlement with them for less than what is remaining as owed after they apply what they got from your bank account. But you typically have to wait until that levy order is completed before they will talk about settling the rest.
I recently tried to refinance my house to find my husband and I each have a judgement I called lvnv funding,llc they were unable to find info on my judgement,however they found my husbands it originally started at $3094.00 now they want $9000 his judgement is with assets llc. Mine is $3231.00 even though they can’t find information on me they want 8000.00 from me a total of 18,000. I want to settle with them, I don’t trust negotiating with them I will settle to pay original loan amount but not the 18000.00. They said that they will call me back with additional info regarding me,however I have not recieved a call. should I get a lawyer to assist.
It can make sense to get a lawyer to look into any legal arguments you may want to make. Let me know what state you are in and I will email contacts to any I know of with the experience you need.
If your goal is to simply settle, how long until you have half of what is owed today?
Hello. I am currently retired and living on a fixed montly income and even though I have a lot of credit card debt I am current on all of my bills/credit accounts except for a Sam’s Club credit account (which is issued by Synchrony bank). The current balance on my Sam’s club credit account is approximately $5000 (with a past due amount of approximately $1000.). I stopped paying in August of ’16 after they closed my account in July ’16 due to late payment history. My late payments started around March or April of ’16. I was struggling to pay this Sam’s Club credit account because of the high balance owed and very high interest rate (roughly 30% APR) on the card. They keep sending me notices that I am past due on my account from a company called EGS FINANCIAL CARE, INC. but I have also been receiving notifications from from Sam’s Club Credit also. It doesn’t seem like they have sent my account to an external collection agency possibly because I have other accounts with Synchrony bank that I am current on. I recently received a letter in the mail threatening me with “taking additional steps” allowed under the law. My question is, should I contact them and negotiate a settlement or should I ask to be placed under a financial hardship payment plan? I’m now reaching the 6 month mark without having made any payments. How likely are they to work with me? I would like to make good on this debt I just can’t afford to make high monthly payments at this time. If they do offer me a settlement I might be able to come with the money to pay if off. What would be the best course of action at this point? Thank you.
Once an account goes this long without payment I typically look to settle it. If you can raise 30 to 40 percent in order to fund a deal I would do that if it were me.
You can call and negotiate the payoff with Synchrony, but if they have it placed with a debt collection agency they will refer you to that company. Get your settlement in writing before you pay.
Thanks so much for taking the time to answer all of our questions. I have five medical bills all from the same hospital and within a short period of time, totaling around $3500. I had insurance at the time but a high deductible plan, so insurance paid nothing except for one out of the five bills. I have been unemployed and unfortunately couldn’t pay the bills at the time, they have now been placed with Medical Revenue Service aka Medical Data Systems.
I really would like to take care of these now, my main question is can medical bills like this be settled for less than owed? I have enough for at least a settlement of half, but don’t want to poke at them if I need to come up with the full amount. Any advice would be great, thanks!
Check out my video about settling medical debt, and also this reader question about resolving medical bills (read into the comments for additional feedback).
What is the lowest capital one will settle for i have 2 cards at 4400 each only behind a week on my pmt as of now. will they possibly settle at 30 % if it goes the 4 months past due?
I do not see too many 30% deals with Capital One. And you typically want to settle with them at 6 to 7 months late or more as of right now.
does chase freedom credit card sue/garnish? im trying to save to settle but they say they dont take less than 90% .
When did you last make a payment on your Chase card?
Chase is not suing their credit card members for non payment at this time. They have not since 2011. That could change of course, so keep saving up to reach your goal. What is the balance on the account?
thank you so much for the fast reply, you really help alot of people, thank you….
and the balance is 2200.00 and i would only be 1 payment late
You typically want to be close to 6 months late, when you are settling with your bank, in order to get the best savings. You can get Chase to 40% or less by waiting that long to negotiate or by waiting for the account to go to a collection agency, say in month 7 or 8 of nonpayment.
Be sure to read through this entire 10 part article series. You will be prepared for what is to come between being one month late, and negotiating the settlement several months from now.
Looking for advice. I have 6 judgments all from 2008.2009,2010. Out of the blue I received a writ of property garnishment on bank account, but this account has been closed for 10 years. This was on Nov. 24,2016 I have been a bundle of nerves, wondering who is coming after me next. I do own my home and all 6 judgments have liens on it. Can they sell my house out from under me I have no were to go. I am on social security disability and have some saved because it was retroactive payments can they take that money. I though about calling this attorney to see if he would settle for half but chickened out still thinking about it. I owe 3,528.00 or if i can pay 30.00 a month which will take 10 years. I just thought with liens the debt would be paid when i sell my home or when i die. My total debt is 22,000.
ThankYou,
Sandy
That is more than likely what will happen if you do not pay. The judgments will get resolved when you sell or after you pass as part of your estate.
If you do want to settle, it makes little sense to me to do just one. All the others could easily learn you are motivated.
Check out this page about SSI protection from creditors. You may want to call and talk to Eric, who is the attorney in the video interview I did on that page.
I was unsure if they would even offer a settlement if I have a loan that I am up to date on.
Keeping unsecured accounts current with payments while others go months late in order to settle can indeed create objections to settling. But those objections can be overcome with your list of creditors and the collection agencies they use.
Thank you for all the great information on your website and YouTube channel.
I was considering using a settlement company, however I felt that paying them a couple of thousand to do something that I could do myself was crazy.
Anyway, here is my question: If I get a loan through my credit union, can I use that for when I go to settle my credit card loans? Or will the companies not negotiate with me due to me having that loan? (I already checked and I can get approved for the amount I figure that I would need to settle.)
Who are your credit cards with?
Citi, Chase and Old Navy
You will be able to settle with those banks while still having another loan.
Thanks for your videos and tips. I actually called the Lawyers today to negotiate the payments. When I agreed to a plan they had me go into their website to make a payment. Both my debit cards wouldn’t process. (I had plenty of funds available) I called them and they said I might have to set up payments through a checking account. So I log back in and sure enough, the website for my account asks for account and routing numbers. I don’t want to give them full reign into my bank account. Any suggestions?
Who is the original creditor, and what is the name of the collection law firm?
Original was Best Buy, bought out by Midland Funding. I called Weltman, Weinberg and Reis today and spoke with a collector. It’s only $1415.55 including the $55 court cost. Collector said I could pay 18 months at $78. Which is full amount. To settle the full amount today was only $1,200. Not much relief. I agreed to the payments but haven’t seen anything to sign or made a payment yet.
If it were me I would have no problem setting up payments with Midland Funding.
Years ago there were many reasons not to trust paying a debt collector by giving them your main bank account information. Those concerns no longer exist when you are paying a legitimate debt.
If a payment problem does come up down the line, post an update and I can help you, but I doubt it will.
Thanks for the reply I appreciate it. Once it passes Midland Funding and goes to the lawyers, such as mine. Are you obligated to ONLY deal with the latest entity that has bought your account? Since the law firm of Weltman, Weinberg and Reis sent me legal papers to garnish, sue, etc….I would assume that MUST now deal with them and not Midland Funding? I’m in Michigan.
Midland Funding does not resell debt. They could change attorneys, but the account will not change owners after Midland buys it.
Perfect, Thank you for clearing that up. The lawyers I’m dealing with the lawyers for Midland Funding. I was unsure of that. Now it makes sense. I’ll report back. I’m sure many people simply freak out when they receive papers from lawyers. Now they did state that my State income refund (if applicable) could be garnished. Most people won’t think about that happening.
HI Micheal,
My husband and I both have credit card debt. With virtually no savings, an internship salary and several cross country moves we maxed out everything on top of borrowing from parents and student loans. He has a decent job now but we found out he needs thousands in dental work.
We had to make a decision to let some credit cards go to catch up and pay for everything. Discover offered us a deal at 60 days past due for lower interest and lower payments which we accepted for now.
The other three are from USBank VISA accounts. We were already on a hardship program on all three and managed to keep up on payments until the last four months. I have had one for probably 10 years and the other two for 5-7 years. They will “charge off” at the end of the month (Dec). The amounts are 4600, 4000 and 3900 and we had a payment plan of 98 95 and 78 with an interest rate of 5%. One or two of them may have been opened as a “business” account.
I have other cards and debt accounts I am paying on and current. We live pretty frugally, some would consider miserly, and try to make money on the side when we can. We are a also expecting a sizable settlement from a car accident but may be another six months to a year plus before we see it so we are trying not to count on it (in the mean time we have had to pay out medical expenses and it has also affected out credit).
We told USBank we could pay $20 per account for six months to a year until we catch up on some other debts and free up more money but no deal. This debt is in my name only, not my husbands and he is the primary earner. Anything I make is on the side as self employed. Our car is 16 years old so the only other asset I have is a house out of state (CO I live in IA and we rent.) We couldn’t afford to live there when we married (my husband has been in school) so I have rented it out for the last 7 years. I owe 104,000 on it and the initial property value search is did was valued at 130,000 give or take.
USBank won’t tell me what will happen once it goes into charge off. Can I negotiate for a settlement later? Will they do payment plans for the settlement that I could swing or do I need a lump sum? If I need a lump sum can I put it off for a while…like a year…so we can get some stuff paid off and money saved up? Can I even wait as long as it takes to get the accident money? Since it is three accounts do they treat them all separately i.e. separate law suits, separate settlements, etc or will they put them all together?
Most importantly could I lose my house over it? Is there a threshold…in other words if I need to pay one card and let the other two go will that work out better in terms of action they will take against me? I just want to understand my options and how to deal with the collector and my rights and their rights. I will read through your information but seems there is not much information out there on rental properties that may have equity and debt collection.
Thank You!
What US bank is not telling you is that after charge off they will send your accounts out to third party collection agencies. Review that article for more about what happens when your account charges off and you negotiate settlements with the collection agency.
US bank also sells debt to debt buyers like Portfolio Recovery Associates. Those debt buyers do not necessarily sue immediately, so you have time to save up to settle with them, or time for your accident settlement to come in and help resolve the debts.
You can settle directly with US bank too. The account may charge off, but stay with internal recovery for a couple of months (not always the case though), and this could provide additional time for your situation to change, and funds to become available to settle.
The three accounts could certainly all end up differently after charge off (one sold, one with a collection agency, one with a different collector). I find that more likely than all three sticking together.
You cannot get US bank to settle with payments longer than 94 days prior to charge off. But after charge off, there are settlement deals you can put together that could include 6 or 12 months to pay.
I think I will do a video this week about the impact to property (rental or otherwise) when you are not paying credit card bills. You may want to subscribe to my debt and credit channel. The gist is that they will have to sue you before the home could be impacted, and even then, they will typically only place a lien on the home that you will have to resolve before you go to sell or refinance it.
You are reading the beginning of the debt settlement article series, so be sure to read through to the end. These additional links are something you will want to review as well, because your situation will potentially involve dealing with each collection or debt negotiation reality. And it is better to know what is coming, and your options to solve the situation, before it comes up.
Hello CRN,
I am really happy to have found your site, especially this early in the morning for me. I am hoping to engage in debt settlement with Synchrony Bank unsecured retail cards, Barclay unsecured credit card, and Macy’s unsecured retail card. I am currently between 60-90 days late.
Where can I find the address to mail my settlement offers for these creditors and have them arrive in the correct departments and be in front of the right people?
Sending in letters to negotiate is ill advised. You are also way too early to start negotiating the settlement amount with those creditors. This page is the first of a 10 or more part article series (all linked at the bottom of this post). Read through all of them to get a feel for when and how settlements regularly get done.
I highly recommend staying away from letter writing efforts to negotiate. You do want the deals in writing, but typically after you negotiate the amount and terms over the phone.
I have a question about settling a credit card and PayPal which amounts to about 5,000. It is worth settling both accounts? Will it hurt my credit score? I’m trying to get a mortgage loan and some of my debt is making it a bit of an issue.
Are those accounts current or in collection? If in collections, how long ago did payments stop, and who are the collection agencies involved (if you know)?
My husband I are attempting to settle about $76,000 in debt with money that he inherited after the death of his aunt. Among other credit cards, we each have a credit card with Wells Fargo with each about $12,000 and a line of credit with about the same. Wells Fargo is also our bank. We are 3 month or more behind on all the debt except for WF. WF is also our bank and mortgage holder. We have struggled to make these payments, We basically are paying it to use it so we have money to make the next payment. We are wondering if we stop making payments are they allowed to garnish or freeze our checking account?
It depends on if your agreements contain any cross collateral clauses or not.
If it were me, I would change your bank accounts. I recommend that to anyone thinking of settling a credit card or loan with a bank they have checking and savings accounts with.
The mortgage being with Wells should not be a problem.
why do you reccomend changing banks? are they able to drain the money in your account w/out a judgment? if so i will definitly change banks……
It is more about not having the main checking account you do all your banking with be at a bank you are also going to be settling an account with. Check out articles 3 and 10 in this series (linked at the bottom of the above article).
Do you know if comenity bank /garder white & marathon visa will try to work out something with me or do they sue ?
Comenity may not sue directly to collect, but those accounts get sold to debt buyers who do sue.
ok….Thank you so much.
Nov 28 16 Left you a message I have 2 liens on my home that I want removed
It was good to speak with you on the phone Iqbal. I got your message after we spoke and understand your goal requires speed. But call the attorney I referred you to and see what you learn from that consult and then let me know your thoughts at that point.
We hired an attorney to help negotiate credit card judgments for my brother-in-law – Capital One and Discover. We are providing the funds for the settlement. We need to clear the judgments in order to sell jointly held inherited property.
Capital One was still with another legal firm & we have successfully settled that one.
Discover had used the same legal firm to file suit as Capital One but the case is no longer with that legal firm & we were told that it is back at Discover. It has been a nightmare to find the right person to discuss the situation & when a contact was finally provided to our attorney, Discover will not respond at all to the offer made. This has been going on for weeks and we are running out of time to provide clear title to a potential property buyer.
Any suggestions? .
Who is the attorney trying to contact, Discover, or another debt collection law firm? If another law firm, which one?
After starting over and moving from Michigan to Texas I have come to a point were I am trying to take control of my credit again. I kind of went backwords by opening up 4 secured Credit Cards and keeping my car loan and two other accounts up to date with no late payments. I have abot $13,000.00 in savings after a death of a family member and money left to me. I have about $45,000.00 in Charged off credit Cards and no one has sued me. All charges off happen in 2015. At this point would: 1. settlement of these CC accounts be better then Filing CH-7? 2. how much would I need to settle? any advise would be helpful THANKS
The amount of money needed to settle will depend on who the accounts are with. Post the creditor name and balance. If it is with a debt collection agency include who that is. I can offer an estimate from there.
Check out this article about how debt relief options like bankruptcy and settlement hurt your credit.
If you would have to give up a good chunk of the cash in chapter 7, settling could be a better path to rebuilding from here (depending on the creditors).
Community Federal Credit Union
$5,031.00
Capital One 30 to 50 percent are the ranges for settling Capital One debts that have not reached the courts, or attorney placement.
$3,750.00
$2,722.00
$5,544.00
$5,623.00
ExxnMobil/CBNA 40%
$932.00
First American State Bank Same as with small banks mentioned above.
$7,504.00
SYNCB/CareCredit 30 to 40 percent settlements on Synchrony accounts and are largely dependnent on the debt collection agency or debt buyer that has them now.
$1,041.00
SYNCB/JCPenny
$3,334.00
SYNCB/LA-Z-Boy
$1,099.00
SYNCB/Lowes
$4,335.00
SYNCB/Sams Club
$637.00
SYNCB/TOYSRUS
$394.00
Collection Accounts:
Midland Funding LLC Sues a lot. Try to set up a settlement early to prevent that. If you need help getting this on a 40% with 12 month payment plan let me know quickly before the accounts are placed with attorneys.
$1,288.00
$3,523.00
Capital One
Portfolio Recovery ASSOC Sues a lot and settles for 50% more commonly.
$687.00
Maybe: ExxonMobil
JJ Marshall & Associate Target this one at 50%.
$5,031.00
Community Federal Credit Union
I forgot no payments, or contact of any kind has happen with any of them. I opened a Mail box so I could start getting the letters but none of the creditors have my address, phone number etc
I put my comments in the same reply you posted, but in bold.
I would target the Community Federal Credit Union, Midland Funding, and Portfolio Recovery Assoc accounts for settlements first. You can get most of the heavy lifting out of the way with the 13k you have.
Before doing anything, have a consult with a bankruptcy attorney first. Get a feel for what chapter 7 would look like. Your credit will bounce back quicker if you settle, but not by much. There are other, more important things to think about than access to financing.
Call in for a phone consult of you like at 800-939-8357, ext 2.
Michel how much should I try to settle a $560 dent that was sold to Midland for? I can offer $150 when I make the call. Also, should I ask them to mail me a settlement letter before paying? Once paid should it be reported as settled or paid in full? Which is best on a credit profiler? Thanks for the advice.
When did you last pay on the account that Midland has?
Midland will send you a written agreement after you set up the deal with them over the phone. You can get them to fax it too. If you are having it mailed be sure to have a paid by date for the settlement that leaves room for the mail delay.
You may have a really hard time getting them to accept $150. It is possible, but not probable. Small balances are harder to settle for a great deal.
The last payment was in April or May. The $563 total includes penalties. My credit score is 690, so I can absorb it. I don’t want to because I’m trying to purchase an investment property.
You may need to resolve it to get the financing to go through anyway.
That was my concern. So, what do you think would be a fair settlement to offer or agree upon? I appreciate you help very much.
Something this small with a debt buyer can often be settled at 50%, but I also see them holding out for more too. Start lower than half and don’t try to get it done in one phone call.
I am just starting the process to help my mom negotiate her credit card debt and was hoping you could help me. She lost her job a few months ago, got a new one but took a big pay cut, and there’s no way she can make the minimums anymore (some she has been paying on for 10 years!!!) She will be 60 days late on all her cards in November and has, of course, been getting phone calls, emails, and letters.
My plan was to start calling them in the next few days using the script you had posted — about not forgetting about the bill, she lost her job and is looking to get this straightened out soon. Is that a good plan, or should we wait a bit longer?
She has about $30k in debt spread over six cards:
Discover – $13k
BofA – $11k
AmEx – $3k
Target – $2400
Sears – $1k
Citi – $500
She will possibly have some money coming her way, but it’s only about 1/3 of what she owes. We could maybe scrape up a few extra thousand, but beyond that is just not doable. A few of those banks I know you said may settle early.
Do we wait another few months to try and settle?
Do we make contact with the banks now to tell them she hasn’t forgotten and is trying to figure something out?
Are chances good that she could settle for 30-50% of the balance?
Otherwise, she really might have to do bankruptcy and if that happens, they won’t get anything because she has no assets. We were trying to settle before we went that route.
Any advice is helpful! Thank you!
If she is going to proceed with settling those credit cards, be sure to read and implement the things I point out in this article about lowering the amount of collection phone calls she has to contend with.
I would actually have your mom (you go with her too) meet with a bankruptcy attorney about filing chapter 7 first. It could cost as little as $1,500 compared to 10 to 13 thousand needed to settle.
If chapter 7 is a no go, I would make the calls to each creditor. No reason to wait. I would only make one call until later when it is time to negotiate the settlements.
Thank you for your response! I will take a look at that article.
I guess we were thinking that settling would be the ‘easier’ route because it wouldn’t damage her credit so much and keep her from getting loans in the near future. She just turned 62 and they (her & her husband) are planning to work a few more years before retiring. Once they retire, though, they might be looking to move.
They do own a house with land, but I don’t think they have enough equity that the bankruptcy could ‘take’ from them (I think the first $60k is safe). So would you suggest bankruptcy rather than settlement in this case?
I would at least consult with one or more experienced bankruptcy attorneys and weigh what is learned next to settling debts, and the impact to accomplishing credit goals.
Be sure to read this thorough article where I compare all mainstream debt solutions for the impact to credit. You may learn she can get more done with her credit after a chapter 7, and quicker, than if she settles the debts for less.
So we’ve been discussing the bankruptcy decision and will be talking to a few attorneys this week probably. She is going to get an inheritance here soon and she has some equity in her home. Won’t bankruptcy take both of those? Only a small amount of her equity is safe (from the information I could find).
Talk over both of those things with the attorney. If they have too much equity to keep the home, or if the amount of inheritance is too much to keep, settling will then look better than a chapter 13.
Question. I had a card with Credit One Bank way long ago. Dec 2009. Got sold to Midland and never knew about it and paid Midland in July of this year. Midland not only closed it and also deleted it. For some reason Credit One kept the item on my credit report all this time and still has not removed it. Any other account I have seen that went from say for instance Cap One to Midland became Midland and Cap One was not a separate item in accounts? Is this normal. I started paying off all my debt in July / August and have raised my FICO 150 points. This is the only thing still on my report that is negative. THanks Michael for your help. You can do this yourself with a little hard work and talking to a lot of people and checking those credit reports with a fine eye. I found an item on Equifax that they MAILED to me after disputes and it SAID it was going to come off and then they never removed it.
OK. I am rambling. My main question is would it be logical to dispute the Credit One item on th eargument that Midland bought it and they should not be reporting it still as a charge off on the credit report. Thanks again sir for all your help.
It would not be realistic to dispute Credit One reporting based on them selling the debt. It is normal for banks, as of now, to still report the charge off, just with a zero balance owed.
I would check out this credit report dispute article and file my dispute based on Credit One being to old to still be on your credit reports. If it is from 2009, it should either be gone already, or is set to come off in a matter of months.
march / april 2017. The thing I have learned not painfully but really annoying to me is the entire issue where Trans Union and Equifax Deleted no problem in a dispute but experian is saying they can not delete until 7 year rule.
That just means TransUnion and Equifax figure it is close to dropping off and not worth the trouble. If the negative is really able to stay on until March or April of next year, the early removal was nice.
Hi Michael,
I am currently 29K in debt (11k at Citi, 9k with Chase, 10k across random cards) I also have a checking account with Chase. I am approaching the 120-150 past due mark on both accounts. I signed up with Pacific Debt Relief but I am scared of being sued in court. I currently have no money to offer lump sum settlements (hence my sign up with Pacific Debt Relief).. I realize I can settle all on my own, but again I have no money saved. I am currently moving all of my accounts away from Chase as I believe they will freeze and/or close my bank account with them. What would you advise I do in this situation? File Ch 7 bankruptcy? I do own a house and pay a mortgage, and have a paid off car. What I liked about Pacific Debt Relief is the ability to collect a large chunk of money from me, then also allow me to set some money in savings for emergencies.
I would consult with an experienced bankruptcy attorney and look at your options in chapter 7. It is far more affordable (under 2k) and can be completed in 90 days.
How much are you putting away toward settlements each month?
I make over the median income for my state. I am supposed to start putting back $570 beginning Nov 1.
How much over the median are you?
Chase and Citibank are not real risks to sue. Chase has not filed a collection lawsuit since 2011, but that can and will likely change. Citibank is not all the aggressive like in years past. But they do sell debt to buyers that sue.
List the little ones and I can help you assess risk with those too.
I am about $10k over the mean, here are my debts from highest to lowest – pacifc debt did say they would pursue the citibank account first.
Citibank- 11,165.00
Chase – 9210
Bank of America – 4656
SYNCB – 1606
TDBank USA/Target Credit – $668
CBNA – 815
Chase – 519
Your biggest risk of being sued is with Target (they sue directly), and then Synchrony and Citibank, as they both sell to debt buyers that sue frequently. BofA has been suing more of late, but still on a small level compared to prior to the recession.
Most debt settlement companies enroll people in plans that take too long in my opinion. Try to knock all your settlements down inside of 24 months if at all possible.
Thanks, will do … do you have any recommendations for legal advice/help in Houston, TX?
I sent you an email with many great legal resources in Texas. There were a bunch of experienced consumer law attorneys in Houston.
Hi Michael,
If I was wanting to offer a settlement amount to Chase. Where could I find the address to mail that letter?
Thank you!
I would not mail any settlement letter. I would negotiate with Chase over the phone. Once you have the terms you can agree to, let Chase send you the letter agreeing to the deal, and then pay them.
Sending settlement offers through the mail is not all that productive.
Hi Michael,
I ran into some major health issues and was unable to work and stopped making payments in march of this year. I am almost back on my feet and should be able to start saving toward settlement the end of next month. I looked at ch7 but with all my other cc debt etc its not much help in terms of monthly payments. what do you think I should do
prosper 16500 charged off
lending club 11500 charged off
avant 12500 charged off
karrot 10000 charged off
usaa loan 20000 charged off
usaa credit cards (2) 8500 and 6500 still in internal collections.
I have a bunch of cards but they are all current, but all have balances of 2-7 K
You would need about 37k to settle everything you listed. And being current on the other credit cards is going to come in to play. Call me for a consult if you like, at 800-939-8357, ext 2. I will go over the other accounts with you too. I can get right to the point though, you are at risk with several of these accounts. How quickly can you raise money to settle some of these priority accounts?
Thank you for the quick reply. I did call and left you a voice mail message. I can’t come up with that amount for several months. Also not all of my other cards are current I have I have several others that are behind.
Comenity 8k
Cabela’s 7k
Webbank 7k
Webbank 4k
Sterling jeweler 1500
A couple syncronry cards that are 30 days late.
I am current on payments to amex 8k balance
Discover 5k balance
And current on a few other syncronry cards .
I left you a message back a moment ago. I am on pacific time and in the office tomorrow. You can reply to the emails that you get from the site (those all come to me) and suggest some times tomorrow.
Hi Michael. I have a debt of $4231.83, originally of Citi Bank which is currently being handled by the Razor Capital, MN. I have myself contacted them via phone after I came to know about them when I called CIti in response to which they sent Citi statement of this amount by email. They told me to pay via check or money order with my id written in the memo.
Last payment made was in March 2012. I was out of country since then and just returned. I want to clear it asap.
How should I pay them — via check or MO? Thet told that they accept only these two modes if payment. They have emailed me saying that they would send a letter of “closing account” with account paid in full once payment is cleared. Do you suggest anything that I NEED to be cautious of, at this. I reside in MA while debt was originally in GA.
Are you paying this in full or after negotiating a settlement? Do you have anything in writing other than an old Citibank statement? I would want something from Razor Capital that stated the amount you are sending resolves the debt. Check out this article for more about what to look for in a settlement or pay off letter.
Hi Michael,
I came across your website and it has been very helpful. My current situation entails unsecured credit card and personal loan debt to the amount of approximately $71,500. I can provide a recap of accounts below:
Security Service FCU Personal Loan; $6,231
PayPal Extras MasterCard: $3,228
Amazon.Com StoreCard: $2,069
Chase Freedom Credit Card: $15,957
Capital One Credit: $9,400
Discover Credit: $2,800
SSFCU Credit: $7,478
Furniture Row (Cap One) Credit: $4,667 (60 mos/0% interest)
Conn’s Synchrony Credit: $4,981 (60 mos/0% interest)
Chase SW Credit Card: $15,027
I have recently agreed to enroll with National Debt Relief in an attempt to get these debts settled rather than my payments being eaten by interest charges every month. After facing some serious concerns about debtors coming to my home, calling my work, being sued, etc. I decided to do another (deeper) dive into researching my other options such as negotiating direct with my debtors to see if I can make a feasible plan.
I am currently in graduate school and will be enrolling in a doctorate program after the completion of my current degree. I would prefer to handle this debt without seeing major impact to my credit score if possible and I would like to stay out of delinquency.
What might you suggest as the best path forward?
It was good to speak with you Joshua. Please update this post with what you learn about consolidating through one of the nonprofit’s. It will help others who are doing their homework about whether to settle debts or not.
Michael,
My wife had forgotten about a $25 balance on a Kohl’s Charge Card that has since ballooned to $357.33 before it was charged off. I had tried to negotiate with them along the way but they were not willing to put anything in writing before I made the payment nor were they willing to reduce any late fees before my payment. I didn’t trust that they would stand by their word so I declined the deal. After many more months, they contacted us again about the debt of $357.33, and I again attempted to explain that that was a ridiculous amount based on the original debt. They stated the lowest they would take is 60% ($215). I countered with $100 to which they held tight to their 60% as the lowest possible. Now, they have given JC Christensen* the opportunity to collect on their behalf. I attempted to negotiate with them as well and they held fast to the 60% line as well stating this was all Kohls would allow them to offer. I have found several recent Kohl’s settlement letters online showing 40%, 45% settlements, After speaking with Kohls again, the 60% number came up and that is basically where the conversation stopped. What, if anything, can I do to break through this amount? I’m not unwilling to settle the debt, but given the fact I tried to take care of this before it spiraled out of control, I think the amount they want now is unreasonable.
Small balance accounts often do not settle for the best savings. Not just with Kohl’s, but most debts. Check out this article: https://consumerrecoverynetwork.com/credit-card-debt-to-include-in-settlement-plan/
So in the current charge off state, from a credit report standpoint, would it be better to pay it in full or take the settlement? If I do take the settlement, how long will that appear on my wife’s credit report. We are working to pay off all debt and close all credit accounts.
Thanks for the help.
Once you get to the point you are dealing with JC Christensen you will get no benefit from paying the full amount. You could not pay 10 times the balance and get anything other than a resolved collection. I typically recommend negotiating the lowest pay off possible. That results in the same thing… a resolved collection.
The negative will fall off her credit up to 7 and one half years from when regular payments stopped. But the negative will lose potency quickly once you resolve it.
We spoke yesterday about Debate Settlement with Navy Federal and One Main Financial. After reading information on your site, I really need to talk to you. I am interested in debt settlement.
Hi Deborah – I tried to reach you at the phone number I have for you. I could not leave you a message. Try me back when you are able.
Micheal ,I wish I can upon your website sooner. Its made me feel a bit more assured my wife and I made the correct decision .
I recently signed up a Debt Settlement Company (FDR) and established a plan to pay off our unsecured debt. of 61K over a 4yr time frame .
My wife and I are 67 and 70 years old and collect SS and I have a company pension. Our combined income is 60k a year. We still have a mortgage for another 15 years .
Unfortunately we are over our head and just getting by to cover all the debt and annual living expenses. Up until we decided to enlist in the Debt Settlement Program we have NEVER been late or missed a payment to anyone.. However In order to continue this method we needed to turn to credit cards over the past several years to fund family assistance and unexpected and non budgeted expenses.
Based on our situation to believe we made the right decision opposed to the other alternatives such as Bankruptcy?
Thank you for your website and time
.
In order to determine if settling those credit card bills is better for you, I would start with a bankruptcy consult about chapter 7. Check out this article about finding the right bankruptcy attorney for you. Get one or more consults under your belt. If you can qualify for chapter 7 without losing assets you want to keep, or that can be sold privately to fund your settlements, than bankruptcy will often prove to be the better solution.
If you can only do a chapter 13 bankruptcy, settling credit cards instead is often a better alternative, but I would not use the longer settlement programs that most companies sign people up for. Look for ways to fund your settlements much quicker. Post the credit cards and balances you owe. I can offer some more feedback about settling if you cannot do the chapter 7.
Hi MIchael,
I have a $11,834 credit card debt with Bank of America- the account has been charged off, but I am being sued. I called the agency 2 times to settle the amount but they offered to settle for %75 so I didnt accept that and I went ahead and took a court date- which is in 2 days- on wednesday, Aug 3.
Yesterday the law office (collection) sent me a letter saying call us to settle before court.
My question is- should I try again, or just go to the court? Do I have a chance to settle at a better rate at the court? I stopped paying the card about 2 years ago.
I would really appreciate your advise. Thank you!
You can sometimes settle prior to court. I would target 50% of the balance owed as realistic. Can you pull that together in a lump sum?
Thank you for your response.
50% would be really hard to come up with. I have 5,000 maximum.
So you definitely not advise going to the court?
My court date is tomorrow- I have about 51K credit card debt all charged off (long story, used by my (now seperated) husband. I have a 2,5 year old daughter to take care. If I cannot settle it today with the collection lawyer that BoA has, what is my chances to settle at the court- full amount? may be installments?
Also- do I need to open a separate bank account to pay them?
Definitely show up to court. You would not need a separate bank account to pay them, though that is something I encourage when you have more time to prepare and be deliberate.
Who are the other creditors you owe? This could just be the first of several lawsuits. Have you looked at how chapter 7 bankruptcy can apply to, and help you?
You can settle judgment debt later, but I would be more likely to want to try to delay this in order to regroup and focus on the right solution and not rush into settling just yet. It is possible sometimes to delay court.
Call me for a consult at 800-939-8357, ext 2, or reply to the email address you are getting these notifications from with your phone number and times that are good to reach you and I will call you, or reply with some alternative times if I am not available.
Hi Michael
Love your YouTube channel and website, THANK YOU! great information that takes the sting out of this kind of stressful situation.
Here is my circumstance. I have had an outstanding debt with JP Morgan/Chase since 2014 when my medical practice went bankrupt, I couldn’t meet my personal account monthly payment and CHASE did an account charge off in Feb 2014.
The current debt collector holds the remaining debt and I’ve been making payments since then. I’ve recently had major medical bills and am experiencing further difficulty making payments to the debt collector but haven’t missed a payment yet. My home was just refinanced this month to help lower that payment and better meet our medical bills.
I think I could pay 70% to 80% of the remaining debt if the debt collection company agrees. What are your thoughts and what concerns should I have about settling my CC debt. I am concerned about the taxes and how to calculate and plan for this. Any suggestions?
Settling your Chase debt for less can lead to tax implications, but for most of us, I say so what. Your saving money, and the tax you pay on cancelled debt (not all of us will have to), will still not add up to the full amount, so you come out ahead.
You should be able to come out way more ahead than settling for 70 percent of the balance owed today. Call me for a quick phone consult at 800-939-8357, ext 2. I will ask you some questions to see why you should not be targeting a much better deal.
Dear Michael,
this is Marya again – I am back after speaking with a bankruptcy attorney and then credit counseling. And ultimately, I feel that I just need to save enough to settle with at least my credit card debts and then move onto the loans.
My question is which accounts I should approach first and at about what time after delinquency.
Here are the suggested settlement amounts you sent to me before:
Nordstrom: $2400 (22%) 40%
Chase: $7166 (18.24%) 20% to 40%
Chase: $1444 (0% and then 23.24% after October 16) 20% to 40%
Discover: $5398 (0% right now, but I am not sure when it will be 25%) 50%
AmExpress: $3818 (20.49%) 50%
Dell: 992 (24.42%) NO
Crate and Barrell: $600 (22%) NO
Bloomingdales: $809 (25.49%) NO
Amazon: $3217 (26.24%) 40%
Citibank: $4359 (16.24%) 35%
BestBuy: $4039 (0 for 2.5 more years) 40%
Paypal: $3394 (not sure I think it’s above 20%) 40%
NIH Federal CU Loan: $16,194 (i think it’s 8%) 50%
LendingClub loan: $14,452 (10.38%) 40%
LendingClub loan: $12,185 (13.25%) 40%
Prosper loan: $6894 (14.97%) 40%
Barclay: $2433 (22%) 40%
TD Bank Loan: about 19000 (5 or 6%) 50%
I will be setting aside $2k per month starting at the end of July,so in 6 months I should have $12K.
This should take care of all/most of the credit cards.
But should I try to settle with any of them before 6 months (180 days)?
And if yes, which ones should I approach first?
Thank you!
You will want to call in for a consult Marya. I am at extension 2 when you call the toll free number at the top of the page. I am going to go over some strategies with you to include the loans at the same time as the credit cards, and lay down some priorities the way I would if these were my accounts.
I an not on the phones today (Sunday), but am in tomorrow at 7 am pacific time.
You can also email me to set up a time to speak on the phone. Just hit reply to any of the comment notifications you get from the site. That will come to me.
Hi Michael,
I will call you on Wednesday. Thank you!
Marya
Hello,
I am 24 years old grad student living in Canada, but I am USA citizen. I am just attending grad school in Canada because it is a lot cheaper. Anyways, I have 7 credit card total debt about $20K and personal loan at Discover $13K. Before being grad student I worked as a teacher. I quit my job and went off the grad school without thinking how much I owed… I managed about 6 months to pay my credit card with my saving and working a little. But now… I am at the end… I was thinking to do debt management plan and somehow I stumbled upon your site… so I am very confused where to go for help. Reading over your site made me think a lot. None of the options are appealing to me… I even thought of stop paying my debt and never move back to America for at least 10 years…. I won’t be jobless forever but I don’t know when I will be able to pay back all my debt… also, once I am out of grad school I have college loan to pay off… What can I do? Past few weeks I have been praying to win a lottery… I sinceely need your advice. Thank you.
Post a reply with who you owe, how much, and the interest rate. I can help you with some pros and cons about each debt relief option from there.
Thank you for your quick reply.
1. Amex- $2,000 (20%)
2. Amex- $4,000 (20%)
3. Barclays- $1,800 (0% until August 2016) (after Aug it is about 23%)
4. Capital One- $7,700 (20%)
5. Discover- $4,000 (15%)
6. Discover personal loan- $12,000
7. US Bank- $900 (20%)
Is debt management plan better? Or bankruptcy? Both options are not appealing to me….
past few hours I was thinking to pay some and toss some out… not smart idea but i have no way out… unless i hit jackpot and pay all at once.
Also, what is time-barred debt? From my research it is saying 7 years then the debt is gone… does debt ever disappear?
Let’s say I stop paying all my credits (or pay few) for 7 years I live aboard … then I come back America would my credit score very low….?
Anyways, I will be waiting for your reply.
Thank you for taking your time to help me out.
With your debt total of $32,400 assume your debt management plan would be 583 a month. Can you consistently afford that? If you are confident of that, read this series about working with a nonprofit debt consolidation company.
With those credit cards and balances, were you to stop paying and later settle each account, assume you will need 14k to get through it all. How long will it take to put together 14k? Most people save it up over time and settle one account at a time. But if you have a way to bring the money together quickly, you can mitigate risks. You are already reading the series about settling debts with creditors (the above article is part of the series), so continue on to the next piece linked at the bottom of the article.
If you can pull together $1,500, than chapter 7 bankruptcy will make a ton of sense for you. You can consult with an attorney about this more, but read this piece about finding the right bankruptcy lawyer first.
You do not have to file BK now. You could wait until you are done with school and back in the states, even though you may stop paying your credit cards.
Time barred debt is generally described as when the statute of limitations to sue you in a specific state has expired. California has a 4 year limit for example.
Negative items drop off your credit report after 7 and one half years.
If the debt is time barred, and also too old to be on your credit reports, it does not go away, but there is little that debt collectors can do to get you to pay at that point, even though they can still contact you.
Which option is better? Debt management or settle with debt collector later.
Some sites said debt management plan is helpless because credit score is messed up even after I pay the debt on time. But not paying all and pay later with the debt collector is still going to mess up the credit score.
Out of the two options, which one is better for long-run? I am only 24 years old So, I will be needing a good credit score in the future.
Also, will it affect getting gov’t student loan later?
I am not sure where you read about credit counseling messing up your credit score like debt settlement, but that is not true. Read more about how I compare the debt management plan with debt settlement.
If it is affordable and your income is stable I would look at consulting with a credit counselor and getting a monthly payment quote for debt management plan first. If it is workable, it will preserve your credit and should not impair your ability to qualify for federal student loans.
Settling for less can impair your ability to qualify for new credit until all the debts are settled. I have seen people get student loans with a few unresolved collections.
Michael,
Also pertaining to my previous question regarding the $13,000 debt to WF.
What do you think the approx.
Settlement offer should be?
Thank you,
Lee
There are different ways to negotiate with original creditors. Sometimes you start low and know you are not going to get this done in one phone call. Other times you target what you know the bank generally approves settlements for and get things done a little more quickly.
Your target to settle will likely be between 35 and 50 percent. Take that into consideration with the approach you use.
Michael,
The 3 loans my 27 yr old daughter has with WF are
1-5,263 104 days delinquent
2- 4,456. 46 days delinquent
3- 3,3354 45 days delinquent
I think the Third delinquent loan for 3300 is a credit card that she has had for four or five years the other two are only about a year to 2 years old.
She only has one other card for a little over a thousand to Chase she can manage that and a small balance on a Kohl’s card.
If Wells Fargo does not offer us a reasonable amount to settle…
My daughter wants to file bankrupt I hate for her to take this route at the early age of 27.
Due to these three delinquencies her credit score is at 540 right now.
With her rent , car and general living expenses she does not make enough money to pay these bills.
I am not in the position to help her financially.
What are your thoughts on any options that she might have?
Thank you so much for your time and help!
Lee
She should be okay. I am not a fan of bankruptcy either, but because of the amounts involved, not her age.
Assume she can settle with Wells Faro for 40%. That means filing chapter 7 over what could amount to roughly 5k.
She should look to save up money as fast as possible and settle with the recovery department at Wells Fargo once the loans and credit card are 7 months or more past due.
So…You do not think WF will turn the debts over to a 3rd party before at least 7 months?
Does WF typically turn debts over to 3rd party or do they keep their debts in house?
Correct, I do not see Wells Fargo doing early debt collection placement (before 180 days nonpayments) right now. They used to, and they could return to doing some of that.
Wells Fargo stopped selling debts more than a year ago. At that time I also saw them keep more accounts in their internal recovery too. This should change int he future as well.
Michael,
My daughter has 3 separate unsecured loans from Wells Fargo.
Total is, $13,000
She cannot afford to pay the debt.
2 loans of $5,000 ea. AND One at $3,000.
So far one of the loans is about 100 days delinquent when should we call the bank to try to negotiate a settlement offer on the one that is already 100 days delinquent and at that time should we try to negotiate on the other two or will we have to wait until each one of those are at their limit for the negotiation settlement time period?
Thank you!
Lee
Wells Fargo can be a bit difficult these days. I have seen them be tough to negotiating with for under 50% and also seen some deals get closer to 35%.
The later you get with payments the better the deals get (some of the time).
Wells Fargo is one bank that historically like to settle all of the accounts on file no matter if the other accounts lag in delinquency, and sometimes even if there were current. If you are prepared with the money to knock all 3 down at once… great. If they will not approve that then keep that money aside for when they do.
How recent are the loans with Wells Fargo? Has she been carrying the balances for a long time?
HI Michael,
Thank you for the help your providing and I have also seen your you tube videos. I am currently around $80k in debt. Just got into some bad investments and bad credit card purchased. I recently met with a bankruptcy attorney but a chapter 11 (did not qualify for Chapter 7) would be pretty much the same payment (minimum) I am paying now, I will only save $500 with fees. I am looking for a debt consolidation possibly or settlement. I spoke to Freedom Debt Relief but I am scared of getting sued. I have read some bad reviews on them. I am willing to pay the debt if I could only lower the monthly payments to half or less. My job is stable and could make payments.
Thanks,
Give me a call for a quick consult about your situation Rolando. You can reach me at 800-939-8357, option 2 rings to me. You can also fill out the consult request in the right column of any page on this site.
I can help you determine how low your monthly payments can be set, or how much risk there is if you opt for the settlement path.
Hi, my wages are being garnished $508. why would the debt collector not tell me who owns the debt. I did a little searching and it’s another collector / attorneys in another state, the collection agency says their client wont accept my payment plan offer. I tried calling the owner of the debt and they wont talk to me, said I need to speak with the collection agency. just so frustrating. I know I might be doing wrong. asked to speak to the collector’s supervisor, told her to offer a little more, said they will call me back with answer from their client. I have provided information of three loans I have. I had asked for (2)of my car payments to be moved to back of loan and I need to pay with this paycheck my car and insurance. after I pay only things I now owe. I am left with $100 for rest of month. should I do the exempt paperwork. I do not have children.
Debt collectors are not typically flexible when they are garnishing. I would definitely contest the garnishment as causing a hardship. If you are successful with this in the court, whether fully or partially exempt, you could then seek a better resolution to the debt. You might even try to do that right after you file to contest it with the court, but before the hearing.
Hello, I consider myself at a bit of a crossroads with one old credit card hanging over my head from college. I reviewed my credit report and the card has a status of closed-charged off. I have a remaining balance of $868 and it also lists a late payment amount of $350. The date of the first delinquency is 07/2011. My last payment was 05/2012. I am receiving letters now from a third party debt collector to settle this debt for less than the balance owed. I am wondering how to handle this situation. I understand that this card will likely be off of my report in 7 years. Which if it is calculated from the date of first delinquency would be in 2.5 years, 07/2018. Is that the correct calculation? If that is correct, which would have more positive or negative impact? Me settling the debt for less than the amount owed or me letting the debt hang around for another 2.5 years? I am in the process of repairing my credit and I feel like this is the greatest blemish but because of the age I am not sure what’s in my best interest. Any advice you can provide is greatly appreciated!
If that first delinquency was a blip, and you brought the account current after having missed a single payment, the date to count from would be later than that, and perhaps the May 2012 date. You will want to work with the assumption that the negative will stay on for 7 and one half years.
You can wait for the collection to fall off your credit reports without resolving it. Your score will increase and you will be able to make progress on financing goals. If you settle the collection for less now, that will get updated to your credit reports, but may/may not move your credit score up immediately. Your credit score will improve in a short while. The main reason to settle now would be to achieve certain financial goals, like getting a home loan.
Are you looking to improve your credit to accomplish a specific goal in the next 3 or so years?
Thanks for the quick reply Michael! I would be looking to purchase a home in the next 1-3 years. Surprisingly enough I recently got a car loan from my long term bank with 3% interest. So I am assuming this blip didnt hurt me too much with them. But the auto dealership sent apps off to other banks and I received a couple of denial letter referencing this account being an issue in their decision.
If I was to apply for a mortgage is it important for me to have this settled and not exist in the current status?
You definitely want to have the charge off showing as settled before you apply for a mortgage. If it were me I would settle it. It boils down to a few hundred dollars that will stand in the way of buying a home.
Hi MIchael,
I came across your website while googling debt settlements and followed a link to this site. Here’s my situation:
– A Citi card credit card with a balance of $6916 – charged off 07/15, I received a letter from United Collection Bureau on 9/15 offering to settle for $3000
– A Citi card credit card with a balance of $1966 – charged off 08/15, I received a letter from United Collection Bureau on 2/16 offering to settle for $865
– A Barclays credit card with a balance of $4131 – charged off 12/15, I received a letter from Northstar Location Services on 2/16 offering to settle debt for less. (Doesn’t give amount)
– A Barclays credit card with a balance of $1416 – charged off 12/15, I received a letter from Northstar Location Services on 2/16 offering to settle debt for less. (Doesn’t give amount)
I believe both agencies are working for the credit companies and have not bought the debt.
I haven’t answered any phone calls or mail from them, and the calls seem to have dropped off.
Besides that I have a car payment due on the 16thof every month for about $345 that I try my best to keep up with. I live alone in NY and have a mortgage of $2500/month, student loan of $122/month a discover card with $2358, I’m current on making payments of $60/month. I’m still employed and bring home $4000/month after taxes, but basically I have been out from work for 2 years do to a progressive life threatening medical illness and treatments, which is why pretty much all the credit cards I fell behind on are charged off. My credit score is all ready low 500’s,
My tax return this year should be about $10,000 and want to use that to try and deal with the collection agencies.I have been all over the internet and reading the crazy debt forums, I’m not looking play the Validate debt dance or pay for delete or dispute charges. If I could deal with credit card companies directly on this I would, and I would try and pay it all off and re-establish my credit. But if I have to deal with collections, I figured just try to settle and keep some money in case of emergencies.
Basically I know my credit score is all ready low and every thing is recent I just want to clear this stuff up/ avoid any lawsuits and move on, to be honest. I don’t expect to be around anyways for when it comes off my credit report.. I was wondering if you thought settlement was the way to go, have you dealt with any of these collection agencies before and what should I reasonably hope to shoot for and will the collection agencies deal with multiple accounts at one time or do I have to do each one card separately. And when I do call these collection agencies, I was wondering if I should keep my illness and it’s situation to myself, I’m not sure if it would work for me for settling or make them go to courts faster.
Thank you very much in advance for reading my lengthy comment and responding.
If I were working your file as a negotiator I would definitely make reference to the medical hardship. It plays to your strengths (hard to believe I know). I think you can get a little lower with UCB, maybe 35%. I would target 35 to 40 percent with Northstar on your Barclay accounts.
You will be dealing with the debt collectors. I would wait to call until you have the money in your bank account.
You can negotiate both accounts with each collector at the same time, but the agreement letters they send will often be separate.
Get your settlements in writing.
Use your bank account to pay the settlements if you like.
Hi Michael, I just called Citibank to verify who has the debts and apparently the larger citi bank card $6916 is now with United Recovery System, haven’t received any info or letters from them. I was just wondering if you have dealt with them before, n if it changes the settlement % you told me to shoot for?
I appreciate any input you can give, hope you have a Happy St. Patrick’s Day!
My target would be the same now that you are going to be negotiating a settlement with URS.
Hi Michael, just called Barclays to verify who has the debts and immediately switched over to Enhanced Resource Center in Fla., they verified correct debt amounts and ending account numbers. Went into a little about my hardship but did said I was employed, and asked them to send me letters concerning the accounts, do to my lack of good hearing from treatments. I gave them a number to reach me at and verified my address, they have had the account since 3/1/16 wouldn’t say how long they have the accounts til, no offers or anything made by me or them on the phone. Does this change on what to shoot for % wise for settlement?
Not really. The longer Enhances Resource Center has the account, the more reasonable the settlement outcome may become. But try to knock the deal down before they lose the account. I would try to work something out by end of April or May.
We had a foreclosure on our house by BECU on 2010, due to the 2008 crisis. We have a judgement, and arranged payment plan for 15 years for about 45K. We have paid about 8K of it in 3.5 years according to the plan. So we have 37K left to pay by 2027. We have no other debt. We would like to negotiate a settlement because the weigh is just too much on us, but we are not in a situation to pay the full amount.
What amount can we shoot for? I know the credit unions are not open to negotiation, but I assume they would want to have a lump sum pay than waiting for another 12 years.
Settling with BECU on a judgment can vary. I cannot offer a very optimistic target when someone is showing the ability to make payments like you are. If you stop paying you risk the extra collection efforts judgment creditors have… that we all would prefer to avoid.
Do you have any other unpaid collections out there?
Are you paying other bills, like credit cards, or a car loan on time?
Can you raise half or more of the balance owed quickly?
Thanks for the prompt reply Michael!
We have no other unpaid collections, We use credit cards, and pay the full balance at the end of the cycle. We are leasing a car. The house was on my husband’s name only. We can raise the half of the balance, but not the whole amount, as we are living in the most expensive area in the US. We don’t want to stop payments, but settle the debt by paying a reasonable amount. The house was on my husband’s name, but the judgement has me as spouse (as far as I understand WA law includes the spouse). His credit score suffered due to bank’s reporting; I have excellent score.
I think I was using the term wrong, We want to close the debt. Because we already had signed an agreement to pay it in full in 15 years, and have been paying a fixed amount the last 3 years.
Give me a call to go over some additional details and I can offer more direct feedback. You can reach me at 800-939-8357, option 2 rings to me. You can fill out the “talk with Michael” form in the right side bar too. That will allow us to communicate through email.
Hi Michael,
I came across your youtube videos (which are very informative!) and followed a link to this site. Here’s my situation:
– A Bank of America credit card with a balance of $3246.37 – since October (various people from) Sunrise Credit Services, Inc. in Farmingdale, NY have/has been sending me correspondence.
Mail dated Oct. 7th “When You Receive A Collection Notice…” from “Mrs. Silva” gives info on what happens next, no payment options detailed.
Mail dated Nov. 19th from Joe Thomas, offering to accept $200/month if I respond within 90 days.
Mail dated Dec. 8th from Regina Tabone, offering to accept $50/month if I respond within 90 days.
I haven’t answered any phone calls or mail from them, and the calls and mail seem to have dropped off.
– An American Express (Costco) credit card with a credit limit of $1,000.
Mail dated Nov. 22. A notice from “Central Credit Services LLC (Formerly Veldos LLC)” in Ramsey, NJ stating that they’ve been requested by AmEx to assist them in the collection of $1,024.64
Credit card statement from AmEx. Statement closing date Nov. 24 with a $1,073.93 balance (previous balance of $1,024.64 plus a $38 late fee on Nov. 19th and $11.29 interest on Nov. 24th – the statement close date).
Mail dated Jan. 28. A settlement offer from American Express. Balance owed: $1,160.39, settlement offer: 60% of balance owed, $696.24. The expiration date for the offer is/was Feb. 22 and I meant to send them money before it expired. They’re asking 60% of the balance owed over the next 6 months which would be $116.04 a month.
– A Wells Fargo credit card with a total credit limit of $5,100. I’ve been a member of Wells Fargo since 1994 (when I was 7 and my parents opened account for me), and I’ve had this credit card since I was 16, over 10 years ago. In March 2015 someone stole my wallet and used every single one of my cards. I reported them all stolen and got most of the charged refunded. My Wells Fargo credit card was one of those accounts. But the bank itself wouldn’t reverse the $975 charge to my debit card/checking account (which overdrafted my account and all of that fee ended up coming from my credit card anyway), so after being told I’d have to pay that amount, I decided I didn’t care about paying down the balance, which was foolish of me. Every so often I would send them a little bit of money to appease them, which I now realize was also maybe not the best route to go. Before this fiasco I legitimately owed about $3,790. I currently have an outstanding balance of $4,735.08. I paid $158 on Feb. 1st, am past due $155 which was due Feb 15th (and have since had interest of $66.01 and a late fee of $35 added – I’ve gotten a late fee every month since March 2015), and they’re asking for $304 by the next statement close on March 11th.
Besides that I have a car payment due on the 3rd of every month for about $401 that I try my best to keep up with. I had only about $250 income for all of 2015, and for 2016, I’ve been making and expect to continue to make about $500/month.
Thank you very much in advance for reading my lengthy comment and responding.
Can you raise money to offer lump sum settlements on one or more of your accounts? Here is what settling with BofA, Wells Fargo and AMEX might look like:
The collection agency with your BofA account will often settle for 30 to 40 percent of the balance owed. Done correctly, and given the right set of circumstances, it is possible to settle this account for less than 30%, you can call for a consult and get into the details of how that might work.
It is unfortunate that Wells Fargo treated you the way they did with your debit card. I would typically suggest you file a complaint against Wells Fargo with the CFPB. If it were me,and the credit damage from Wells Fargo had already begun, I might move in the direction of settling with Wells Fargo, for say 40% of the balance.
I would call Amex and let them know you want to make a settlement deal, but cannot raise that much (or commit to that high a monthly payment toward the settlement), but could work with them if the amount was, say 10 percent lower. Get that newly negotiated deal in writing before you make a payment.
You can only do what you are capable of financially. If you cannot raise the money to fund settlements, it just is what it is. You will be dealing with different debt collectors along the way, and there will be opportunities to settle these accounts and rebuild your credit as you go.
I likely have a page up about any debt collector you may here from moving forward. Use the search box in the upper right to find those pages and read up on what settlements and negotiations are looking like with each. Post comments and concerns and get feedback along the way. If you cannot find details about a specific debt collector you are hearing from you can start a new page about them using the Ask Michael feature at the top of the page.
Given the relatively low amounts involved, and your age, I would not suggest bankruptcy right now.
If you want to find out if your accounts can be consolidated to a lower monthly amount, with fees and penalties waived, call 800-939-8357, press 1 when you here my voice start in with the menu. That will connect you to the largest nonprofit in the country who can consolidate your bills in many situations. The call is free and friendly. You are mainly looking for that monthly payment quote in order to determine if it is affordable.
I just talked to chase to make arrangements to pay my credit card debt. I have 2 cards with chase totally 20,000. The only option they gave me was pay the full amount over a possible 60 months. They wanted to do an application over the phone but I refused because I can’t pay the full amount because my payments would be almost as much as I am paying now. I am 60 yrs. old and cannot pay that amount in retirement. I can’t afford to pay any amount in retirement. I wanted to pay it off at a half the total amount in 3 years. They said they didn’t have that option.
How many months late are you with your payments to Chase? From the sounds of it you are not behind enough for them to discus settlement options.
When you do get to the point of being able to negotiate, Chase indeed has no plan that allows for a reduction of the balance and 3 years to pay. But there are often going to be settlement targets far less than 50% that will play into your planning. Call in for a quick consult if you like. You can reach me at 800-939-8357, option 2 rings to me. I am on the phone a lot, so be sure to leave a message and I will return the call.
I am not late on any payment. I have not paid any principal on one of my cards in several years. The balance has been the same. My concern is that I definetly will not be able to pay my minimum payment of $256.00 in retirement in the next 3-4 years. I believe their 5 yr. payment plan will be even higher.. My balance is 13,000 on one card and 6,400 on the other. I have already paid about 9,000 in interest in 9 years on the 13,000 card. My interest on that card is 129.00 a month and 95.00 on the other. I cannot pay a lump payment settlement either.
Watch this video about entering into retirement with affordable debt that I published last month.
Post your thoughts in the comments of that video, or in this comment string, and lets go from there.
I am currently $42,000 in credit card debt. I have a special needs son and was recently diagnosed with SLE and lost my job. We pay a $1,000 a month in payments if not more… we are currently current. I was thinking about stopping payments… and then starting to settle one card at a time with that payment money. In a few months the promo interest rates will go up and we will no longer be able to afford them. I do not want to file chapter 7, I want to do what I can to pay off this debt. Is it better to let them go into default first?
It is typically not a good idea to let accounts go into default if you can avoid it. You may still be able to, but call me for a consult about your over all situation at 800-939-8357, option 2.
If settlement is your path to resolving your credit cards, than yes, you have to be in default several months before you can typically have any meaningful discussion with creditors about them accepting less than what you owe as payment in full.
My family had a bit of hardship which ran up my cards and I was unable to make min payments. It was a capital one card and my balance is almost $23.000.00. About a month ago I was telling them that I was going to get some money and could possibly make a payment. The wanted to settle for 13300.00
I have come up with 12,000 but now they have sold my debit to theBureaus Investment Group Portfolio No 15 LLC and they are using Stoneleigh Recovery Ass. LLC to collect. When I called the first time the person on the phone told me the best they could do was like 16,500.00. So I asked them to submit my offer of 12,000.00. I was told to call back the next day which I did and now I am taking to account rep that is assigned to my case has told me the best offer is 19,000.00. I owe other creditors money which none of them I am late with. Should I use my funds to pay other creditors since they dont want to give me much of a setttlement? f they were to sue me what is likley the judgment amount will be the entire balance.
Unfortunitly this account rep and my wife went round and round as they made there first call to her before I had called them. They were trying to stong arm her and she does not take that from me or anyone. He used bad lanuage which she returned. So I am woundering if this may have turned a little personal. So looking for advice on how to handle this matter
I am optimistic you can still settle the account for half. But you do raise a good question about whether you should focus on resolving other debts. Give me a call to go over your creditor specifics and I will help you prioritize your accounts. You can reach me at 800-939-8357, option 2 rings to me. I am on the phone a lot, so be sure to leave a message. You can also email me directly and set up a time to talk. My email is the address you receive these comment notifications from.
I could not find a coment notification in my email to email you. I am still struggling with collection company. They have moved me up to speaking to a supervisor who wants a call back from me tomorrow. The offer is now 18,000 and I can spread it over 6 months. I have stuck to my inicial statment that I could pay 12,000, but they will not take that offer. Of coarse they are getting reall pushy about me sending them a payment which I have refused to do. In my last post i told you I had other creditors that although I am current on i do have a sufficient balance. Do you think using the other creditors as leverage, is a good stratgie to tell collections that maybe I will pay them with my 12,000.00 to help push them to make a deal.
I am thinking taking the 50% to 60% settlement as my credit has already been hit for late and non payment. Is there any advantages for me to pay the entire balance to collector at this time as I have already done the damage? My thinking was to take the settlement as it will help me get out from under this debt I have got myself into.
I have to call the collection agency back tomorrow and just not sure what to tell them.
I only use other unpaid debts as leverage when negotiating. Bringing up credit card bills that are current does not have the same affect. It often makes you look like more of a collection target.
I put up a video about settling charged off debt while trying to limit credit report damage a couple weeks ago. Give that a watch as it will answer you question about the benefits of paying in full, or for much less.
I would target a much lower settlement. I am available to call at 800-939-8357, option 2 rings to my desk. The email notifications only come if you check the box to receive them before you submit any one of your comments.
I have about 10 credit cards. Balances are about 31,000. Most are different store cards but the issuing bank for most are synchrony bank. In December my husband lost his job and we can’t make the minimum payments anymore. Creditors are calling every day but none are wanting to try to settle yet. I can borrow some money but it would be no more than half what my total balances are. Some have tried to set me up on a hardship program but when his unemployment runs out or my job is over come June ( I am an aide at the local school, it is part time and only contracted through this school year) then I would not even be able to meet those hardship payments.
Is there a chance of them settling with me at some point and for what type of amounts?
The largest balance on a card is $5008. with a couple others being 4600, and 3800.
I target settlements with Synchrony at between 25 and 40 percent. It can matter the brand on the credit card, and how long your account has gone unpaid matters a great deal.
Call me to discuss strategy if you like at 800-939-8357. option 2 rings to me.
You can also continue reading through the first stage negotiation and settlement series by clicking through to the next piece (at the end of the above article).
Michael,
Thanks for the great blog with practical guidance around debt!
My husband and I are looking to buy a house, and some old debt is showing up on his report. Last payment was July 2009 so we are SO CLOSE to the 7.5 year drop off, but we find ourselves needing to buy before then.
For some reason, even though the accounts are old and charged off, they are still showing a “monthly payment due” which is hampering our debt-to-income ratio. Specifically, we have
BofA balance $8005, monthly payment $400
Capital One balance $2700 monthly payment $135
We have tried to negotiate the BofA balance in the past, but found them really hard to deal with. They wouldn’t accept a dollar less than the total amount owed. We are in California so I believe the SOL is 4 years?
Any tips/advice on how to negotiate with BofA or are they just notoriously stubborn?
Thanks for any advice!
I have always found Bank of America easy to deal with. There are accounts that get flagged for one reason or another. That may have happened with you. Give me a call at 800-939-8357 (press option 2 to get my phone to ring). I will go over your account history and situation and give you some realistic targets.
Yes, the SOL to legitimately sue in California is 4 years. That time having lapsed will often lead to better settlement outcomes, but not always.
Hi Michael,
I am so thankful to have happened across your site. It has been really helpful with understanding how the debt settlement process works which is what I was searching for.
My husband is self-employed and our income has drastically dropped this past year. We have come to the point of not being able to continue making the minimum payments on our credit cards. They are killing us. We’ve got a great history of paying on time and have only skipped one payment on each which only happened this past month.
The three cards are as follows:
Capitol One – $10,000 at 19.9%
Discover- $8,500 at 13.99%
Chase- $9,500 at 11.24%
Understanding how the process works, I know we will not be able to come up with 50% of that if we were to settle. What is the best way to go about this? We don’t have any valuables to sell and only have one vehicle which we do need.
Discover has already reached out with a hardship plan. It would drop the interest to 9.99% , with a minimum payment of $152 for 60 months. Even that is not doable to us for now. Do they generally go lower then that?
I guess my question would be, would it be best to hold out for settlement, do a hardship plan on only one (not sure if that is doable) or what is our best bet? Our income will hopefully increase again this spring but as of now our savings is gone and I stay at home with the children so our income is really limited.
Thank you for your help.
The Chase and Discover hardship plans will not result in much monthly payment reduction as those cards have interest rates that are already pretty low. Getting Capital One to drop interest will help the most. But with your household income dropping in the manner you describe, none of the payment reduction offers coming from any of the banks will be enough. Settling with your banks for less than the balance you owe is often the next step to consider.
Two of your three credit cards have aggressive collection policies (Capital One and Discover sue to collect), and one does not. And if it is going to take you a long time to come up with the money to settle (half-ish), say more than 18 months, I would first look at filing chapter 7 bankruptcy. If you learn something from consulting with an attorney that will prevent you from filing bankruptcy, then circle back and lets talk about what settling will look like for you.
My first question will be how long it will take you to raise 12k? There is no right or wrong answer, but your reply will impact the feedback I offer.
Hello Michael,
I have come across your website just the other day while researching my options to settle with a few cards. Currently live in CT and have been out of work for about 10 years on a disability pension so my income is fixed(no COLA, etc) my wife works and has been with the same company for around 15 years. We recently have been faced with the multiple calls from collection agencies due to not being able to meet our monthly obligation to our cc companies. On a couple of the accounts the interest rate was raised due to lack of activity(we stopped using the cards 2 or so years ago) Before this we were struggling to keep current on all accounts, but have eaten up quite a bit of savings, 401 accounts, etc) We have recently asked family for assistance and need to get the amount as low as possible as not to be a huge burden to them. here is where we are at:
1. Capital One (GM card) $14,472 currently has not been charged off (4 missed payments)and when speaking with them they asked for a monthly payment and then would discuss lowering and interest rate or after that payment would entertain an offer from us. Shows as “Cancelled by credit grantor”
2. Citibank $21,223 shows as “Cancelled by credit grantor” with 3 missed payments account is being handled by Alliance One.
3. Citibank $30,371 with 4 missed payments this is currently with GC Services and they have offered a hardship lump sum of $19,200 which is roughly a 70% deal which I believe could be settled at a lower number. Also comes up as “credit cancelled by credit grantor”
4. Home Depot/CBNA I believe that this is also a Citibank card $4,121 4-5 missed payments, have not spoken to them yet, but believe that the account is being handled by Viking Financial, also shows as “Credit cancelled by credit grantor”
There are some smaller store credit cards that we feel we can keep current, balances below $2k on each.
Up until a few months ago we have been current on all cards with no missed payments..
Can the 3 Citibank cards be pooled together and negotiate with just one collection agency? I have a feeling that the answer is “no” if the accounts were charged off, but “maybe” if they haven’t been, your thoughts?
Also when dealing with Statute of Limitations I know that CT is 6 years, does that pertain to when an account as a whole has been charged off or if there is charges that were made 6 years ago cannot be collected one?
Any assistance with this as far as what order to settle, rough estimates of settlement percentages I should target for, or any other help .that you can give would be greatly appreciated.
Thank You, DL
Not much has changed since I rated banks for how they settle.
It is unlikely that you would be able to negotiate all of the Citibank accounts with Citi, or a single debt collection agency at this point. You will have to focus on negotiating the best deal with each collector. Are you ready financially to pay settlements you negotiate?
Capital One is not likely goign to go lower than 50%. And you cannot realistically expect to get any lower than that when dealing with debt collection agencies.
Each one of your Citibank accounts has the potential to be settled for as low as 25% or 30% based on current trends. That said, I do not think you will hit that target on all of them. I cover negotiating with GC Services in the comments of my resolving debt with Citibank page. It will be difficult to get them to the best savings on your account when you are only 4 months late.
I cover Settling with Alliance One and Viking Financial in the comments here. I do need to dedicate a page to them separately.
The 6 year SOL will typically begin with when you stopped paying the accounts.
I have real concerns with your paying several smaller balance accounts when trying to negotiate and settle with others. Check out these 2 reports:
https://consumerrecoverynetwork.com/credit-card-debt-to-include-in-settlement-plan/
https://consumerrecoverynetwork.com/keep-credit-card-open-when-settling-debt/
Call me for a consult about those open accounts, and how to time your settlements better with all of the debt collectors. You can reach me by choosing option 2 when calling the hot line listed at top of page.
Michael, thank you for the prompt response, even on a weekend.
I will plan on calling you on Tuesday 12/8/15 as I will be able to have an uninterrupted conversation.
Do you suggest I attempt to contact any of the collection agencies prior to our conversation, or should I wait? I am currently making files for each one and putting together a negotiation plan for each that will include time frames and target payment amounts.
Talk soon, thank you!
Call me first. Our discussion will likely change how you approach them.
Michael, First, thank you for taking my call yesterday, the information and guidance is/was very beneficial to me.
Secondly, I plan on calling and hopefully start the negotiating process with Cap One tomorrow. I think I have a good grasp on what needs to be accomplished with them, not overly optimistic that they will want to strike a deal on the first phone call, but know that I have a few things going my way.
I will keep you posted.
Update:
Called Capitol One this morning went thru the verification of who we were and that it was our account(yada,yada) Told the woman on the phone that we were looking to settle the account, without going further she offered us a 60% deal. After she told us that is when I brought up that we were in fact working with other credit agencies in an attempt to settle with them also and we would not have that amount of money available, even if broken down into 3 installments. The woman on the phone put us on hold to check if she could do any better on her offer, came back with a 52% deal and knowing that realistically they would probably only go down to 50% we accepted. For our situation we felt it was not worth haggling over 2%.
We also asked how the account would be reported and we were told it will show a $0 balance and state “account paid in full at less than full balance”. We also asked for a letter to be sent as soon as our telephone conversation was over and we told that one will be sent and would take 7-10 days which should put the letter in my hands a couple days prior to our settlement due date of 12/24. one thing we did do that I learned from reading this site is we set up a new bank account that we will use solely for debt settlements and gave Cap One that number. We plan on placing the proper amount into the account a couple days prior to the settlement due date and verified with Capitol One that payment could be made directly from that account instead of sending a payment thru the mail and were told that yes they would accept that form of payment.
Next up the focus will be on settling with Citibank on 2 of the 3 account we have. Will be working with Alliance One and Viking Financial, the account being handled by GC Services we will let time out with them and let it get reassigned with a different company as per our conversation.
Thanks again, not sure we would have attempted this if I did not find your website.-DL
I have $19,000 owed on a NFCU (Navy Federal Credit Union) credit card. If i can’t make the payment anymore, will they garnish my wages? Would they sell my debt to a debt collection agency? Or would they come after me? I live in FL, and i have been making payments on time up until now.
Thanks for any advice that you have.
Most any debt that goes unpaid long enough can end up with an outside debt collection agency. But not all unpaid debts are sold. Navy Federal will not typically look to sell your account. They do work with collection attorneys though.
Ideally you will want to come up with a plan to resolve your Navy Federal credit card. I left you a voice mail in return of your message to me. I look forward to digging into the details with you when we speak.
Hi, I have a debt that keeps popping back up after it has been settled. The new collector (palisades collections) is telling me that this is a different debt and that I still need to pay it. I asked for them to verify the debt and all they keep doing is sending me a dunning notice in response. I don’t know what to do and I have disputed it with the credit reporting agencies twice now, only to have it reinserted again each time.
I have filed complaints with the Texas state attorney general and the FTC and it doesn’t seem to make a difference, the guy I was talking to on the phone at palisades thinks it is funny and just antagonizes me with ugly comments like, “if you just pay it, we will go away”.
I know that there are laws to protect me, but what am I supposed to do? I can’t afford an attorney to sue them and there aren’t any attorneys that will take my case (already checked) on contingency. They all just keep telling me the same things, “pay the debt, it will be cheaper”. I already settled the debt in ’06, I am not interested in paying for it again. what do I do?
I would get all your information together, being as detailed as possible, and file a debt collection complaint against Palisades with the CFPB. Review that article before you file.
Who did you settle the debt with back in 2006? Is Palisades appearing on your credit reports?
The SOL is passed in Texas. You could send a cease communication letter (send certified mail return receipt), and that will prevent any additional collection calls or notices. If they continue collection efforts, after you know they received your letter, post an update.
I have already filed 2 complaints with the FTC and I guess it just hasn’t been long enough. I did the cease and desist, they claim they never got it and just keep on calling no matter what I say.
I don’t remember who I settled it with, it has been too long and I don’t have records that far back. I think the original creditor was either Capital One or Citibank. it was for a credit card that was in default. I remember I paid 60% in two payments to get it resolved and I think they are reporting it, they said they were when they threatened to file suit against me. They said that the debt has been reclocked and that the SOL started over again. They say their records show that I didn’t do a settlement, but just made a big payment. From everything I have been reading, they shouldn’t be allowed to do any of what they are doing and reporting them to the FTC has really had no effect.
I did some more digging last night and have found some other information about suing them myself and that they will have to pay me 1000.00 for breaking the law and that I can do it myself without an attorney. The guide is called Weathering Debt, and it has instructions and sample letters. I am thinking about going this route. Do you know anything about suing them myself without an attorney?
To be honest, I am more than a little angry about it and would be thrilled to stick it them if I can. I would like your honest opinion though.
There is no need to sue a debt collector by yourself for debt collection violations when there are many attorneys out there that do that for you and only get paid after the case is resolved, and their fees are covered by the debt collector.
Given what you have shared so far I think you should pursue it. If you need help finding an experienced attorney to work with that charges the way I just outlined, let me know, I will email that to you.
Yeas, please send me that. I live in the Dallas TX area and I haven’t been able to find an attorney that doesn’t either want money up front or is telling me to just pay them off.
Thanks much!
I have about 20k in credit card debt. Most of it is from 2007/2008. My mom took out most of the cards, and then put them in a debt management program, but I was unable to pay the monthly fee when I left work due to maternity leave. I have not paid these cards in all this time, and I want to know what would be best. should I settle? (I only have a few thousand dollars in my account, I just finished graduate school and I was living off my loan money) or, should I file for bankruptcy?
What state are you in?
Can you confirm when it was the last payments were made on the DMP?
Whether to negotiate the debt, wait out the derogatory collections on your credit reports, or file bankruptcy and get a fresh start, is a big decision. I will be better able to help you make a comparison with the answers to those two questions.
Michael
This is a fantastic informative site. I watched your interview with Jared and sent him a request for a consolation but I would like your advice. I recently sold my home due to a job loss and tax increase I couldn’t afford it. During this time I racked up 30k in credit card debt. I am working now and making over 1k in minimum payments.
I have 11k with Citi Bank with a Sears MC, Home Depot, Best Buy, and good year.
I have 14k with Synchrony Bank for Lowes, SAMs , and a couple others.
I am current with all of them but 3 months I was several months behind until I sold my house. My credit is down to 500 from 730.
If I stopped the minimum and saved I would have 12k or more in a year to settle. Do you think debt settlement would be a good option?
Thank You
I generally see settlement as a good option for folks that can negotiate and fund all of their settlements inside of 24 months. I would estimate your time to completion at 18 months or less. If you have to one off your settlements, you could be dealing with some higher percentages, or even critical stage collections, on the last couple of accounts. But all of that is navigable.
Jared is great with this stuff. I expect him to encourage you to pull resources together earlier than what I implied is doable above. He is right to do so. You can often have better settlement outcomes when you negotiate the deals not only quicker, but in rapid succession.
Thanks for the tip. Resources are very limited so hopefully I can manage something. I did go ahead and write the junior lawyer that was on the litigation, as a kind of heads up and last chance for his client to get on the straight and narrow. Maybe that will suffice if it gets the job done. Otherwise, I’ll try your recommendation.
Following a civil suit in which I brought counterclaims in part dealing with wrongful charges, I entered into a formal settlement agreement and dismissal of case with a major credit card co. Original claimed amount was approx. $12K and following negotiations with their attorney the stipulated amount owed came to around $5K, payable in monthly installments, all of which have been timely for about a year, and one year to go. I waived claims for wrongful reporting up to date of settlement only. They relinquished all their claims too in exchange for the settlement so long as I pay the agreed amount. Now, I would have expected that if anything the card co. would stop the negative reporting but not only have they failed to report that going forward from settlement, I have been on time for nearly 12 months and paying as agreed (as to which I have numerous automated email confirmations of receipt of payment, so even if they want to try to skirt around and pretend the lawyer wasn’t their lawyer, their domain name is all over the automated email), they are also continuing to report charge off every single month. I have called them and pointed out the settlement and afterward faxed them the legal docs. I also disputed with at least one credit bureau early on, about 3 months after entry of dismissal and execution of the settlement (with proof of payment), all to no avail. I am nearly apoplectic.
What state are you in?
Massachusetts, originally CA, but the suit was commenced Feb 2013 in MA and settled/dismissed March 2014 in MA. The delinquency started end of 2012 after I’d been in MA for nearly a year.
If I understand this correctly… you were sued; you counter sued; you both came to an agreement; part of that agreement was that they would not report the late pays or that you account was charged off? If that was part of the agreement, you should be upset. If it was not, what you describe is normal when settling debts at all stages of debt collection.
Did you have an attorney helping with your counterclaim? If not, I would run the scenario by an experienced debt collection defense attorney in MA. I can help you connect with some for a free consult if you like?
I did not use an attorney but did pro se. That said, having done many settlements professionally (not debt or PI but other kinds of claims), I am familiar with release language and was careful to say I only release up to date of settlement. The fact is, the only binding agreement is the settlement, which does not say I owe $12K. It says something like $5K, and that should I be in default of the payment schedule (I also ensured to provide a notice/cure period to allow for inadvertant mailing delays or delays of address change before being deemed in breach) or if I should later declare bankruptcy, the only remedy to them is they can claim a balance of $7,500 or so, less the payments made. So it seems to me, they are in clear violation (now wilfull after having the opportunity to fix it and refusing to) of FCRA because it is agreed that $12K is not relevant and I am in fact making payments as agreed per the only valid agreement now existing.
If you are ready to take them to task, it sounds like you are capable of preparing for this. There are some experienced FCRA attorneys in MA you can connect with for a no cost initial consult. There are helpful case management resources for FCRA issues available from NCLC too, who are in Boston.
I see several times that you mention Bank of America has a dedicated line for debt negotiation. Would you please provide me with that number.
Just call the number on the back of your credit card, or on your billing statements. When you puch in your account number, your account will be recognized and will get directed to the correct department at BofA that still has your account. If your account is more than 6 months past due, it is likelier you will be dealing with an outside collection agency.
I have recently been sent to collections on some schooling I have done in the past and I was told not to come back.
They have sent me to collections for $3067.
I am wanting to try to settle on a lesser amount. But the collection agency tells me that they have to get with the school in order to do anything. I’ve been dealing with this for only 2 days and I just want to know what would be my best bet in getting this resolved without paying the whole amount of possible.
Settling student loans for less than the loan balance is possible when they are private.
How long ago were the loans issued?
Were any payments made, if so, when was the last payment?
What type of school is this?
Are the loans private (not government backed in anyway)?
This was cosmetology school.
All payments made were from pell grant and fasfa financial aid.
I started school January 2013 was asked to leave and not come back October 2013 they sent me to collections September 2014.
The documents the collection agency provided don’t match. For example: one page has an amount for tuition fees books and kit. And the next has a different amount completely.
Federally backed loans do not settle in the way we thing of negotiating a lower pay off amount. You may be able to get collection fees waived on them though.
Why were you asked to leave the school? Perhaps that is something to leverage.
My student loans are currently being paid.
That is not what they have sent to collections.
the 3067$ is money they say I owe them (the school) not the government.
She asked me not to come back because I offended someone with something I said.
And I wonder if they can do that… send you away without an alternative, and whether how it was handled, was without a cause clearly outlined in any agreement.
Did you talk to the school about their policy over such things, either then or recently?
The debt the schools is trying to collect on for themselves appears to be private, so can be settled. What amount are you able to pull together to put this behind you?
It was against policy to be offensive in any way so I understand that part.
I’ve asked the collection agency to settle on an amount I offered 1000-1500 and I haven’t gotten an answer yet because the collection agency told me they would have to get back with the school in order to do anything of the nature.
Okay. Post an update with what they say.
It is normal for a collector to have to get approval for something that is not automatic for them to be able to accept. That approval may have to come from a manager or supervisor, but it can also be required by their client, the school.
How can I set up payments to pay off old debt?
Setting up payments could be as simple as contacting the creditor you owed, or their assignee debt collection agency. Some debts are sold off to investors, so you may end up paying a company not connected to your creditors.
Can you offer more detail? Who was the creditor, and when did you last pay them? From whom, and when was it, that you last heard from anyone about your debt?
I entered into an agreement with Freedom Debt Relief (FDR) to help me when I separated/divorced in 2012 for 3 credit cards and one line of credit. FDR settled one card with Capital 1 for 50% after 6 mo0,000.00 I owed on the card with Bank of America. I only have a 12,000 balance with the final credit canths with a savings of about 10%. I came into cash after changing jobs and pulled one card from the service and paid it off. I have my final card settled at 50% but with FDR fees it only saved me about 20% of the 2rd debt BoA. I have about 6,000 in my account with FDR as they are paying 800.00/month for next 6 months to complete my settlement on the Bank of America line of credit. My question is can I pull this credit card out of their program and now negotiate a settlement with BoA on my own? It’s been almost 2 years that I’ve been in this program and am very frustrated with FDR. Their website lists typical monthly settlements with BoA for their customers saving over 70% of total owed INCLUDING their fees. After paying 600.00 per month and even putting in an extra 3,500.00 in an effort to expedite this process I feel like i have been duped!!!! And as a result my once sterling credit is ruined and I did not really save very much money in the process.will I nullify my current settlement with BOA if I try and make my own settlement with BOA and cut freedom debt relief from the process?
If you have a deal with Bank of America the Freedom Debt Relief already worked out, they will have, or are, already being paid their fee for negotiating the debt for you. Quit now and you may be out the full fees, as they are considered earned when the settlement is accepted, and the first payment made.
You can rework the settlement. But are you sure the deal was negotiated direct with BofA? From what you shared, it may have been reached with a debt collector, or a debt buyer. Find out who (if not BofA) and post an update. Who you may have to negotiate with can change my feedback to the point I would caution you from ending what is already in place.
The line of credit with BOA is already settled. I don’t want to pull it out. FDR negotiated a settlement for 50% of 20.000.00 for 10,000.00 to BOA. They charged me a fee of almost 5,000.00. My last card in the program is for 12,000.00 with BOA. My question is can I remove this card from the program and negotiate my own settlement without FDR or BOA negating the settlement already in place for my line of credit loan.
BOA has already charged off both debts, line of credit and credit card.
Find out who BofA has your account assigned to for collection, or if they sold the debt, who they sold it to. Post what you learn and lets go from there.
I was not sure if the account you want to negotiate already has been by FDR, and is getting paid monthly. If that BofA account does not have a deal negotiated yet, you can yank it from FDR and negotiate the credit card settlement yourself. For those inclined, I recommend folks negotiate settlements on their own whenever possible. Get everything done you can, and let a pro step in when you hit a wall, or if there are situations where the deal that can be done, is better reached by a negotiator.
Thank you.
I pulled the BoA Credit card from freedom debt relief today. Thank you for the advice as they did not give me any hassle at all as I was expecting. The credit card (charged off) has not been paid on for 2 years and the balance is roughly 12,000.00. Is an offer of 5,000.00 to BoA fair? Do you think they would accept this? I’ve seen others talk about settling for as low as 30% but 40% is what I can honestly afford to do right now. Should I start at 4,000 and leave me some wiggle room. Where/who within BoA would I begin to discuss/write/email this settlement to. I looked and couldn’t find an overdue accounts section. Thank you again for the information you and your site provide.
Call the normal number for BofA credit card accounts (look on the back of the credit card if you still have it, or old billing statement). It is unlikely you will be negotiating directly with BofA after this long. They will have the account placed with outside debt collectors, or sold your account to a debt buyer. Your calling to ask which, and the name of the company.
Once you know that, post an update and lets go from there.
I would start your negotiations at a round dollar figure around 25% of the balance owed, and work your way up from there. 40% is a very realistic goal, but I still see many settlements around the 30% mark too. But much can depend on who has the account.
I seem to have made things worse. I pulled the debt owed to BoA from FDR like we discussed earlier in this post and wrote BoA asking to settle the debt. I received an email from an attorney in New Orleans that had a copy of my letter sent to Bo A asking if this was me and to provide him with a telephone number to discuss this issue. That was mid January. Didn’t hear anything back until today when summons delivered from sheriff dept stating i have 10 days to reply to lawsuit by BoA seeking all 14,000.00 of past due amount. What are my options other than the obvious of getting an attorney? Do you have any experience when it gets to this point?
It is likely more cost effective to respond to the summons using an experienced debt defense attorney in LA. You can still settle the account after that, or call to negotiate now. But I would definitely talk your options over with an attorney first.
Would you like me to email you contact details to those I know of with the most experience? All of them offer a no cost initial consult, which will help you get your bearings regardless of whether you retain one.
Yes please do. I’m unsure of how to proceed and could use someone with experience in this type of matters to assist.
I am located in Bossier City LA. Zip is 71111
Shreveport, LA is very close also.
Thank You
Done. Like I said in the email, distance from the attorney you are working with is not always going to be an issue in these cases, especially if the goal is negotiating the lowest settlement.
I owe about $50,00 in an unsecured loan with NFCU and are about 5 months past due. I have no other loans with NFCU. I was thinking of doing a debt settlement with them. What do you think would be their response. Do you know if they are easy to work with?
Negotiating a settlement with NFCU is not complicated, and I have never considered them difficult. What you are able to settle for can differ from one person to the next.
Is that a 50 dollar debt, or 5k?
Can you help me with a quick credit report question.
I recently found i have 2 wells fargo student loans defaulted and charged off. I had too many seperate holders I lost track of two. All other student loans slowly paying off.
Original chargeoff $3700
Terms: $3556 per month, paid monthly for 141 months
What does that mean?
Hello Michael,
After reading other questions presented to you I thought it would be a good idea for me to ask questions, as well.
I live in Michigan and I had a terrible spiraling financial fall after I lost my job in 2008. I was able to pay my bills for 2 years after the job lost, but it in 2010 it all collapsed on me.
I have a judgement from rental company that says, satisfied as of 12/2013.
A judgement from a credit card that states “pending” for
A car loan that was repossessed in 11/2011, $4062 balanced charged off . I got a loan for this vehicle 10/2007.
How long will the judgement(s) stay on my credit report?
What should I do in regards to the car balance? Should I work out a payment at this point or leave it alone?
I have medical bills from a fall in 2011 that total $1275.
How should I address paying the medical bills off?
I don’t want to file bankruptcy at this time, if I can avoid that process.
Thanks for your help.
The paid judgment should stay on for 7 years from the date the judgment was entered in the court.
I would want to settle the car loan balance. It is best to negotiate a single lump sum payment. How much money can you pull together to settle this debt?
Have you contact the hospital and asked if they have a program for writing down, or off, services and bills for patients who meet a set standard, or qualify for indigent status?
Were any of the medical bills covered by insurance?
The most that I can come up with for a lump sum payment at this time would be about $1000-$1200. In regards to the hospital bills, I have not called the hospital regarding settlement, because for a long time I didn’t have any money. I was in between jobs during the time that I was injured, and I had no medical coverage. I am just at the point were I can begin to make arrangements for my past due bills. Once, I make arrangements on these bills and pay them up, will this increase my credit score? Do I need or should I get a secured credit card to rebuild my credit?
Thanks again for your help.
I think you have a shot at negotiating the repo collection balance for 1500-ish. You could start that conversation now, or perhaps wait until you have a couple more hundred to add to your stash. How long wil it take to save up another 3 hundred?
You can often settle medical bills in your situation. My goal would be to settle for around half. And you are at a place where you could pay the medical debts outright and/or settle.
Getting a secured card is more likely at this point (with the unpaid collections), and would give you a head start on rebuilding. What are your credit and finance goals? Are you planning ahead to purchase a home, car, other?
Hi Michael,
I could probably save another $300 by the beginning of the year. I am keeping things realistic because the holidays are coming around, and I know I need to have money for the occasion(s) to come. In addition, I am seeking a part-time job to help with getting things paid up.
In the future, I will want to buy a car and home, but I mainly want my credit restored so that I can freely do as I wish. I’ve always had been a responsible person with my finances, and never lived above my means, so to have financial freedom back again would make me happy.
Thanks!
Because the collections are as aged as they are, and with no real collector efforts (unless you have received recent collection calls and notices), I would hold off on negotiating anything until you have the money in hand, or will have inside the same month.
End of year is a good strategy similar to end of month negotiation timing I discuss elsewhere on the site, and on the dealing with debt collector videos.
Find out if your bank offers a secured credit card program. I like Bank of Americas because they will convert that secured to unsecured with proper use, and relatively quickly.
Hi Michael,
I will look to the end of the year to do start the negotiations. I’m glad you mentioned Bank of America, because that is the bank that I plan to use for the secured credit card. Once last question(s), should I start with one secured card or two? I want to get my scores as close to 700 -720 within the next year, right now it is at 568. Or whatever other suggestion that you have to help me get there.
Thanks
I would use the one secured account, and then after the medical collections and deficiency balance are negotiated, and showing paid for 90 to 180 days, apply for ONE unsecured card with a lower credit limit. If you are declined, wait another 6 months.
Slow and steady will win this race.
I will do as you suggest. thanks for all the value information.
Notify me of answer. thanks
Stacy – You should get an email notification of this reply. You can also subscribe to the comments of this, or any other page of the site directly, by checking the subscribe box before you submit a comment.
Continue reading through the first stage debt settlement sections of the site. You will want to have a full understanding of what to do, and when to do it, with each of your creditors. You can skip ahead to this article about timing: https://consumerrecoverynetwork.com/best-debt-settlement-timing/.
You cannot hire CRN to negotiate for you at this time. I shut down customer coaching and direct negotiating services 6/2013. But you can still reach out for help at 800-939-8357.
Hi. I owe 36 in credit card debt and am ready to pay each a lump sum and be done with it. My last payment to each of them was in July. I have not paid August or September. When I called one of them I was told that it had not reached the point of negotiations. Are there a certain number of payments I need to miss before I begin to negotiate? Or can I offer you a lump sum amount that I can provide to go towards paying off each debt and allowing for payment to you for your services and be done?
I am helping my sister put together a plan for debt settlement (or perhaps chapter 13 bankruptcy). She currently owes about 15K total in credit card debt (CitiCard -~5K, CapitalOne-$7K and Kohls-~$3K) and has some equity in a house owned jointly with our brother. Between a part time job, child support for her two children and food stamps she has roughly $2k in monthly income. Because of the equity, I believe she would have to file bankruptcy which would protect $15k in equity. If need be, my brother could also file which would protect another $15K in home equity in Ill. I think they are both “judgment proof” His only income is Social Security disability. There may be about $15K additional equity in the house (total home value estimated at $140K – first mortgage at 85K, second mortgage at 10K). They went through a HAMP modification last year and had the principle amount owed reduced by 10K on the first mortgage and a second mortgage covers the remainder of $10K (only payable upon house sale).
We are wondering about the pros/cons of trying to settle the debt or to go through bankruptcy.
all the accounts are current, car repairs of $2K is the straw that broke the camels back
Thanks Mary. I did not see this comment until after responding to the last one.
How much money will be available to use to settle credit card debts in 6 months time (credit card payments are not being made for those 6 months)?
Is she paying the credit cards currently? If not, when did she stop?
How much money is available to your sister after all of her other expenses are paid (what is left over to set aside in order to save up and settle)?
Are there other cash resources she can tap in order to settle with her creditors as early as possible?
Assume she can settle with Citicard, Capital One, and Kohls, for under 7k. Set that beside the cost of a chapter 13, and what will likely be a 5 year repayment plan, and I tend to like debt settlement over chapter 13. But if she were to file chapter 7 bankruptcy, where the cost would be more like 1500.00 total, and all the credit card debts are discharge in a matter of a few months, I would like chapter 7, but only if that can be done while keeping the home (that seems to be the goal from what you wrote).
I have a default judgement from Discover in NJ from 2010. I was not a resident of NJ at the time but had a PO BOX there. I was a resident of PA. I was served for a court date via return receipt letter. I could not make the court date and therefore a default judgement was issued. I tried to declare chapter 7 bankruptcy but could not come up with the $2,000 in advance to file.
I couldn’t get a decent paying job there since my layoff, so I moved to Texas and found one. I tried to settle my $7,900 debt with the law firm representing Discover for $5,000. They would only go to $7,300 as they say I now owe them $12,000. Should I hire a lawyer and see if I can get the judgement vacated? I do not think the judgement has any affect in TX. What do you think?
You were sued in the wrong jurisdiction, so yes, I think you should connect with a consumer law attorney familiar with debt defense and vacating judgments. This is an old judgment, so that could be a hang up.
If you need some help locating an attorney with the experience you need, post the name of the county the judgment is in, I will find one (or perhaps several) and email their contact details to you.
Thank you for answering so quickly. I haven’t really had the money to pay back the debt or engage an attorney until now. That would be Camden County NJ. I tried calling a few attorneys I found online left messages and never heard back. Thanks again.
So a recommendation or 2 on an attorney would be very welcome!
I sent you two to connect with in Marlton. Post an update with how you progress.
Dear Michael –
First a little background information before asking a few questions about debt settlement on a small business Capital One credit line. My wife has had an S-Corp small business since 1996 and in 2003 opened a line of credit with a credit limit of $45,000 and interest rate of 4.25% with Capital One. My wife is the sole owner of the business and is the sole guarantor for the credit line. The business drew regularly from the credit line as needed over the years, but the recession nearly brought business to a halt and it’s barely viable at this time. I co-managed the business for about 12 years, though we are in the process of getting divorced – no fault (New York) and my involvement in the business is minimal at this point. The balance is just about $45,000 and my wife has decided that default is the best option. We did not make the July payment (first missed payment since 2003) and will not be making the August payment. We’ve been through debt settlements with several personal credit cards and an Amex small business credit line and settled for less than 30% for the personal accounts and about 55% for the Amex business account.
I am 67, work part time and receive monthly social security payments. I do have stocks worth about $90,000. My wife has a small amount of money in an annuity (about $10,000) and is trying to continue and breathe new life into the business. We would like to handle the debt settlement process on our own, so here are the questions:
1) Is it best to let Capitol One know right away that we are unable to continue paying? Or, is there some advantage to stalling and letting them come after us?
2) Is it reasonable to assume a settlement amount of 50 – 60% of the outstanding balance (plus penalties and interest?)
3) We are planning a fundraising campaign in about a month to support business growth and to pay off at least some portion of the debt settlement. If, for some reason we are unable to come up with the full settlement amount would Cap One have access my wife’s annuity? To my stocks? (in terms of divorce law, NY is an equitable distribution state.)
Many Thanks!
I would target settlement with Capital One right at the expectation you set in your comment. I rarely see settlements go below 50% with them.
You cannot have a productive settlement dialogue until you cross a threshold with creditors. With some banks that will be 60 days, and others 90. I put Capital One in the 90 day category. You can call and let them know you are unable to pay, and that it is not your intention to fall behind, but circumstances are what they are, and you tapped everything out just to stay current for as long as you have. But you are looking for that notation to be placed in your file this early, not negotiating with them. With a business line of credit, you could look to negotiate with CapOne after 90 days, and hold out for the best savings from there.
In other words – be proactive in reaching out, and do not wait for them to come after you, but time your efforts for when you are likeliest to get the best result. Check in with them once a month to let them know you are still trying to figure out a plan of action (even though your plan is already set on negotiating a favorable settlement).
They would have to sue your wife; have that result in a judgment; and pull her in for an asset discovery hearing, in order to even learn about the stock and annuity. Even knowing about them, I am not sure they can force the liquidation of her annuity. And she would have opportunities to settle all along the way.
Hi Michael,
Thanks a lot so far for your great advice. I currently have a Bank of America credit card in collections for $5,400. It’s been passed on to a second collection agency now, and it’s been about two years since the account has been charged off by BoA but they haven’t yet sold the debt. (The collection agency that has most recently contacted me is collecting for BoA.) They have agreed to settle the debt, but for over $2,000. I finally want to deal with this debt now, but only have about $1,300 saved up for a lump sum. Do you think this is enough to pay them? What do you think is a reasonable settlement amount for this debt? Thank you.
1350 would be the lower end of settlement approvals I am seeing with Bank of America. Getting them to agree to something that low (25%) is not as common as it was a couple of years ago. 1600 to 1900 would be the more common low end target to hit.
How long will it take to raise any extra money if you cannot get the collections agent to agree to 2k?
Be sure you get any agreement to settle in writing. Follow this outline for settlement agreements: https://consumerrecoverynetwork.com/paying-your-credit-card-debt-settlements/
Michael,
Thank you so much for your response. I appreciate it so much! I have a few more questions, if you would be so kind as to help me further. I talked to the collection agent today and we agreed to settle for the amount she wanted (around $2,160) , but to split it up in three payments. However, I may have access to $2,000 total now. I want this whole debt ordeal to just be gone ASAP! Do you think they would accept a lump sum of $2,000 instead? I just want it all to be over!
Also, they would like to be paid via direct deposit. I heard that it is a very bad idea for debt collectors to have your bank account number. However, I bank online and it’s very easy to open up a new, separate account (for free), and then transfer the money needed from the preexistent account to this new one. Do you think it would be a safe option to just use a brand new online banking account to pay the collection company? Thank you again for your time. It’s wonderful how you spend time answering everyone’s questions on your website.
I would do just like you suggested… open the different account and use that for electronic payments.
If you do call back and offer the lump sum, that results in a slightly better savings, let them know you have a source for the money, not that its yours. It may change their mind about the settlement they already agreed to (not likely, but I have seen something like this occur enough times to raise the concern).
Hello,
I have a credit card debt with BoA that was sold to a collection agency. I am wondering if there is a way to get the collection agency to remove this from my credit report because BoA has charged off my debt.
Details:
Last payment 1/2009
BoA Amount $11,000
Collection Agency claims $17,000 is now owed
State of California SOL = 4 years
I have sent a DVL and contested this, which my credit report states. I am wondering if threatening to file a complaint with BBB and CFPB due to the SOL making the loan time barred. Any advice?
I don’t want to settle the debt because I don’t trust the collection agency and it’s almost 7 years, which means it will fall off my credit. If they try to sue me, I can get it thrown out due to SOL.
Thanks in advance,
Luis
Hi Luis. I responded to your comment on the other page about settling with collection agencies, and that page is more topical to your situation and goals. Lets continue the discussion over there.
Hi Mike,
In October of 2012, my wife and I made the decision to do a strategic foreclosure on the condo she purchased before we started dating. The mortgage is held with of BoA and as soon as it went into default, our credit card account with them was closed. The credit card account is up to date and we haven’t missed any payments. However, the debt is rather large (about 16,000). At this point in time, it seems as if we have paid the principle several times over and with the account officially being closed, it seems like it might be a good time to make a settlement offer especially since we will have enough money to make a lump sum payment in the next month.
What should our settlement offer be and would it be better to contact them in writing or via phone?
Negotiate with BofA and get the details worked out by phone, then get the details outlined in writing.
I typically target settlements for BofA credit cards at between 30 and 40 percent.
How many payments have you missed so far?
Edit – I see you have not missed any. You will find it is best to negotiate with original creditors like BofA when you are between 150 and 180 days late (try not to let it go 180 days late if you can help it). Continue reading the section of the debt settlement program guide that deals with settling your debts direct with your bank.
Calling now to talk about settling for a lump sum settlement is not going to lead to anything, and can be counter productive sometimes.
Mike,
I have debt with TD banks from a Target credit card. I am being sued by Cohen & Slamowitz LLP in Long Island NY. The amount I’m being used for $3300 . A summoned was served to an individual at my apt on July 4th . I want to settle with them. I had a shoulder and ankle injury and I was behind on some my accounts . Target would not work with me. I am going to address the summons ASAP . What is the best way to nego a debt settlement instead of going to court . I can’t afford the whole amount. Please advise.
Thanks ,
Chuck
You need to be able to convey your in a financial hardship, and have a realistic expectation of what you can settle for. Now that you have been sued, and because it is a Target account, you could need 60% or more of the balance to settle in a lump sum single payment. How possible is it to pull together that amount? How long will it take?
Hi,
If something is already in collections, does that mean that I can’t work out a settlement with the original creditor I owe to?
Maria
Once your account is sent to an outside collection agency, it generally means the original creditor tried to get you to pay for several/many months, and then gave up. They contract with outside agencies, or sell the debts off from there.
You can start your negotiation effort with your original lender. But if they refer you to an agency, then that is who your negotiations and settlement efforts will need to focus on.
There are instances where you would strategically choose to wait for your debt to get sent back to the original lender, placed with another agency, or sold off to a debt buyer.
If you provide more details about the debt, how long ago it was paid, who is collecting now, how much you are targeting to settle this for… I can offer more feedback.
If a debt I had with say Citibank has been sold 3 or 4 times over…how can I get all the debt collecting companies that no longer own my debt off of my credit report?
jd – Please provide more details by answering the following in a comment reply:
What are the names of all debt collectors reporting an entry for the Citibank account?
Which one (or more) of them is reporting a balance due and owing as of today?
Which deb collection agency did you last hear from, whether by phone or email?
When did you last pay Citibank?
I have been getting phone calls about a debt I owe to Capitol One, I haven’t received anything in the mail. I just recent got a phone call saying I need to call back and verify my address because Capitol One wants to take me to court to pay a debt I already paid. When I asked for a hard copy to be sent through the mail I was told they already did that but it went to the wrong address so they wouldn’t do it again. I gave my email address and haven’t heard anything until I got the phone call saying that I have to verify my address. It feels like I’m being railroaded into going to court and pay a debt that isn’t mine because someone dropped the ball and didn’t do their job correctly.
That very well could be (the railroading part). When was it that you paid the account off? Did you settle the debt, or pay the full balance? Did you pay Capital One, or a debt collector?
I paid $500 to Merchant Recovery Services a debt collector. It was a settlement because I think I owed more than that. the first payment was in November 2013 and the last payment was made in March of 2014. I do have the bank statements showing they took the money out of my account. If you need any other information let me know. thank you Christine
If you have no documentation, but know that the account was settled and paid consistent with what you agreed, I would suggest you file a debt collection complaint with the CFPB. You can file online here: https://www.consumerfinance.gov/complaint/
Before submitting your complaint, put together an outline. It would be good if you included dates, numbers called, people you spoke to, amounts paid, etc.
Post an update with what you hear back. It can take a week or three to get a response. If you talk to any debt collectors between now and then, let them know you are not going to talk to anyone about this paid account until you learn the result of your CFPB complaint.
thank you very much. I’ll file the complaint and let you know how it goes.
Hello! I’m 23, and I’m trying to fix my credit score (580) as much as possible after a couple screw-ups. I had a BofA credit card that I haven’t paid since 2012. I have a balance of $1,254 owed as of today. I received a letter from Gatestone & Co stating: “Your account has been placed by FIA Card Services with Gatestone & Co, a collection agency.” It goes on to tell me I have 30 days to dispute the validity or they will assume it is valid (which it is).
I have a few questions I was hoping you could clear up!
I have $500 that I have saved up to put towards a settlement possibly. I would love to pay a lump sum and just be done with it. Since this is a smaller debt, is the benefit of owing $0 and not being maxed out on the CC worth the negative effect a settlement will have on my credit score? and what type of offer do you think I can expect to get?
Also, if a settlement is an option, would I be better off calling Gatestone & Co or contacting Bank of America? I’m not sure if BoA is even an option, since I already received a letter from a collections agency..
Any advice or a point in the right direction would be sooo helpful! Thank you!
You would be calling the debt collector, Gatestone, to negotiate your settlement. You could call BofAto start, but they will refer you to Gatestone.
I would target roughly 40% of the balance owed today as my settlement amount. If I had time to go back and forth with the negotiations, and wanted to try to save maybe up to 10% more, I would make a lower offer, and call back about this time next month if I cannot get it approved.
Debt settlement is not bad for your credit reports. At least not in the situation you are describing to me.
How many other accounts do you have in collections?
Thanks for clearing that up! I have a Capitol One credit card that I owe roughly $600 on that I last paid in 2012. They haven’t sent any type of letters lately so I figured I’d start with BofA. I also have a T-mobile debt of $463 in collections from 2009 or so, but I haven’t received letters from them either so I’m assuming I should save them for last?
With settlements, are payments an option or is the whole lump sum expected up front?
Thanks again for the help!
You can often get payment arrangements along with the reduction of balance you negotiate. How many months will vary from one account and debt collector to the next.
How much money do you have to offer in a lump sum to settle the BofA account with Gatestone?
How much can you confidently afford monthly if you negotiated, say 6 payments?
Ideally, I would love to pay a first lump sum of $500 toward Gatestone, and be done with it. I’m not sure if that would be enough on it’s own though. Monthly payments, I could probably only manage $50 to be safe. I’m on a pretty tight budget.
Thanks for the speedy responses and all the help!
I think you have a really good shot at settling your BofA debt with Gatestone for that amount, or a touch less. You have to stick to your guns when negotiating and let the collector know that is all the money in the world to you, and all you have to work with. Debt collectors often have real time access to your credit reports, so they can see the Capital One and Tmobile in collections. Use that fact by referring to the other debts you can use this bit of money to resolve if they do not want to.
Hi there! I am looking to go back to school but owe an old college money from 2008. I had a loan that didn’t go through because a signature was needed. The school didn’t notify me until the semester was over and I was trying to enroll for the next term. I ended up dropping out because I couldn’t pay it and it went to collections. They will not release any of my transcripts until the collection agency is paid. I want to call the collection agency for details about how much I owe and if they will settle for less, but how can I do that without admitting it is mine and reactivating an expired debt? Any help will be greatly appreciated!!!
Tisha – What is the name of the debt collector? What state are you in? What type of student loan was it?
I owe $22,000 to Capital, Citi, and Bof A credit cards. If I was able to settle, what amount would I need?
I have 5 years to go before the SOL expires. I am behind almost 6 months now. The cards are in my name only, not my spouse’s. thanks.
LS – Those credit card banks vary in whether you can negotiate a settlement prior to charge off, and what amount they will accept as settlement in full. I could better target amounts if I knew the rough balances on each account. You can also get a general feel of estimates and ask questions in the comments after reading: https://consumerrecoverynetwork.com/review-top-7-credit-card-lenders-best-offering-debt-relief/
Hi Michael,
Thanks for all your wonderful credit repair advice. I have a charged off account with Bank of America for $5,400. It was my only credit card. It appears they passed on this account to LTD Financial. I’m unsure if BoA sold my account to them or just passed it on to collect for them.
In any case, I was scared and irresponsible and ignored calls from both BoA and LTD since 2012, when my account first became delinquent. I’m finally ready to take responsibility and try to settle this account. I have about $2,000 saved up. Do you think this is enough to settle?
Also, becoming paranoid about my credit score, I jumped the gun and recently got an unsecured credit card. It only has a credit limit of $300 and I’ve been making only very small purchases on it — nothing more than $20. I got it because I had no other credit cards to my name after the BoA card was charged off and I wanted to build credit. I know I should have waited to take care of my BoA debt first, but it’s too late now. I know you advise not making payments on any other accounts when you try to settle with a company. Do you think the fact that I’m making very small payments on my new, secured credit card affect my chances of settling with BoA? Right now, the balance is only $2. What if I pay it off so the balance is $0 and then not make any payments on it? Please advise. Thank you.
Mia – You can always call Bank of America and ask them if they sold or simply placed the account for collection with LTD Financial.
Offering 2k to settle a 5400 balance on a BofA account is a realistic target. You may even be able to get a bit lower.
Yours is not a scenario I would be concerned about, where you are paying other accounts, and not paying the accounts you are negotiating a settlement with. The balance is just too low, and if any collector brought that up, I would refer to it being a secured card with a low limit for identity theft protection purposes.
Hello,
I have two judgments against me one from Ford Motor Credit for about 7800, and one from a title company who botched a closing (while I was in Chap 13 bankruptcy no less) and then sued me for 4800 in a venue 600 miles away. I REALLY have a bad taste in my mouth even still from these crooks but I digress.
The title company judgement was made on 7/3/2007, and the Ford Motor credit judgement on 7/23/2008. I have made no effort to contact or make any payments whatsoever to either of them at this point.
I am wanting to get a mortgage, and need to resolve these debts. Given that they are so old what I can expect when I call them to negotiate? Is it dumb for me to even try when they are so close to dropping off the radar anyways? What kind of settlement should I offer?
I have found a house that I really want to buy, but am I being stupid in even trying at this point? I know I can be approved for the loan to buy the house with these paid.
David – The older the debt, typically the better savings you can target when negotiating your settlements. The more sophisticated debt collectors will use software and scoring models (not credit scores), that will rate how collectable you are. If more collectable you look on paper, the more convincing you may need to be about what you can afford to pay to resolve the debts.
After 6 or 7 years, I would look at 50% of the balances owed today as a realistic amount to negotiate, get documented, then pay.
Can you raise that amount of money to pay in a lump sum?
How many open accounts are on your credit report today that show you are current with payments?
I have two open accounts that are current. One auto loan, and one credit card. I also have 3 collections left to pay totalling about 1100. Although the debts are from the same time period as the judgements, the collection dates vary. The most recent one is 2 years old
Yes, raising the 50 % isn’t an issue. I was thinking more like offering 25% to start out. Is that too low?
Not too low at all. And if you are financially prepared to pay higher, while always targeting the better savings, I like your chances. Do not let on about any financial goals when negotiating. Just that you fell on really tough times, and that things are not easy now… not by an stretch. But you are trying to bounce back, never intended to not pay, have limited budget bandwidth, etc.
OK, thanks for your advice. I have left a message first thing this morning with the attorney but it is the end of the day now and they still haven’t called back. I don’t want to seem too eager, so I will wait until just before lunch tomorrow to try again. I can’t let it sit either, or I’ll loose the house I want which is the whole point of doing this now anyways. I’m guessing they are playing hard to get also heh. Anyways, kudos on a great site and it is great you help so many people, great job.
Thanks,
David
Just for anyone else who might happen by I thought I would share the end result of my “negotiations”. The attorney came back today and said FMC will not settle without having taken payments for a while first. Every call for the last week or so I was under a full court press for my employment, bank, and address information. The title company wouldn’t settle at all. Perhaps my experience is unique, but I believe I would have been much better off had I hired someone to do the negotiations for me rather than do them in person. I believe that at least in my case, having a third party shield me from the creditors would have been a major advantage. With this debt being so old I guess they figured why take a settlement, they have gone without the money this long if I need to settle (of course I never told them I needed to, but why else try after all this time?) then they want to make me pay. Not at all how I expected things to go. Thanks again for your advice, this has been an excellent learning experience, and a great place to learn from.
David
Thanks for posting the update David. Negotiating settlements as a form of debt relief can vary in results from one person to the next. Depending on the timeline of your goals, you may also want to reach back to try and settle this the following month, or even the month after that.
While it is pretty obvious this site focuses on what you can do for you, without hiring a professional negotiator, I do suggest working with a pro too. There are people that should start with, and keep to, that approach to settling debts (hiring a company or individual). There are people who can do some of the negotiations and settle some accounts, and only hire a company to work on some difficult accounts, or late stage debt collections (your type of situation). And then there are DIY debt settlement files.
I agree, and I certainly wouldn’t advise anyone who wanted to try on their own not to. However, my situation has changed dramatically from the times the debts were incurred (for the better). It was very unnerving to be grilled by the attorney for all my up to date personal info, and now I feel since I have contacted them it is possible they will pursue further action, when in the six years the debts have been out there I haven’t heard a peep from them. Secondarily, I think that had they been contacted by a third party, it would have seemed more “normal”, as opposed to what is this guy up to that he is contacting us after all this time. From everything I read, I thought this should be a slam dunk easy negotiation. Now, not only will I not be able to buy the house I wanted to buy, but I will be living in fear that garnishment or levies could be in my future. Your mileage my vary, and I encourage you to work out things on your own if you can. Just be aware if you have something to protect, you could be opening up pandoras box. My experiences are my own, and I do not offer them as advise, but merely as an example of how things progressed in my specific case. Best of luck to everyone here!
Hello,
Just wanted to let you know, the case was taken up by Kirschenbaum and Phillips PC. I got their contract fRom the Marshal’s office.
Hello,
What is my best course of action after my bank account has been frozen by a Marshall. My bank, Chase, called me today with that news. All but 1920 dollars is remaining as available purchase. The credit card in question was from Bank of America of in and around 6,000 dollars which has ballooned to 12,000 dollars. This is in NYC. I am a student and have no income, until I graduate later this year. Please advice.
Atanu – Were you aware you had been sued and a judgment entered against you? Who sued (name of plaintiff) if different than BofA?
How long ago was it that you last paid your bank of America credit card? What was the date originally sued?
Yes, I was aware that a judgement had been entered against me. This judgement was passed in Sept 2008. The name of the Plaintiff is Bank of America although they had taken the help of Worldwide Alliance or an agency like that. The last payment on that card was much, much before 2008. Unfortunately, I cannot remember. Wish I could give you more information, but I just don’t have them. The person I talked to at my bank ( Chase) gave me the number, case number and name of the Marshall I should call .
Okay, thanks for those details.
If the judgment is something you knew about, and it is from 5 years ago, I am not sure what your options are going to be for challenging the bank levy. You could talk this over with an experienced consumer law attorney.
What is your goal with this debt?
I have a student loan over twenty years. It wasn’t that much. I paid a year. Then I guit paying. For three years they have kept my federal tax money. I live in Greenville South Carolina. How do I find
Out how much more I owe on this loan. Thank you so much for any help. I’m sixty three will be sixty four in August. I make around twenty one thousand a year. I really could use that money. Please help me
Connie – Try this site for details on what to do in your situation: https://studentaid.ed.gov/repay-loans/default/get-out
You can call or email them for more hands on response too.
Hi I am wondering if you have any knowledge settling with a collection agency called MC Acceptance located in Phoenix, AZ
Nothing in my files with an MC Acceptance in Arizona, or anywhere else for that matter. Can you offer any additional details about your issue?
Hi,
I have a 2nd child on the way and want to clear out all my old debt before baby is born. There are 2 accounts where I have huge balances that I can’t afford and was thinking of negotiating a settlement instead (which I know they’ll knock off a huge huge chunk off of..about at least $6000) but a friend of mine said I shouldn’t do a settlement because it doesn’t look good. I mean at this point, my credit is bad already..both accounts are to stay on my report until October 2016 and March 2017. There’s no way I can afford both accounts.
I guess my question is: does a one time settlement make any difference on my report versus just paying monthly until it drops off after 2016 and 2017 (and stop paying after it drops off)? And what happens if I don’t pay both accounts? Can the bank i owe decline me from ever opening an account with them or will they not be able to see that I had this debt with them 7 years ago? I’m asking because in case I want to get a home loan in the future. Thanks!!
TY – Have you already stopped paying these accounts? If so, settling would be better for your credit than having unpaid debt on there. What credit would you expect to apply for (home loan, auto, other) between now and March 2017? How soon is the future you reference above?
Paying collection accounts the full balance using long term monthly payments is not as good a plan as settling with them and getting it over quickly. Paying accounts that are still with the original lenders, even if you have been late a time or two in the past (30 and 60 day late appear on the credit reports), is the better way to achieve your credit goals, but takes longer in order to get your income and expenses aligned with affordability.
Post how late you are with payments, and who the creditors are, and lets go from there.
Hi,
I’ve been making monthly payments to these collection agencies since about 2012, in very small amount automatically deducted from my account each month. Some were paid off, some settled…i have about 3 more small ones that I can pay off easily in full and the 2 large ones mentioned where i would have difficulty paying in full. The 2 big ones are Citi and BofA. All of these accounts went into negative back in 2009/2010 after something happened in my personal life. So they’re pretty old and not with original lenders anymore.
I don’t intend to take a loan with my significant other until probably all that has dropped from my report..possibly in 2017 but if i could do so earlier, I would like to (home loan). I am aiming to have all these closed by the end of this year so that my credit score can take 2015 and 2016 to slowly recover (if it will at all, since they’re all technically still on my record). Most of my negative records will drop by the end of 2016 (and 2 in early 2017).
TY- Thanks for the additional details TY. Now that I have a clearer picture, I would suggest settling the Citibank and Bank America accounts. The target I would aim for in those settlements is going to change depending on the name of the collection company you have been making those small payments to. Post a rounded balance for the Citibank account and who is collecting, likewise for BofA. Also include how long each collection company has been debiting your bank account monthly.
Your friend would be incorrect about negotiating a debt settlement on these collection accounts not looking good. It is often better for your overall credit goals to settle collection accounts that are late enough to be paying debt collectors, and not your original banks and lenders.
Hi,
Citibank is with Associated Recovery Services but it looks like they’re using ARS to collect the money, it’s not sold to ARS. I stopped making payments as of Aug 2010 and it says charged off as of Dec. 2010. I believe March 2012 was when I started doing $50 monthly payments. The original balance was $11,116 after all the interest tacked on. My current balance is little less than 10,000. I spoke to them already about a settlement offer and the last offer they’ll accept was $3000 which is good but i was hoping for a little less because I also have to take care of BofA. Citibank due to stay on record until March 2017.
BofA was sold to Asset Acceptance. Stopped making payments to BofA as of January 2009 and it was closed/sold to Asset Acceptance in September 2012. I started making payments to Asset on December 2012 for the amount of $100.00 each month. Original balance was $8,908. On October 2013 (current balance then was around $7,900..they also removed some interest so it was a little less than that), they told me that if i can up my monthly to $125.00, they’ll cut my balance down to $4000 something so I did and am now making $125.00 a month. Haven’t called them to make a settlement yet but I feel they’ll be a little more lenient than Citibank. And by paying this one off first, it’ll give me more cash flow to pay off other smaller debts BUT BofA is due to drop off on October 2016, 6 months before the Citibank one..which makes me think, shouldn’t i take care of Citi first since it’s on my record longer?
Thanks a million, Michael!
TY – I would not get hung up on the credit reporting aspects of this. It is best to focus on the math and the best use for your available dollar at the time you settle each account. Asset Acceptance is not charging interest, but Associated Recovery Services may still be charging any contractually allowed interest on the citibank account. If that is the case, knock out the settlement with Citibank first. The 3k offer to settle a 10k balance is quite good for a citibank account. I would not expect ARS to go any lower using today’s trends. Can you pool together the 3k right now and still be able to meet your other bills and obligations? If so, and if I were in your shoes, I would knock that down.
Settling with Asset Acceptance will be a bit different. Do you have the cash flow to wrestle with this one if you can negotiate a good settlement?
Can you give me a rough outline of the smaller debts you have, who paying, any late pays, etc?
Hi,
I don’t think Citi is accruing interest. They send me monthly letters to give me the updated balance and to tell me $50 will be deducted and i haven’t seen any interest tacked on. If you mean something than this, please explain as I’m probably not understanding correctly.
If I pay 3k to Citi, which i’d have to borrow a little from my 1st kid’s savings, it would probably take me awhile to pay for BofA. I might not be able to save enough for BofA until end of the year or until next. With 2nd kid coming, i have to enroll my 1st kid to preschool early which will cost about $1100 a month or a little more and which will also mean, I wont even have a penny to save until he’s out of preschool (2 years).
The other debts are to Nordstroms (i haven’t even contacted them yet..i know the balance is $2000+ and they’re willing to settle for a few hundred according to their letters), Chase (owe about $800 left..$50 paid monthly) and HSBC (also about $800 left.. $40 paid monthly). I was thinking if i paid BofA first, i could tackle these with the $125 that i normally pay BofA monthly with.
Oh sorry, for the 3 smaller ones..Chase also uses ARS to collect like Citi and HSBC sold to Portfolio Recovery. Nordstrom..i think is still with Nordstrom. Unsure actually.
Negotiating a settlement with Asset Acceptance for the best savings can sometimes require payments be stopped. You risk the account being placed with an attorney who could sue in court to collect. Same thing applies to the HSBC account, though that balance makes it somewhat less likely that Portfolio Recovery sues.
If it were me, I would stop payments on all of them, and start settling them off one by one, and as quickly as possible. By order of priority:
Citibank and Associated Recovery Services
Asset Acceptance for BofA
PRA collecting on HSBC account
ARS collecting for Chase
Nordstrom Visa
I would set a realistic expectation that I could be sued on one of these with how long it may take to continue to save up, then settle the next debt… save up, then settle the next. But if you clear those first 3 quickly, you will limit those risks.
I had actually called the smaller ones before in attempt to stop monthly payments so that I could focus on each one individually first. The HSBC one said that because it was originally with an attorney already, they said i shouldn’t stop payment on that account because it’ll go back into the chances of being sued (even though for that small amount, it’s unlikely).
Also if i stop monthly payments on all and do them one by one, i dont know when i’ll save enough to clear the bigger ones, therefore leaving the smaller ones unpaid for a while. BofA also said if i stop payment with them, i’ll start accruing interest again. Such a headache.
I was actually thinking of settling smaller balances first and then work on the bigger ones (while still paying monthly for the bigger ones so i don’t get sued…until I can come up with enough cash to settle..which i understand is like paying more than I should). Totally opposite from what you suggested though.
TY – You run higher costs, or higher risks either way. It is a matter of choice. You will be making an informed decision.
I would have started your file from the outset a bit differently, but would do as I suggest if I woke up in your shoes today. PRA is a loose cannon in this. I say nice things about them on the posts I have dedicated to them, and because they are consistently pleasant enough for consumers to work directly with to solve accounts. But they can do some damage too (using the courts overly much).
It will boil down to what you are most financially able, and comfortable with doing. If you can power through the settlements inside of 12 months, I like your chances of avoiding major issues.
Hi Michael,
Thanks for the response. I think I will call Asset today and see what’s the lowest they can go. At least get one of the bigger ones out of the way, then see how much I have to work with Citi. And possibly even call the others to see what options I have and go from there. I’ll update you and will let you know if i have any further concerns. Thanks for your input!
Hi again (sorry to bother you),
I just noticed on my credit report that 2 different bureaus have different drop off dates for Citibank. In fact, everything’s slightly off by a month but Citi bank is off by 6 months or so between Transunion and Experian. Is there a way to dispute the one with the later drop off date?
You can dispute the Citibank entry on your credit report. Send your dispute to the credit bureau that has it wrong, and to Citi bank. Keep a copy of your letter and send certified mail return receipt to both. You may need a record of this later on.
I would not dispute collection accounts on your credit report, for the reasons you would, before I have negotiated and settled the account. I would wait until after the settlement.
I made a very naive mistake a few years back and lent my card to a family member. I live in NY, they maxed it out an AMEX at about $10,000.00, maintained it as long as they could then defaulted.
I’ve been dodging a lawyer about it for a while. Recently, I had a few unexpected knocks on the door, (I didn’t answer) so I believe I’m being served a complaint or summons.
I have a bank account, but don’t make regular money, I work freelance. But I don’t want them getting a default judgement and freezing my account nor do I want his thing hanging over me forever. I have other cards that are well maintained though.
My plan A, so far is to try and see if there is indeed a complaint or summons pending and to answer. Just try and make them prove I owe anything at all. Then if they don’t drop it, or I lose, my plan B is to just file Chapter 7. Plan C is see if I can lay my sob story out for the court and try to get it lowered or dismissed. Not sure if this is a good idea.
In the end, I simply can’t afford to pay for this thing, I barely get by as it is. I realize I might lose by having broke the contract already by lending my card. And so you know, the person who charged up the card is not abel either to reimburse me. How can I unwind myself from this?
Steve – Plan A will buy some time, but there is little to argue with AMEX about proving the debt. They do not generally sell debts, so it AMEX suing, and they have all the documentation to prove the debt.
Plan B will put this to rest quickly, as well as any other debts that are unmanageable.
Plan C is a nonstarter. You can pluck a few cords in court, but it will not change a thing. The court is not there to determine whether a debt is affordable in this situation.
Talk to an attorney about the benefits and drawbacks of chapter 7 bankruptcy, and how that applies to you.
Hi Michael,
Regarding the Citi Bank issue that is posted several times above:
They had made a settlement offer of 50% and would only snail mail an agreement letter. I was right up against the charge off date but I didn’t want to give them any money without first seeing that letter. Therefore, I made a “stabilization payment” to delay charge off for another 30 days, with the hopes of getting a better offer early in the next billing cycle and to get a full 90 days to make the final payment, plus to allow enough time for the letter to arrive in the mail.
This all backfired on me. I called today to submit new offer (which I believe is mandatory for them to spit out a number) and they raised their offer to 65%. I asked to speak with a manager. He told me I could try again and that the deals can change day to day. This contradicts what I had been previously told which was that the offer probably would not change within the same billing cycle. I can’t afford 65% so I’m not sure what to do at this point.
Any thoughts??
Use an end of cycle strategy where you know their policy is to let the account go, and be prepared to settle without any delay. Record the call if you hit the settlement number you are shooting for, but cannot wait for the written agreement to arrive. Tell them you are recording and why. Save the recording and proof of payment. If the letter never comes, and you have them saying they would provide one in the recording, post an update and lets go from there.
You also will have an opportunity to negotiate a settlement with whoever Citi bank places the debt with for collection. You need to be able to let go of trying to get this all done with Citibank if they are not going to agree to an offer you can afford to pay. It is okay, and more common actually, to settle with debt collectors.
Hello Michael,
I have 4 medical bills that are there on my credit report, which were a result of doctors visiting me while i was hospitalized in 2009 for illness. The hospital charges were waived off as i was a student, but the charges for personal visits by doctors were billed to me. I was unaware of these bills and now my credit is bad. I have some money saved and want to settle and close these accounts by making a one time payment. How do i negotiate with these collection agencies.
The 4 accounts on my credit report are as follows:-
a.) CAC FINANCIAL CORP (800) 319-2676 – $563
b.) I C SYSTEM INC (888) 735-0516 – $500
c.) NRS/RECEIVIA (800) 776-4600 – $892
d.) GULF COAST COLLECTION (877) 827-4820 – $399.
What are precautions and safeguards to take while negotiating with them.
I want to negotiate a settlement and pay it off.What are precautions and safeguards to take while negotiating with them. My credit score is 540 and i really want to make that good, but don’t know how. I do not have any credit cards nor do I have any other debts.
Please advice me. I need help.
Thanks
Rony – Before I go into particulars with my feedback, what amount of money do you have to put toward all of the settlements? And when you say you have no credit cards, are you saying you have not established any type of credit in the past?
Yes I havent had any type of credit in the past. I contacted one of the collection agencies. They agreed to a one time payment of $337 to close an account that orginally was $563. But they just want me to write a check or pay it asap and are not ready to give it in writing. The total amount of all the 4 accounts put together is $2354. I want to have all these accounts closed . Please suggest me what should i do.
I have saved some $1200 for this purpose. But if it is settled at a lower amount then that will be great. I am a student and struggling with this.
Thanks
You are going to be contacting them one by one to negotiate the settlement, and probably real similar to what you experienced with the debt collector you reference above. Be ready to pay as much as 70%. You will want to wait 30 to 60 days to have any debt collector reporting to the credit bureaus update the account as paid. If they are not updated by 60 days after you paid the settlement, post an update and lets go from there.
You can use some of the tips I outline in the video on this page for negotiating with debt collectors: https://consumerrecoverynetwork.com/my-credit-card-account-just-charged-off-and-a-debt-collector-keeps-calling-me/
Read over this report about getting your settlements documented. In a pinch you can record the call and agreement made over the phone. Just let them know you are recording the call and why. You want to cover the same elements in the phone call that I cover in the linked report. Keep everything, including any recordings, in a safe place.
Post questions in follow up comments as needed for feedback. Once you are done, it will be time to talk about how to establish credit. Having none will keep your score low too.
so should i send them the check by writing across as paid in full. Or should i call them again to get at least some written assurance or what. I can follow your tips with other debt collectors. the lady i s poke to did not let me talk and hung up after saying that i have until 11th to pay it. So what should i do now.
rony – I would not count on a memo section of your check saying paid in full. If it were me, I would try for a written agreement, and record the call with the collector as an alternative (I would tell any collector I am recording the call and why even if in a “one party state” – but that’s me). If they hang up on me again I would circle back and deal with that account after I dealt with all of the rest. If any of the debt collectors at that place still have a bad attitude, I would consider finding a guy like me to tell my story to on and off line 🙂 so a guy like me could write about the collection agency, and the specific collector, and the billing company/medical service provider – all in an effort to prepare other consumers who may have to deal with them, and for training purposes….
Hey Michael,
I called a couple of them and all of them are ready to provide the letter stating that the account is paid in full, only after i make the complete payment. They say they will send out a statement only after they receive the payment. I am not sure how to get them to send me a document stating the terms of settlement before the payment is made. What do I d now?
Call them all and record the conversations, making sure that all of the issues I cover in that article I linked to above in our comment string are past of the conversation. Let them know you are recording because they will not release a letter with the agreement details prior to payment. Keep the recordings and the letters they send later in a safe place.
Post about hiccups you experience if any occur.
Hey Michael,
I know this might sound silly but none of the apps i have tried can record calls. I’m in Florida. So i haven’t had success in doing as advised by you. Can you suggest something please.
rony – You can use some older technology and land line using some items you can pick up from radio shack. Do you have access to a land line?
Hey Michael,
I do have land line, but it is majic jack(internet phone). I am not sure how to make use of that to record conversations. I called the toll free settlement number of this website to get help with negotiating debts,but was told that they don’t handle a small amount as $2400. Can you please guide me on what to do next in regards to the settlement and documentation of negotiating process.
Thanks
rony – I think you can set up a google voice number and record with that. I am not familiar with magic jack to know if the little 12 or so dollar devices you can pick up at Radio Shack, to record using a regular desk top phone, will work or not.
If you want to talk about getting someones help who will work on accounts this small fill in the consult request on the right side bar on the site. I get those and will forward to Steve (CRN specialist for years). You guys can connect at a time that works for both of your schedules.
Hey Michael,
I did fill in the consult request which you said will be forwarded to steve so that someone can work on my accounts and negotiate settlements. I still havent recieved any call or email from anyone. can you please help me resolve this as my credit is hurting bad.
Thank you,
Rony
Rony – I did find the form you filled out. I missed sending it to a specialist somehow. I sent it to Steve, who you should now hear from. I will call him to bring the email I just sent to his attention as well,
Hi Michael,
How familiar are you with LHR? I have made arrangement on most of my old debt. The last one lingering is an old First National Bank – Legacy Visa that I had. The last payment was made on 5/25/2010 ( and I live in Texas) so I think the statue of limitations is approaching. My credit report shows a balance of $780 to LHR for this. I am not in a position to pay it all off… and I am wondering if I leave this one be or if they have a history of suing not. They have not contacted me lately. I think a year or 2 ago they sent a little..but I am not 100% of that. Would love to get your thoughts on what you would do.. and what you know about them.
Shannon – I could better put this in perspective for you, using my experience, if I knew how prepared with money you are to settle, and what your credit goals are in the next, say 24 months?
Michael,
The immediate goal to make sure I don’t get sued: -) I would love to clean up my credit over the next year or two but paying them even half now probably isn’t an option since I have recently started paying on a few other old debts. My plan was to pay off the ones I am working on now and then try to call LHR and negotiate with them. If there is a chance they will sue me before the statue runs out I could borrow the money from family….but I really really don’t want to do that unless I have to. I can probably pay them off in 6 months or so. How does the statue of limitations work on credit card debt in Texas? Is it 4 years from the last payment or 4 years after it was charged off? What are the chances LHR will sue over $800?
Shannon – Lewis Hastie Receivables, or who ever they may be collecting for (if not themselves), has probably started contacting you again due to your comment about getting other bills caught up, or negotiated and settled. I do not think LHR is likely to sue, but people are sued for these lower dollar amounts, so it is a legitimate concern.
If you get relief from other debts that are more pressing, and approach LHR with your settlement offer in 6-ish months, you will probably be okay. But I am all about getting this stuff knocked down as quickly as possible, so would encourage you to consider all of your options to take care of the remaining debts like this as soon as possible.
Thanks Michael,
The “stabilization” payment was their idea to buy more time to see if a better offer might come forth in the next billing cycle. They did say that that payment could go towards a later settlement agreement.
Do you think this is a wasted effort on my part and that I will likely end up with the same offer next month…or is there any potential to this. Would I have better chances in 1st tier collections?
Thanks – Richard
Richard – I think the chances of getting a 5 to 10% better settlement after citi drops the account into the collection pipeline are better than negotiating that same outcome with Citi. The problem here is that settling direct with Citi removes the risks associated with aggressive secondary collectors. What I think we are really talking about here is the price of that.
Hi Michael,
Just wanted to followup on the above post regarding the 24K Citi Bank account. It’s now within one week of charge-off and I called to make a higher offer at 40%. The person I talked to, who said she was a supervisor veteran, told me that a new offer could not be submitted in this same billing cycle that the other offer had been submitted in. She refused to try it saying the result would be the same – 50%, claiming that was an exceptional offer. The only way I can submit a new offer is by making a stabilization payment to to buy 30 more days to prevent charge off. Then I can make the offer in the new billing cycle. It had been suggested I may get a better offer in the following month.
One issue with this account, aside from it’s size, is that I borrowed 4500 on it within the last 12 months. The account is very well seasoned but I’m wondering if that will make it difficult to get below 50%.
Any thoughts????
Richard
Richard – Creditors do come up with strange policies. Another large bank will not honor any counter offer if there was a mailed offer with an expiration date… until after the expiration date. Citi is one of the more process driven banks when it comes to internal recovery practices. That said, I do think that the 50% is more (or all) related to how your account is flagged. Here refusal to try is what I find the most consistent with this observation.
I am skeptical of the stabilization payment as it does nothing of the sort. Only bringing the account current, or agreeing to payments that reage, would do that in a banks view.
I am sure you understand what it means to have citi drop the account into one of the three collection buckets. It boils down to cash flow and/or risk reward in a situation like this.
Hi, my name is Jessica and I have actually paid my debts in 2011. I started receiving letters from a collection agency requesting payment from me and I keep calling them and telling them I have already paid the bill. my problem is that I never received a final receipt from the collection agency whom I paid in full. I have tried to call the agency but their # is disconnected and now I have no way of getting that specific letter. I do have the initial letter stating what I was to pay and when and I have my bank statements showing the payments. what can I do in this situation?
Jessica – If you are confident of the deals you made, and given the documentation you have being sufficient to back you up in a he said/she said match, you could send a brief request to cease communication to these recent debt collectors, and include a copy of the debt settlement offers, and the proof of payments made prior to expiration. Send out certified mail return receipt requested, and keep a copy of all you sent along with the green return card you get back in a safe place. If you are contacted again after you know they received your letter, post an update and lets go from there.
At least… that is what I would be likeliest to do.
Hi Michael,
I’ve successfully settle two of my accounts with the help of your team. I’m working on the last one and
wanted to get another point of view. This one is with Citi Bank with the current balance at 24K. There are 2 weeks left before charge off. Interestingly, they have never once called me about this account, though I have been checking in with them every month.
I initially offered a low amount (5K) 2 weeks ago in order to see what they would come back with, which was 50% / 12K. I submitted a 7k offer last week but they were still holding tight at 50%. I was told on the phone that $345 would stabilize the account for another 30 days and that I might get a better offer in that next billing cycle. I asked if the $345 could be used towards this settlement even though a deal was not in place. I was told it could be and I made the person repeat that for the recording!
Due to my funds, I need to be more at 40%….. 50% is not totally out of the question, just much more difficult. So my questions are:
1. Do I stand any chance of getting below 50% pre charge-off? If so, is it best just to make a 40% offer in the final week or is there another option?
2. If a 24K amount charges-off are they more likely to give it to a lawyer rather than a collection firm? If they lawyer-up will I be kicking myself for not taking the 50% deal and end up with a larger problem.
3. Is the $345 “stabilization” payment, in the hopes of a better deal next month, worth considering or is this merely a red herring they’re using?
One last note…I would much prefer to avoid a charge-off / R9 ending up on my credit report.
Thanks for all your help so far. My CRN specialist has been fantastic.
Richard
Richard – I am glad to hear you are working through the debt relief program with some coaching from a specialist. That ongoing professional support really makes a big difference.
I would be inclined to offer up to 45% leading into the last week if it is something you can fund. If you cannot do it financially, it is what it is. You can circle back with a similar offer once you know where the account lands. Don’t get overly hung up on charge off trade line reporting. You have other accounts that went south in order to settle, so the cumulative affect hammered your credit. If you settle this last large balance with Citibank in the first collection bucket, and get it to show zero balance owed on the credit reports, your recovery time credit wise is not going to change much.
Once a collection file is placed with an attorney who regularly sues in order to collect, and depending on how collectable you look, you could certainly look back at the 50% offer and wish you had jumped on it. Do not let that response coax you to the offer on the table if that is not something you can manage with confidence. There are three buckets that creditors drop charged off debts into. The lawsuit prone collection attorney is one of, and the smaller of the three. It is just a reality of collections.
Thanks Michael,
So bucket one is a collection service ,with the account still owned by the bank. Bucket two is the attorney…..what is the third bucket??
Currently my income is from Social Security and a pension and I don’t currently own any property. There are a couple of non-retirement accounts that have what I consider a modest amount of money in them. I assume an attorney would not be able to access info about those balances without a court order. I would think I’m not that collectible but does the prospect of a 24K bounty make it worth their while to try and get a court order.
What were your thoughts about the “stabilization payment” scenario I mentioned above.
Richard
The other bucket is the one creditors sell their debt into. Debt buyers are investors that purchase the legal rights to collect on unpaid bills. It is a volume business, as far, far less than half of the accounts purchased, will ever see a dime return.
The stabilization payment referenced by Citi bank collection is not a scam, per say, but it can (not always) buy you a months time from your account meeting one of the buckets. I generally have encouraged this only when needing the extra weeks to gather additional funds to settle an account.
Hello Michael,
I have about $45,000 in credit card/personal loan debt. My minimum monthly payments are about $1,250 and all accounts are current at this time and I have not been late except for a couple of times that I paid a day or two after the due date. Unfortunately, my circumstances are about to change drastically – my income will be decreasing about $800 in the next couple of months due to losing some extra work I’ve been doing (the man I’m doing the work for is retiring), and on top of that, my expenses will be increasing because a member of my household that has been contributing to those expenses will be leaving soon. It won’t be long before I can not longer make those minimum payments. I’m wondering what’s the best option for me. Should I go ahead and contact my creditors and let them know what’s going on and see if they will accept some sort of settlement? The problem with that is that I don’t have any cash to settle with and no way of coming up with it in the next few months. The only thing I could do is make monthly payments. My creditors are Discover, Capital One, Chase, and American Express. I do have a few smaller department store/gas cards that I could probably pay off in a few months. I don’t want to file bankruptcy, but if they won’t work with me, I don’t see what choice I have. And I’m a little nervous about using a Debt Settlement Company since I’ve seen so many bad reviews. What do you suggest? Do you think it’s possible that any of those creditors will work with me to get to a monthly payment that I can afford? I’ve been trying to find ways to increase my income, and I hope that will happen, but I have no idea if or when it will, and I don’t want to go into default and start having them call and harass me and adding to the stress. Any advice is greatly appreciated!
Holly – Discover is the only credit card you have that has shown any interest in reducing both the balance and the payments. And that has always been on a limited basis – more like a pilot program – and for those who qualify. You may not.
Other than that, you are looking at credit counseling to reduce the monthly payments. Best case scenario there is 765 a month for up to 60 months. But that rate is reserved for severe hardships usually, and probably not a realistic thing to expect from all of your creditors, so assume an estimated monthly payment of 945.00. The best way to get a direct and accurate quote would be to talk with a credit counselor. Its free to call, so take that time. At worst you walk away far better informed, and will know why you ruled it out, and why you are then limited to bankruptcy or settlement. Talk to a counselor at 888-317-8770.
If you are adverse to creditor and debt collector calls, settlement is not a great option for you. You could hire a firm, but that will add costs to the process that you can do on your own. Not everyone wants to do this on their own, so one on one coaching could help. If you want to know more about the program I developed for CRN members to do that, call and talk to one of the specialists I work with at 800-939-8357.
Hiring a full fledged debt settlement company is not that big a deal, just do it with eyes wide open. If the company does not charge advance fees (as most don’t any longer as a result of federal law changes in 2010), they cannot get fees without earning them first.
You also owe it to yourself to full understand bankruptcy, and that is not a good idea to do just from online review of the process. Consult with an experienced BK professional in your area. If you can qualify for chapter 7 without giving up too much, it will trump all other options.
Please post comment updates to this thread as you progress. Post questions, get answers, estimates on settlements with those creditors etc.
Michael,
I just settled a judgement but I am getting the runaround on who notifies the court that this has been satisfied. I went to the county clerk and they said the plaintiff (debt collector) must notify the court. The collector says I do. I cannot get a straight answer. Any thoughts?
Chris
Chris – Can you offer more details?
Who was the judgment creditor? The attorney you settled with? How old is the judgment? Do you have any documentation outlining the agreement you made to settle?
Palisades Collection. Settled with Fulton, Friedman and Gullace. The judgement was made in 2007. As far as docs, they would not give me anything until I agreed on a payment. I sent them emails that they would not respond to. So I had to call. I did record all the calls though. They sent me a copy of the release of Judgement that their attorney drew up. That was January 10, 2014. But as of today it has not been recorded to the county clerk.
Chris – It is common for Fulton/Friedman/Gullace to file the satisfaction. I would expect that to have happened after a month, but have had some files take 60 to 90 days too (even one that took much longer). You can file a motion with the court too, but I would encourage you to talk with an experienced consumer law attorney in the area about that first. If you want a referral to one let me know the name of a large city near you.
Dallas, TX
I sent an email to you with a half dozen or so experienced attorneys. One of them should offer affordable help with the motion and filing.
Michael
I posted questions in November of 2013 regarding debt accounts that were re-aged and increased by almost 25% from original charge off letters. Currently, in reading through Debt Settlement sections (note my browser could not find debt settlement and timing section) I have a question. As I have not worked in several years, have not income or assets, but do have 2 debt accounts I want to settle and pay is it likely the debt buyer (Midland) will negotiate at less than value on these debts, and if so what percentages can I negotiate?
Dee – Sophisticated debt collectors like Midland will assign a collectable score to your account. The less collectable you look on paper, the better I usually target your savings from settling with them. I target between 40 and 60 percent on non judgment/non attorney placed collections with them. There are instances of documented hardships that have allowed lower settlement approval.
Do you have open and positive accounts on your credit report right now?
Michael,
No open accounts on my credit report other than the collectible debts mentioned above.
My positive accounts were closed in good standing back in 2010.
Dee – Settling your debt in later stages of collection like this, and with no income/assets, and with those other collections on your credit reports, I would target 40% in your negotiations as realistic. With how uncollectible you look, if you are not in a hurry, you can stage your calls and negotiations over a period of weeks (even months), and sometimes see better reductions.
Please do post updates as you make progress, or if anything pops up in the process that you want feedback on.
Michael,
Thank you for your feedback. I will keep you updated as I make progress, and may request feedback as I go through this process.
Michael,
We want to offer a settlement on 2 credit cards that we have, due to unfortunate circumstances life has thrown us the past 3 years. We have never been in a situation like this before and would like a bit of advice on getting these cards settled.
1) We owe Capital One 5056.00. The last payment we made was September 7, 2013 for 115.00. Prior to that we had not made a payment since May 2013. The account has been charged off and is with First Source Advantage. They are servicing the debt for Capital One and have not bought the debt. I talked to a representative today and he sounds like he
would like to settle as much as we would. I told him I would call him back after discussing things with my husband. He offered us a settlement for 4046.00. That is approx 80%. I told him there was no way we could do that because we are gonna be using our tax refund. He told me for us to come up with an amount and he would run it by his supervisor. He asked if we were prepared to get this thing settled this month if we come to an agreement and I told him we were. I was hoping to settle for more on the lines of 25%. What do you think?
2) This credit card is Bank of America. We owe 12,500.00 on this card. It has been charged off and now Northstar Location Services has the account. I don’t know if they are servicing it or if they have bought it. We have not made a payment on this account since June 2013. Any advice would be appreciated….
Thanks, Kim
Kim – I reviewed a Capital One settlement for less than 50% last week. But I just do not see enough of them to encourage anything less than 50% as a realistic target. If you offer low to start, and are prepared for the 50%, you are in better shape. Just try to avoid a situation where you go back and forth 5 times in 5% increments if 25% is turned down, and you have to get to 50%.
On the Bank of America settlement with Northstar Location Services, is BofA showing a balance still owed on their credit report trade line, or does it show zero? Is Northstar Location services on your credit report? If not, is anyone else reporting? I generally target BofA accounts for 40% settlements, but still see enough come in under, or at 30% to suggest lower targets are still realistic too.
Answer those questions and lets go from there.
I’m trying to help my fiance clean up his credit. His credit went from good to bad when his wife passed away in 2004, his health declined and his business went under. He lost his health insurance and in 2011 i found myself taking him to emergency at USC Medical the outcome a triple bypass.
He is now on Social Security Disability and Medi-Cal. His benefits are only $1,000.00 per month and family is helping him with his house payment. I help with other bills as well.
He has so many past due all have gone to collections even one has a judgement. I have power of attorney and called the judgement one and they would not talk to me even when i offered to pay half of it as full settlement the girl was rude and no. They tried to collect from a bank acct. he did not even have. I filed paperwork back to the court that no money can be collected from any government benefits whatsoever. They tried to collect again and so I re-filed again some kind of exemption amount which exceeds the debt anyway. There are duplicates on his credit report one from the credit card company and another from the ones they sold it to.
He has tax liens 3 of them from LA County, Ca. Its a mess. Im afraid to call because I dont want to start statute all over again. There are some he does know at all. What do I do first?
We have no money to pay these completely off but I can come up with something.
Some say ”charged off” and sold to another company. Is this worth pursuing is it too far gone?
Thank you
Judy – Who is collecting the judgment debt? How much is it, and when was the judgment entered?
Duplicate entries on the credit report are standard. The original creditor may be appearing with all the late payments leading to a charge off. But if the creditor sold the debt they should be reporting zero balance owed, and the debt collector who may later report would report the balance owed to them.
If your only goal is the credit reporting aspects, than it may be worth negotiating and settling the debts. I can offer better feedback when you respond with answers to:
How long ago was it that each of the outstanding debts stopped receiving payments?
What are his credit goals for the next few years?
Can anyone explain to me? I am a married independent taxpayer. Although I am married, my husband never support me financially. So, in 2010, I borrowed money from 2 banks for schooling about $15,000. From 2010 to today, sometimes I got job. Sometimes I lost my job. But I have paid the debts down. When I lost my job, I wrote letters to them to tell them I am able to pay at a reduced amount given by my mom from the other country. So, i have paid them down to $5,600 (for both credit cards). Last year, I had 5-month contract jobs and I earned around $25,000. Two banks said that they will send 1099-C to me. Now I have been unemployed for 6 months. Can anyone please tell me whether I have to pay anything to IRS? If they send 1099-C, will I have to continue to pay them? What if I have enough money from my mom to pay off, should I tell them not to send 1099-C to me?
Who are the 2 credit cards you are dealing with? When did you last send them payments?
I just set up a debt settlement with FDR and I am anxious if I have done the right thing. My situation: $135,000 in credit card debit ( 5 cards : BOA, AmEx, Chase, Barclays). It has build up over a 10+ year span and has reached a point where it is no longer manageable and I can not handle the monthly payments. Balance transfers and relying on a big quarterly bonus is not working anymore. I researched my options and decided on debt settlement using Freedom Debt Relief. Putting in $1698 per month for 53 months. I had never missed any payments or been late. I stopped payments in Dec 2013 to the credit card companies. I hate the idea of not paying my bills but I have to think of getting this behind me for my kids sake.
Bill – Do you have any specific questions I can answer about your situation? All I can offer is my general feedback based on what you shared so far, and that is – Make every effort you possibly can to set aside more money much quicker. 53 months to settle credit cards like yours is just too long of a debt settlement plan. That type of debt relief program would be more consistent with credit counseling.
How much more do you suggest? I may be able to add more to it in the next several months. And should I add it to the Escrow Freedom Debt relief set up. Did I make a mistake choosing Freedom Debt Relief – should I have gone to an attorney?
Bill – Add as much money to your set aside account (escrow/other) as possible, and as often as possible. If you are working with a settlement company like Freedom Debt Relief, than yes, deposit into that account. The settlement company needs to know you have the additional money as soon as it is available. That way they can target the next credit card debt to settle.
Freedom settles debt every day. More than any attorney I am aware of. If you need an attorney in order to settle debt, it is generally when you have been sued, and not necessarily then if the goal is to settle the account.
Dear MIchael, I sent you a long letter last night. I know you got it because a lawyers name showed in my e mail today. I ‘ve been looking for my letter and some advise on your site and don’t see anything. The lawyer you recommended is like an hr away. I see you answer people, I was hoping for you to advise me also. Thank you, carol smith
Carol – I posted a brief reply to your comment and questions about Cach that you can read here. If you want to be notified by email when someone replies to your comments, or when a new comment appears on a page, you need to check the box to subscribe to comments, or subscribe to the RSS comment feed.
The attorney contact information I sent you is what I found closest to you for someone with debt collection defense experience. You should call and consult with them, and if distance is an issue, ask for a referral to someone with that same level of experience nearer you. Few attorneys are experienced with debt defense. Those that are tend to be a pretty close knit group and know each other.
I got a pretty good deal…The are sending me in writing our arrangement…is it normal for me to have to sign the consent to judgment form. They said the Only way to set up a payment t plan now is to or tto wait and let it go to court for judgement. Thanks
Tom – It is not the only way to get an agreement done, but it may be the only way they are willing to do this one. It is absolutely common to consent to judgment in order to get the monthly payment you can afford once sued.
If your happy with the deal that’s what matters.
Michael, what’s a good source to find out how much i owe in collections? Not sure how much i owe. I do know i owe about 6k for two usaa loans. What’s a good settlement for usaa?
stephanie – What other accounts do you have in collection besides USAA credit cards? How long ago was it that payments were made on those debts?
Your credit report is the first place you can look to in order to establish a base line of what your collection balances are. You can also call your original creditors and ask about the balances, and who they may have the account out to collection with, or who they may have sold your debt to (if sold). Any calls that result in connecting you to an agency, or the creditor themselves wants to start talking about settling, or negotiating payments, just let them know that you are still struggling financially, and cannot commit to any type of path to resolve debts quite yet, but are just gathering information in order to formulate a plan.
USAA settles for 40% or a bit more. Sometimes lower if the situation is right. What types of accounts are you trying to negotiate with USSA? Do you have other loan products or bank accounts with them?
Hello, I have been served a civil summons for a debt I owe from discover.the debt is for 1900. I want to settle this debt before a judgment but I cannot pay the full amount.I have many unpaid debts at this time.I would like to set up payment would the attorneys at smith debman narron saintsing and Myers do this. I am in north Carolina
Thanks
Tom – You can typically set up some form of payment plan at this stage of collection, just know that payments more often than not means paying the full balance back plus attorney fees, so not negotiating a debt settlement.
Would it be possible for you to raise about 60 to 80 percent of the balance in order to settle with Discover? If so, how long would that take?
No, can’t get the funds until March/ April…but can pay monthly till then…how much is the attorney fees normally run…I am fine with paying the full amount, being that it is what I owe
Okay. Attorney fees vary, but you can expect a few hundred being tacked on at this stage of the process.
Call the Smith Debman firm and see what you can work out for payments. Just be sure not to agree to something you are not completely confident you can afford.
Hi –
Like many others did when the real estate market was hot, I opened a Heloc line of credit. Using much of it to complete the home we built and a lot more when I had loss of income and my wife had cancer, we are now not only underwater on the HELOC, but almost so on our original mortgage. We are current on original mortgage.
As we sought out uninsured cancer treatments, I had to prioritize paying other things, and stopped paying the underwater HELOC. It was charged off in March, collection attempts were made by the lender (RBS/Citizens Bank) for a while, then it was assigned to an out-of-state law firm for collections. I had little contact with them, and they have now assigned the debt to a law firm in my state.
I’m not worried about them foreclosing on an underwater HELOC, but I am concerned about being sued.
Question: I read somewhere that a junior lender cannot sue in leiu of foreclosure in most states. Is that true?
Facts:
1st mortgage $350,000 current
Home Value $375,000
Heloc $90,000
Last payment 08/12
I am hoping to settle this and have read of a lot of people who have settled for 10-20% of the Heloc debt. I might be able to raise this amount by borrowing it. I just received the dunning letter from the second law firm.
Question: Should I approach them to settle, or should I wait until they contact me?
ed – You are on the front end of what I expect will be a consistent theme regarding HELOC affordability for the next few years. Banks are going to develop more SOP for loans like yours, and beyond the standard mortgage work out and foreclosure prevention plans. Here is a recent piece about the larger issues: https://www.nakedcapitalism.com/2013/12/big-banks-about-to-start-booking-second-mortgage-losses-they-can-no-longer-extend-and-pretend-away.html.
You should consult with an experienced foreclosure defense attorney in your area about the frequency and risk exposure for a second suing to collect in lieu of foreclosure. You want feedback from someone in that trench. Post the name of a nearby larger city and I can email you contact info to attorneys with the experience you would look to speak with.
Settling a Heloc is very doable. Some settle for the type of savings you read about, some don’t. Who is servicing the first? Are home values in your area showing value appreciation? If so, by what amount, and when did that trend begin?
Does the attorney letter you received reference any other company than RBS or Citizens bank?
Thanks, Michael for your very detailed response.
I read the article you referenced and do agree that this is a huge issue that has not yet been properly addressed. I’m not sure if I fall into the same category since my loan has been charged off for about 8 months already.
In regard to the questions you asked:
Rbs/Citzens is the only one who is listed on the letter from the Law Firm.
My first mortgage is serviced by Chase.
Prices have appreciated in my area by about 7 % in the last year, a trend that started in 2012. They seem to be leveling out, but are expected to grow 2% in my area according to Zillow. My home might actually have around $50,000 of equity by now.
I live in Chicago and would appreciate if you would indeed forward the name(s) of an experienced foreclosure defense attorney.
Thanks,
Ed
Ed – I sent you an email with contact details to several attorneys in the Chicago area. Any one of them would be able to advise you on your issues. Some will undoubtedly have professional experience in dealing with RBS and Citizens bank HELOC’s, and probably the attorney trying to collect on the HELOC too (if you are dealing with a seasoned collection attorney).
The separate servicing from the first mortgage to the HELOC can make settling a little easier in some cases.
Price appreciation metrics can matter, but not all collectors take a sophisticated approach using that data.
It would be great if you posted updates as you progress through this. Other readers can benefit and learn from you.
Thanks again, Michael –
I did receive the list of attorneys, contacted 3 of them and connected by phone with one of them. He believes that the collector/law firm can sue for breech of contract and they would probably “get around to it”. For now he said what I was doing was the best thing.
What I’ve been doing is that I reached out to the collector law firm and made a settlement offer of around 10%. I talked to two agents there. The first one just took my offer and said that she would submit it and that if I didn’t hear from them in a couple of days to call them again. I didn’t hear from them so I called them and spoke to another agent who said that they would need financial information from me in order to consider any offer less that 95%. I wasn’t comfortable with that so I politely terminated the call.
I’m hesitant to provide financials for 2 reasons:
1) I have a decent income which believe that is all that the collectors will look at. BUT, because of my wife’s cancer I have huge debt. I don’t think submitting my financials will help my case but hurt it.
2) I don’t trust the collectors to not use the information they get against me in some way. It’s like I would be allowing them discovery without any guarantee that they will approve my settlement offer anyway.
Instead, I wrote a letter requesting that the law firm verify the debt (it was within 30 days). I realize that I had made an offer and that might be construed as an admission that I owe the debt, but I never did say that I agreed with the debt, and in fact had stated that I disagreed with the amount. I’m hoping that by doing this I will be able to find out if they have anything like the original contract, or if they are just working off some statement they got from the previous collection law firm.
I’m writing all this because you had asked met to let you know about this process so others can learn from it and to see if you have any additional feedback or advice for me at this point.
Thanks!
ed – From what you have shared so far, you appear to be dealing with a debt still held by its originator, not a sold debt. The attorney that has the account, if working for the original creditor, will not be working from an excel sheet containing only the most basic of information. The attorney should have no trouble getting the needed info to validate this debt, and will have instigated that process after having received your request.
I think you may benefit from some help with strategics and implementation. Call in and talk with a CRN specialist at 800-939-8357 for some good feedback on negotiating and settling from here.
Hi Michael,
I have a personal Student loan of about $20,000 from about 4 years ago that is in default and has gone to collections. I have so many different student loans that this one, even though its a big one, got missed. I would like to try and settle it, how much do you think they would settle for?
My husband and I would like to buy a house within the next year but need to get this off of our credit.
Thank you!
Sarah S
sarah – Is the student loan in question a private loan? Who is the loan with now?
Michael,
I’m in the same situation as many of these people. My story is too long to tell. In a nut shell, on my credit report, I see some that say Charged off and I get letters from collection agencies and some that say Account Closed ans some that say the account was purchased by another lender. I know in reading your responses, I am still responsible for the debt, and am willing to settle, even though I know each one is going to send me a 1099. My question is, can an account that’s in collections or has be purchased, specifically, purchased, charge me more than the amount that was written off? After it’s paid, even if it was settled for a lower amount, how does the Credit Card company handle that. Do they get their money from the purchaser? Do they re-record it as income? Will I now get 2 1099’s I want to get this settled, once and for all. Our other option is bankruptcy. We’ve already got the black marks on our cc report, if it can’t hurt us any more than it already has, is that the better option? If we do that, we won’t be liable for taxes, correct? Hope you can help! Thanks!
Mary Ann – When an account gets charged off, the agreement at the time of that event may mean interest is allowed to continue to inflate the balance owed. But there are also instances where “junk fees” – collectors adding fees that cannot be justified – can occur. If your aim is to negotiate a settlement for a significant savings, it may not be productive, or a good use of time, to get into how the inflated balance was achieved. That said, I can think of many files I have worked where getting to the bottom of how collection balances ballooned, in a seemingly arbitrary way, is the first thing I dig into.
When you negotiate and pay a settlement on a credit card bill with a collection agency that is working directly for your lender, the settlement and now zero balance owed, is updated to the credit report by the original credit card lender.
When you settle with a debt buyer, and if they are reporting to the credit bureaus, they would update the account to show settled and zero balance owed. The original credit card lender should already have been showing the debt as charged off and zero balance owed to them – so no change to the banks reporting would be needed.
This is not to say that credit reporting always goes like it is supposed to. You do have to review everything and if things need corrections it is up to you to get that done.
If your credit card debts were sold, the bank will get nothing from you settling with debt collectors on those accounts.
If you negotiate your settlements with collection agencies working for the banks, the creditor will get paid, and the agency gets to keep a portion of what they got you to pay.
Banks are required to follow accounting principles, so if they charge off a debt and record the balance as a loss, but later are able to recover some or all of that money, they would have to account for that.
You should not get 2 1099c’s for the same account.
Comparing settlement to bankruptcy is something best done when you have all of the facts about each path. I can help you understand the benefits and drawbacks to negotiating the debts down if you post a comment reply with the following info:
Name of original creditor; when account last paid; who is collecting now; approximate balance owed.
In order to truly evaluate bankruptcy you should consult with a pro. You can call 877-278-8117 for a free consultation and determine:
Whether you qualify for chapter 7, or would have to file chapter 13.
If chapter 7 is an option, are there exemptions you do not meet that would make negotiating the debts a better alternative.
If filing chapter 13, are there benefits you will realize that you cannot from settling on your own.
You are correct – 1099c’s and forgiveness of debt are not an issue when discharging debts in chapter 7, or when a portion of debts are discharged after completing the 3 or 5 year chapter 13 repayment plan.
Hi Michael,
Quick question. I have been in talks to settle my cc debt with B of A/FIA.
The women I spoke with today said they would take the lump sum I offered at 35% of my balance.
The problem I am having, is that they are telling me that they will not send me a letter stating this agreement in the mail. They will not give me anything in writing until AFTER I make the payment.
How can I trust this? How do I know they are not just going to apply that payment to my balance and tell me I still have to pay the rest. Or sell off the rest. I am very leery of this. I want to see it in writing.
They are also telling me that since it is the end of the month, they cannot guarantee that they will take the same settlement offer next month. Can you please give me some expert advice. I have a hard time sending them a cashiers check for a big sum of money without some written paperwork to back-up our agreement. They said that they do the ‘disclosure’ over the phone and they we have to “trust each other”. Just sounds so sketchy. One women told me that they don’t trust the mail service. I would really appreciate your advice.
Thank you, Rachael
Racheal – Set aside the “don’t trust the mail” talking points that recovery specialists and debt collectors at BofA or FIA card services may use. None of that is really what is going on. Bank of America (and other banks), developed a policy a couple years ago where they do not kick the letter loose until there is a payment set up in their system. More often than not I would recommend using a check by phone direct from your account and set the date of the payment draft for a week or more in the future in order to allow time for the letter to get to you.
They will do a disclosure call. It is recorded from their end. I recommend you record it from your end as well, and tell them that you are. If you do not record it, be sure to take good notes of what was said, by whom, and the date and approximate time of day. Those recordings will then be better identified in their system should you need to file a complaint with the CFPB for unfair and deceptive practices – if any mistakes are made with your agreement that lead to any future collection efforts by them, or a debt collector.
Here is some more detailed information about settlement letters and getting through your concerns: https://consumerrecoverynetwork.com/debt-settlement-letters-agreements/
Those letters have been getting released by BofA and FIA – as indicated – with very few issues.
Offers do change. FIA may not even have the account next month, so now is a good time to settle with them.
Thank you so very much Michael.
I’m just clarifing what you mean by doing a “check by phone”- is this the same as giving them my account number and bank routing number? Like an auto withdrawal? Can it be from my saving account or do you know if they want it from a checking account?
And in my conversation with them-I can set the withdrawal date for a future date? And they won’t take the money until then?
I just want to be as informed as possible. I truly appreciate your advice. And will follow your recommendations.
Rachael
Your debt settlement payment(s) over the phone can come from either account, using routing info etc. I do suggest using a different account dedicated to paying deals you negotiate. Read more about that here.
Yes, you can set the payment for a future date. Just let them know you need sometime to pool the money together, and will have it in the account by xx/xx/xx date.
I think and hope I am good now 🙂 with Capital 1 atleast. I just got the arrangement letter. It says:
Thank you for making payment arrangements for your Capital One account. As we agreed, your first payment of $50 is due by the 30th of each month beginning on 10/31/2013. Please continue to make these payments each month until you’ve paid your balance in full. You can always pay more than the amounts we’ve agreed on.
If you don’t make all the scheduled payments as we’ve agreed, we’ll take action to collect the balance you owe us. After we receive your final payment, we’ll send you a confirmation notice.
When mailing your payment please write your 16-digit account number on it and include the enclosed payment slip. If you have any questions, or if you’d like us to discuss your options please give us a call at the number below. If your account is being serviced by a third party agency, your call will automatically be routed to them,
Sincerely…..
Does this all look ok to you? It does to me.. but just checking
Shannon – I would move forward on payments with confidence with that agreement. I would be sure to get payments sent well in advance of the due date. Keep that document and record of your payments in a safe place. If any other collection action were to occur, but where you have been following the agreement, post an update here. There are steps I will recommend you take.
I am a huge fan of the rip the band-aid off approach to resolving collection accounts. Once you resolve the Midland account I would aggressively pay off this one with Capital One using all available funds (tax refund etc). Your credit will best heal once these older collections show a zero balance owed. You do not really get a credit bump from payment plans on charged off debts. But will benefit over time once the amounts are zeroed out.
Calling Midland Funding to arrange your solution should go equally smooth. If you had previously indicated some form of cease communication like with Capital One you may need to be prepared for them to bring that up as well.
Michael,
Thanks again for your advice and support. I called Midland and got the same deal as I got with Capital One. $50 per month and then I will call back and try to settle the balance once I get my income tax return. So happy to have dealt with them on my terms instead of them dealing with me via a summons.
Hi Michael. Hoping to get your advice on how to handle some debt I have. Looking at my credit report I have a charged of Credit One Bank card that was sold to Midland Funding showing a balance of $1300 and a charged off Capital One card that has not been sold off to anyone yet showing a balance of $2210. The last payment made on each was on May 2010. I would really like to deal with them before they deal with me ( sue me). What the best way to go about it. I don’t have a lump sum of cash. Is it reasonable to call and ask for payment arrangements with both for monthly payments? Or will they both only take a larger payment to settle on full? I really want to avoid the lawsuit. I haven’t been served yet but I have a gut ….or guilt feeling it’s coming.
Shannon – Either of your accounts could sue you (reputation of both). But both will work with you to resolve the debts, whether with a payment arrangement, or negotiating a lumpsum debt settlement, or a settlement with payment terms.
What can you budget monthly with confidence right now?
If you get a good settlement offer, what amount could you pool together given a month or two?
Thanks for rhe quick reply. Unfortunately I don’t think I could pool together too much until income tax return time. I normally efile and get it back pretty quick. .so I would have it the end of February maybe. In the meantime I can afford to pay them $100 each a month. I’m scared to call and open pandoras box with them if that won’t be an acceptable payment amout. Do you think they would both accept that? Are you saying they would work out arrangements with me now….or after they served me? How long do tbey each normally allow payments for ( is asking for $100 a month on a $2200 + debt asking for too much?)
Oops… I forgot one question. If I should decide to wait until I have a larger pool of money will there be any warning signs or notice that they are about to sue me? I know the SOL is up around May or so..but I have also read that Capital One specifically likes to wait to the SOL is near. I am not sure what the best course of action is at this point with my limited funds. I definitely want to avoid a judgment and a lawsuit if possible but I don’t have a lot of money to settle it right now. What would you do?
Thanks for doing this for everyone! Your posts and answers have been great to read!
Midland Funding is highly likely to work with you if you negotiate 100 dollars monthly payment, or even settle for less and with payments (though smaller balance accounts in general do not settle for the best savings compared to higher balances). As far as Capital One, I cannot really comment without knowing who the account is placed with for collection. Who was it that most recently contacted you collecting on the Capital One account – whether phone calls or letters?
Capital One hasn’t been placed with anyone yet. It was still in house. No one has called me or mailed me anything. I just know I owe the debt and that they have a history of suing so I wanted to get some sort of control over it. I actually got brave and called them this morning. I must have told them not to call me anymore a few years ago. They referenced having a cease and desist notice on my account. Anyway I called and they said I could pay $50 a month and that as longs as I didn’t miss a payment that it would remain in their office. I am still waiting to get a faxed copy of the arrangement before I make the first payment. That seemed a little too easy. Is there anything I should leary of? Can they still sue me if I am making the $50 a month payment?
Shannon – Yes, they can still sue, but I find that highly unlikely in today’s heightened regulatory debt collection climate. Most definitely unlikely depending on what that agreement letter says. Post an update when you get that letter and lets go from there.
oh, and yes, it can be that easy sometimes:)
Michael…. I’m wondering if you have been able to collect any hard data as to the average percentage of “savings” in settling a debt at the 6 month mark as opposed to settling in month 3 or 4 after the first missed payment. Once again, looking at the cost benefit of settling quicker, possibly sustaining less credit damage and getting back on track faster versus maximum savings…Thanks.
Richard – There is little difference or benefit to your credit, or limiting the damage to credit scores, by settling just after 90 days late, or just before charge off (typically 180 days late). The credit damage from late pays comes mostly from the 30, 60, 90 day late pays. The charged off is the next hard hitting event.
The savings from negotiating settlements at 90 days compared to, say 150 days, is stark. Several banks will not even engage in negotiations at 90 days. Most 90 day settlement opportunities were occurring at the height of the recession, and took the form of pre-approved mailed letters to delinquent card holders that met a specific criteria. Citibank did a good amount of this, Chase and Bank of America a little (but were willing to settle at 90-ish days when calling in to negotiate). You just do not see the 90 day pre approved mailed offers to settle much now. And calls to negotiate this early now often result in paying a premium of 20% or more than would have been the case had settlements been negotiated just prior to charge off, or with an outside collection agency after that.
My wife and I have a Chase Credit Card with about 4600 on it…my wife just lost her job out of the blue and we have exhausted our savings down to nothing. We are not behind on payments but barely making minimums. I was wondering if it would be possible to settle our debt for less and be done as I have already gotten rid of so much to pay off other bills and shes in a competitive field so I dont know how long we will be in this spot?
James – Settling your Chase credit card would make sense if you cannot afford the minimums. Assuming you could negotiate and get Chase to approve a settlement of, say 1800, how long would it take you to raise that amount of money?
Hello Michael, Last week I was served a summons by the office of Rory W. Clark (located in Westlake Village,CA) on behalf of FIA Card Services in the amount of roughly $4700, for a cc that was initially issued by BofA. I live in SF, CA and understand that as it is a small claims matter, I am required to represent myself if the case goes to trial. I have 30 days to respond, and in the past week have been researching to figure out where I stand and see what my options are (and stressing out a great deal). I was recently laid off, and am currently collecting unemployment; I have no savings with which to offer a lump sum except for a retirement account. From what I understand it’s in my best interest to respond to the complaint, one way or another. But first, a couple things; I have two other cards with more or less similar balances that have been in collection for several years, that so far I have not been sued for; and, strangely enough, the amount I *am* being sued for by FIA seems low, by a couple thousand, compared to what I thought I owed. My question is, if I answer the complaint, should I request validation of the debt as a defense? Or do I answer hoping the case will be dismissed/dropped if I attempt to make a case? (FWIW, their office is 7 hours away, would they really travel that far??) Also, is cashing out a retirement account ever a good idea to pay off this kind of debt? I’m 36 and have some time to build that back up. At least then everything would be a clean slate, or, perhaps then the taxes I would owe on any reduced settlement amounts would be more than I could afford…Or at that point could I claim insolvency? I own no car/property/home, and am a renter. Do I sound like a candidate for Chapter 7, considering those two other lingering debts?
I know there were a lot of questions in there, thank you so much for your consideration in advance.
Leah
Leah – Many collection attorneys will pay a local attorney to make limited appearances. No, the attorney listed that is 7 hours away may not show, but does not necessarily have to. Cashing in a retirement account in order to settle can make mathematical sense in some limited scenarios. But with early withdrawal penalties and tax implications, there would have to be some extenuating circumstances (cannot qualify for chapter 7, other assets to protect etc.), to make sense of it. If you can simply borrow from a 401k, it can make sense for some situations, but more for someone who is very confident in their job security.
You can defend the suit to the best of your ability and keep your options open. FIA is not a debt buyer, so some of your best defenses are not on the table.
Chapter 7 is indeed an option. But let me ask:
What are the balances on the other 2 debts? Who is collecting on them now? When were payments last made on these accounts?
I ask because currently I would only consider the Bank of America account as the driver to bankruptcy. And filing over that amount is not attractive unless it came down to a wage garnishment that would create a domino of other problems.
Hi Michael, Thank you for the response. I don’t know if I would want to borrow the money from the retirement fund, since, as you said, I’m not too confident about my job security for any time in the foreseeable future. So who knows when I’d be able to start paying it back.
The two other debts are about $6000. The Citi card is collected by Capital Management Services, and I’m not sure who’s collecting on the Capital One card. I’ve been offered settlements from Capital Management Services for as low as 25%, which would be great to take advantage of, but like I said, the only way I’d be able to do that is to cash out my retirement, which I’m hesitant to do. But the question there is, is that worse than filing for bankruptcy? And who knows if FIA will be willing to come down low enough to make it worth it. There is only about 15K in the retirement account, and after the penalty and taxes, I’m guessing I’d see about half. Is it worth the risk? It’s been at least two years since I’ve paid either one. Does it make sense to get settlement offers from all three collectors, then look at retirement fund vs bankruptcy?
Thanks again,
Leah
Thanks for the additional details Leah. I see a couple of paths for you to take.
Given the limited unemployment income, and no assets, debt settlement on the BofA/FIA account, even when sued, can “maybe” see an optimized savings of 50%. Lets say that you settle for 2400.00. You still have the other 2 accounts out there. Capital Management Services is not high risk for suing, but Capital One is. You said the balances on those two were similar to the Bank of America debt. Assume you settle with CapOne for 2500.00 next (as you save up money, or tap other resources). Save Capital Management services for your last settlement for about half, so another 2500. Lets call it 7500 to settle all 3 accounts. You can early withdrawal your retirement and clearly avoid bankruptcy. Should you? I wouldn’t. But I completely understand why you would want to.
The total cost of chapter 7 would be between 1500 and 2k (national average is 1800 – but San Francisco tends to be on the high end of costs). Lets assume you you pay 2k – that’s all court costs, attorney fees, etc. You preserve your retirement fund, as most are exempt; you eliminate all unsecured debts; and all stress associated with the collections; have access to most credit products again within 24 to 36 months (access to student loans could be 3 years – FHA mortgage underwriting 24 months). You cannot file for chapter 7 again for 8 years, and may hinder some very limited options for employment (certain types of jobs would heavily scrutinize the BK).
As cash strapped as you are, I like the bankruptcy option from a purely dollars and cents perspective. If you were not currently laid off, I would have more to add to the debt settlement comparison, and some additional monthly budget and living expense questions, but that is not the case here.
There are always other considerations for choosing other alternatives to bankruptcy. But when there is a collection lawsuit that could result in a judgment (that can lead to later wage garnishment and bank account levies), it causes something of a time crunch for decision making. I would suggest consulting with a bankruptcy professional now, and then weigh what you learn in that consult with what you can expect from debt negotiation. You can call 877-278-8117 for the BK consult. If you learn something that would give you pause from pursuing bankruptcy, or have more questions about settling, or even doing nothing for a while (until your job situation changes), post to this comment string and lets go from there.
Hi, I was trying to settle a bank of america credit card. Its being charged off next monday and I have been in constant contact with them. They offered a 50% settlement last week but i was unable to come up with 50%. I contacted them today and they told me there was no settlement being offered at the moment. please advise. I can only come up with about 40%.
Jim – There are instances where BofA settles for higher amounts. We tend to see people we help through the process of settling with Bank of America on your own get between 30% and 40%.
You may not have an opportunity to settle direct with them at this point if the account is set to charge off the day after tomorrow. You may have to settle with the debt collector, or purchaser the account is placed with. BofA may keep the account for a brief period in an internal post charge off recovery unit, or with FIA card services, and settlements here can get done at 40%.
Also, you can often get the settlement amount split up into a few payments, so if you want to get the deal done, but are a little short, the additional time to pay can be negotiated.
So I should not even try to call them today, tomorrow or sunday and wait until they charge off right?
Jim – I would call and try to get the settlement done each day. The worse that will happen is that they will tell you the same thing. But there is a chance you can still knock the settlement down. I have seen settlements with Bank of America on the last day before charge off.
I was wondering if you guys deal with an outstanding balance on a mortgage after its been short sell. My remaining balance from a short sell was directed to a law firm and I have been repaying them monthly. I just got a letter from the lawyer stating that they are no longer representing the creditor and my account is now being managed by another law firm. Can I settle this debt just like a credit card?
Sam – CRN specialists can help you settle debts resulting from a short sale. They can also help you settle on your own. I would recommend calling in for a free consult to talk about your situation with one of them. Call 800-939-8357.
I tried to contact ARS regarding my Chase CC account from years back. I’m currently having them deduct a small amount from my bank account each month. When I asked if there was a settlement amount, the rep basically said if i settled for less than full balance, the bank will never let me reapply for anything/work with them again. This rep said she represents Chase. Is there such thing? And what other banks do this? I want to get some stuff paid off but now i’m afraid to do settlements because of this. I’d like to buy a home in the future and would be looking for home loans from banks so I don’t want to get blacklisted or anything. Thanks!
I’m sure you know but ARS = debt collection agency.
There are a couple of debt collectors with ARS for initials. What is the full name of the collection agency you are dealing with?
Tiffany – To my knowledge, Chase Bank does not black list people from future credit products if they had previously settled a debt with that same customer in the past. I have worked with people who have maintained Chase accounts (credit cards and otherwise), while settling other Chase accounts. Even if Chase were to do that, there are many other resources to obtain home loans from when you are ready.
American Express has maintained a black list where people who have not paid them have found it impossible to get AMEX cards again. That is the only confirmed example I can provide.
Settling a Chase account that went to a debt collector will often mean the account was already charged off. This means the credit damage is already done. Deciding whether to settle the debt at this point should be more about affordability and cash flow, not credit reporting.
Thanks Michael!
I’ve contacted ARS again and spoke to the Chase rep I’ve been working with. I’m confused because I thought ARS is a collections agency that buys out old accounts from credit card companies. But she said she represents Chase and Chase didn’t sell my account yet, they just go through ARS to try to get paid? When she asked if I wanted to hear the settlement disclaimer, she went through the whole 1099 deal and also stated that because i’m not paying in full, I will be restricted to ever get an account/loan with Chase again. Maybe this is something new? Which is fine, I don’t intend to deal with Chase again but just wanted to see if this applies to other banks and if you’ve ever heard of it. Thanks!
No problem. If that is the case it would be the first I have ever heard of Chase making that disclosure, whether through a debt collector or by an internal employee.
Chase does assign out to debt collectors while retaining ownership of the accounts (not selling to debt buyers) more in the last couple of years.
Got it.. Thanks! I’ll be returning to this site for more advice if I need any in the future. Glad to have found this useful site. =)
Thanks Michael, for your detailed explanation…and your question. Yes I have been doing research and trying to find the right path and I very much feel I’m doing a balancing act on this situation. I’m semi-retired and have gone through a rough patch with my business. However I do feel I have the potential to make sizable amounts of money in the future, as I have in the past. But until I get my business back on track, I will be utilizing much needed assets to resolve these debts. So I may have too many assets to think about bankruptcy but doing debt settlement will diminish them significantly. And of course, if I do a complete default thinking I’m judgement proof, will I end up getting sued for the assets I hoped to protect….which really aren’t that much.
Yes, I have always had good credit and would prefer to keep it in the best shape that I can but I realize I can’t have it both ways. If I understand you correctly, it sounds like settlement is a faster recovery than completely defaulting, which could drag on for a long time.
So again, I’m just trying to balance out all the apparent options in front of me….realizing that I can’t afford my current debt load, aware that at my age I can’t afford to give up needed assets and also knowing the importance good credit, even if it is not for borrowing money….
I did do an initial consultation with your company and will most probably follow up on that….Thanks
You are going about this in the best possible way. I so very much wish more people would be methodical, deliberate, and committed to researching all of their options and getting questions answered along the way. And there are times where not paying, not settling, and not filing bankruptcy can be considered an option. But it should be viewed as a temporary one by most.
Negotiating and settling credit card (quicker the better), will absolutely be better for your credit than defaulting and leaving debts unresolved. An exception would be if you took 4 or 5 years to settle, get the credit reports updated that far down the road, and add a 12 to 24 month recovery time afterward.
Glad to hear you connected with a CRN specialist. They are here if you need or want one on one support, or a direct service.
Hi Michael,
If a person is “judgement proof” is there any purpose to doing debt settlement, as opposed to doing a complete default. My assumption is that debt settlement would put a resolution to everything, for a cost, and alleviate the lingering potential to get sued with resulting collection judgements that could be executed in the event of future monetary good fortunes. Is this correct and are there other considerations within this framework?
Judgment proof can be short or long term. If someone is judgment proof today, but with a reasonable expectation they will not stay that way, taking advantage of early settlement opportunities makes more sense. My comment here is based on years of experience. All those files later, I would estimate less than 100 could say the money they used to settle debts turned out to be regretful because they could have simply stayed judgment proof. Judgment proof files are often better off moving straight to chapter 7 bankruptcy and discharging debts, rather than negotiating settlements.
There are other considerations, but they are not all monetary ones. The stress and bother of collections is often left out of the equation. Debt collectors calling a relative, employer, former employer (whether violating fair debt collection laws or not), are the types of considerations I am referring to. Length of time to be approved for fairly priced credit products again are another consideration. Negatives fall of the credit report 7.5 years after the first missed payment. But a judgment 4 years from now adds another 7 years (now a total of 11) to credit concerns.
I could actually roll through a litany of things that become part of the equation when forced to dodge debt rather than resolve it when possible. But after I reread our comment exchange on this page, I have a question for you: What happened between your first post about credit concerns, to this one about being judgment proof? I completely support what I assume is simply your having continued your research, and reaching a reasoned and logical conclusion that your credit is far less a concern than being able to provide for and support yourself. But I am curious.
Reading question #5, if there is no settlement offered to the creditor and quitely waited till the 7 year timeline expired, will the debt still fall of without any repurcussions, or can the creditor come after you later in life?
YA – If a debt remains unpaid for 4 years in California it passes the statute of limitations for your son to be sued. But the debt is still out there and collectable. Debts like credit cards fall off the credit report typically 7.5 years from the date of the first missed payment.
Michael,
This is a really great website – thanks! I am in Virginia and have two credit card judgments against me totaling about $30k including interest and fees. Both are about 6 years old. I have no garnishments, levies, liens, etc. and never did – it seems the law firm never bothered to try any of this, but I have also been careful not to leave myself vulnerable to any of these. A few questions:
1. When you talk about negotiating a reduced payoff (say 40-60%), is that 40-60% off the original amount or the amount with accrued interest and fees?
2. Based on the age of these judgments, what would be a realistic settlement amount?
3. In another post you suggest offering 50%. Why not just ask them what is the least they’d take? Or start off offering 10% (or 1%) and letting them go up from there? Is there a downside to offering too little, other than more back-and-forth before a payoff amount is agreed on?
4. I have the cash to pay off in full, but don’t want to part with that much money, especially considering I don’t absolutely have to settle at all – I’d rather clear up my credit, but don’t need it right now. If I do settle for less than the full amount, when the settlement is recorded in the public record will it show that I settled for a reduced amount or will it just say that it’s been satisfied? I don’t want it to show on the public record that I shorted my debt, but if it doesn’t indicate what I settled for then I’d want to settle for as little as possible. Also, if I do settle for less and the public record only shows that the judgment is settled, can anyone from the public call the law office and find out how much I settled for, or is this confidential?
5. My credit reports from annualcreditreport.com indicate that the judgments are set to be removed in another year or so. If I settle, and the settlement is updated on the credit reports, is the 7-year clock re-set, or will they both fall off after the 7-year limit? By this I mean is the 7-year time frame from the date the judgments were recorded (regardless of subsequent activity like payments plans, partial payoffs, full payoffs, etc.) or is it 7 years from date of last activity (meaning it would stay on my report for 7 years after I settle, regardless of how long ago the judgment date was)?
6. When negotiating with the law firm, should I negotiate by phone or in writing? If by phone, and if a payoff amount is negotiated, what is the procedure for getting them to give me a written, binding commitment that if I send the funds they will release the judgments as satisfied?
7. Once the judgments are paid/settled, do they notarize and record the Release of Lien document at the courthouse where the judgments were recorded, or do they send me a notarized document that I then use to get a Release of Lien recorded myself?
8. Presumably, the credit reporting agencies will be notified by data miners about the settlement once recorded. Will this bring down my credit score? I ask because I would like to apply for a secured credit card through my bank, and I’m thinking I might want to wait until after the debt is settled but before it’s recorded in the public record – the one credit agency my bank uses to decide about credit cards doesn’t have either judgment on the credit report, but this might change once the settlement is recorded in the public record.
Thanks again for putting together a great website!
1. Negotiating is generally going to start with the current balance owed, so inclusive of interest and fees.
2. A realistic settlement on judgment debts this old can be 50%, but there is more to negotiating at this stage. There are variables such as:
a. Who the creditor or debt owner is?
b. Who is the attorney collection firm you may have to negotiate with?
c. Does your credit report or other information sources available to a debt collector show you as more collectable (paying other unsecured debts, home, cars)?
3. There are certainly instances where you can start with an extremely low offer. But starting off negotiations with something unrealistic is a waste of time, and can lead to some reverse gamesmanship. In your situation, if you are sincere about wanting to settle, you will want to try to go from initial contact to debt resolved inside of a few weeks. These debts being judgments could still lead to attempts at wage garnishment and bank levy.
4. You will want your settlement agreement documented. With your situation you will want the agreement to outline the judgment creditors responsibility to file satisfaction with the courts. The court record, and thereby the public record section of your credit report, is typically not going to show this type of debt as settled for less. Just satisfied. I am not sure why you would get hung up on this though. Is there a special circumstance?
5. If you settle these now they should still fall off the credit report 7 years from date of entry, so next year as you indicate. You do want to monitor your reports to see that this happens, and dispute the entries as older than 7 years if need be.
6. Negotiating the deal is best done over the phone. Getting the settlement outline in writing is pretty standard. You would simply request everything verbally agreed to be sent to you in writing, including the fact that the court record will be updated to reflect the debt as satisfied. You can request that be mailed or faxed to you. I am seeing more written agreements being emailed as attachments, but not all collectors do that.
7. Typically the judgment creditors filing is all that is necessary, but different jurisdictions have their own protocols. I would run this question by an experienced consumer law attorney in order to get a definitive answer. This is also the type of procedure question that court clerks are a great resource for.
8. It can take a month or two for the newly updated court record to be reflected on your credit report. But then again, it could take less. I cannot say what your credit score impact will be without looking at your entire report. Even then I would be making an educated guess at the impact. You can expect the recency to have some impact, but it should be negligible. I completely agree that you should look to resolve this before submitting any credit applications or applying for anything that would result in a hard inquiry.
URGENT QUESTION :
Hi, Michael! Thanks for all the great answers!
I was able to make a payment schedule with TD Bank Group (Meyer & NJUS P.A.) for $259 each month until December… Now the problem is that my husband lost his job and We can’t make the payment this month (15TH) and We are going to close our bank account since them take the $$ automatically … What should I do? Call the lawyers?
Melina – Was your payment arrangement part of a negotiated settlement? If so, how much was the original balance? What did you settle for?
The payment arrangement was because TD bank USA was suing my husband for $1316.63 + fees (Total: $1553.63) Target debt.
If you are paying back the full amount than missing the payment will not cause you to lose out on any savings negotiated as part of a settlement. But did you sign a stipulation to judgment when you set up the payments? Was there a judgment entered in the court, and then payments set up?
Missing the payment if you signed a stip would likely lead to the judgment then being entered and enforceable. If the debt is not recorded in the court already, this could lead to that, which will further impact your credit report.
Calling the attorney to let them know you are not able to make the payment is fine, but it generally will not impact the chain of events that occur as a result of missing the payment date.
My husband call the lawyers office (Meyer & Njus, P.A.) and They confirms the arrangement of $259 for 6 months (Ends in December) He already paid 2 months. They sent my husband a letter where He signed a AGREED ORDER TO DISMISS WITH LEAVE TO REINSTATE to not go to court.
The court records show this:
07/31/13: ORDER ON MOTION FOR INSTALLMENT PAYMENTS BY AGREEMENT – ALLOWED – $259
07/31/13: DISMISS BY STIPULATION OR AGREEMENT
Thanks Melina. You do need to be concerned about the suit progressing when the payment is missed. You could try to negotiate a lower payment now that your personal finances have changed. I have seen mixed results with that after collection reaches the courts.
Michael – Just curious if my new set of questions ever posted to the link you sent me?! I am not sure I presented the question correctly. Let me know if you ever received that. Thank you !
Melissa
No, I did not get them. If you used the ask Michael feature, it should have created a draft page behind the scenes on the site, and I would get an alert and go answer those. None of that happened. Rather than risk that happening again, go ahead and email all of that to me and I will create the page.
Michael-
Is there an email address to contact you directly or would you like me to try the Ask Michael feature one more time? Thank you again!
Melissa
It would be great if you tried the ask a question feature again. But if it does not complete the submission you can email back to the address I just sent you. Be sure to copy your efforts in the ask a question page so you can paste that into an email if necessary.
Hi Michael:
Use the ask feature again today, any luck?!
All set Melissa. Came through no problem. I will not be able to publish the new page today. When it goes live tomorrow you will get an email that your question has been answered and we can participate in the comments of that new page on those topics.
My husband and I have been with a debt settlement company the past 2 years. So far, we have had great success with settling 6 of our accounts. However, we recently received warning that Discover Card has commenced legal proceedings. When I called our settlement company to instruct them to start negotiations, they stated that we had no funds in our escrow account and were unable to start discussing settlement. They advised me to hire an attorney through them at a reduced cost. The attorney would only be able to advise us on how to proceed and not appear with us in court. Am I better off communicating with the lawyers representing Discover Card directly or stalling until my escrow account grows or hiring a local attorney to represent us personally. I’m looking for a number to make this lawsuit go away. I can afford payments over twelve months but I think it will be hard to get them to agree to these terms. Any advice would be much appreciated. I know Discover is aggressive and has a reputation for winning in court. I’m frustrated on my own lack of knowledge on how to proceed. Our escrow account will not start accumulating funds until January as the DS company is currently settling another of our accounts. Thank you again for any advice.
Jules – 2 year debt settlement programs are a stretch when you want to avoid being sued. Ideally you would look to pool together whatever resources you can to settle the suit with Discover.
A couple of ways to manage this could be:
1. Work with an attorney to answer the lawsuit with the intent to buy a few months time in order to complete the other deals that have been negotiated. Once you free up the monthly cash flow, dedicate those funds to settle the lawsuit. It is possible to do that over payments. What is the balance on the Discover debt? What are you sending to escrow monthly?
2. Pool together whatever resources you can that are separate from what you send to escrow and settle with Discover. It can work to your favor to file an answer to the complaint prior to negotiating a settlement, but that is not always the case. Can you get your hands on additional funds quickly?
Your strategy should take into consideration any remaining accounts that have not been settled. You want to be aware of other accounts that are higher risk to sue for collections. What are your remaining account balances? Who is collecting on those balances at this time?
Thank you for the quick response. Discover Card has a balance of $7,100. We have 4 remaining accounts waiting to be settled. Wal-mart $4800, 2 Chase cards totaling $2600, and a Dell account $1600. We pay $525 per month into our escrow account. We have no extra resources available to us at this time. However, I recently took on a second job. This will bring in an extra $600 per month. Discover card had sent me a settlement offer when we first started the program for a one time lump sum settlement of $5800. I believe the settlement company we are working with was trying for $4600 over 6 months. This was until another account settled so nothing was ever agreed upon. I was thinking of getting a lawyer, then stretching things out. However, should I continue to let our settlement company negotiate or try to resolve this on my own. I keep thinking they must have a number, and I’m anxious to know what is. I’m scared what a judgment in their favor could mean for us. Thanks again for your input. You’re extensive knowledge is very much appreciated.
Jules – The number for settling a lawsuit with Discover in a single lump sum payment can range between 50 and 80% depending on the circumstances. If you have sincere hardships and limited or fixed income, you could target the lower range in negotiations. Without that you are looking at the higher range. None of which applies given the fact your short of resources to negotiate with. You can get relief from a monthly payment agreement. That 600 a month you are adding to your monthly cash flow will get you there, but do not expect a negotiated balance reduction with the longer term payments of 12-ish months.
I do think you can set up the payments on your own. You may be asked to sign a consent or stipulation to judgment now that you have already been sued. See this post for more about options when being sued for collection. You should consider taking this debt out of your debt settlement plan (and the others frankly), in order to keep from being charged a percentage of your enrolled debt fee by the debt relief company you are working with (if the fees are not based on a percentage of savings). You can settle all of your remaining debts on your own. I can help you do that right from this website. This would save you money in fees. You could then use a pro only if you hit a brick wall on some accounts. But I understand why you may opt to continue working with the company you hired. Who is it that you are working with?
I would suggest working with your own attorney to answer the complaint in order to buy a little time. You can arrange a payment with the collection law firm now or later. If you are able to buy enough time to save up the 600 you have just added to your budget, maybe even do your taxes early (if you get a refund), add the 525.00 to your savings starting in January, you could knock this out.
Hello Michael, I am 19 years old with a few small debts but one in particular that I must pay off early next week in order to move forward in life. Jan 2011-July 2011 I was in my own apartment until things got ruff and I had to break my lease. :-/ with that I owed my apartment complex. Since I couldn’t pay, it was sent to a collection agency. They said my debt is around $2,200 but they offered to settle at $1,786 which is somewhere around 20%. I have saved around %40 of the total debt and will have more soon but I want to know if they would possible settle for 40% due to the debt being over a year old with no payment and the fact that I want to do a lumpsum payment. I can’t apply for a apartment until this is complete and I have a small time limit. Can you help with what I should do?
Thanks-Rodney
Rodney – Settlement is situational with something like this. Is it possible to settle a collection account like this for 40%? Yes, but it is not a gimme. Read more and watch the video about settling with a debt collector here.
I live in VA. Original cc debt was sold to Velocity Investments and the law firm representing them is Dominion Law Associates out of VA Beach. Judgement was awarded to them almost 2 years ago for 16,000.
No further action from them since judgement. Debt and judgement only in 1 spouses name. Spouses name that the judgement is against is not main income earner and basically works part time for extra money. Steps have been taken to protect bank accounts and cash, and home and autos are titled as “Tenants by the entirety” so I think they are safe. I went to local courthouse and pulled file and all papers/procedures seem legit. Judgement is for real. However, Judgement itself is not showing at all on credit report, but the original cc issuer file is still there saying CLOSED in March 2009 with comments of PURCHASED BY ANOTHER LENDER. There is not a separate account from Velocity, just the original cc account with last activity March 2009. A few questions seeking your opinion:
Why do you think they have not tried to levy bank account and garnish wages post judgement?
Why does this issue (Velocity and judgement) appear to be non existent on credit report?
Assuming from previous posts I should negotiate with Dominion Law and not Velocity. In your opinion and this current situation, do you think Dominion Law Associates will settle for less than the judgement amount? Considering its been 4 1/2 years since they purchased the debt.
Tim – It is difficult to speculate about why the creditor or Dominion has made no attempt to garnish or levy. Collectors have to economize time and resources. Many will use software that spits out a collect-ability score – spending energy only on those who score over a certain threshold.
I cannot say why Velocity, as the debt owner, would not report the collection account to Experian, Equifax, or TransUnion. But neither Velocity nor Dominion Law would be reporting the judgment. Judgments are reported to the bureaus by court record data miners. The judgment was either missed, not correctly associated with her credit profile, or some other reason. That does not mean it will not appear later.
As far as who you may be negotiating and settling with, I would start off by calling Donimion Law and targeting 50% as a realistic settlement amount. In my experience, the longer a judgment goes unpaid, the more negotiable it becomes, and the more favorable the pay off. Ideally you will be ready to fund the settlement in one payment.
After more than 4 years you may find that Dominion is no longer on file, or that Velocity no longer owns the debt – there is a market for judgment debts to be bought and sold.
I have a question ? My husband has an old credit card debt which was about 5000.00 now it has gone to two different creditors . The one who has it now is Tate & Kirlin which they told me that there client is LVNV Funding …which i had read bad thing about them. But anyway the credit card company wont deal with this and i want to settle for the original amount which was 5000.00 but now its up to almost 11000. 00 would i be able to do this and who do i speak to the credit card company or tate & kirlin about the settlement? They would even tell me the interest rate!
Pamela – LVNV is a debt purchaser. Once your creditor sells the rights to your debt you cannot resolve with them. You will be working with Tate and Kirlin or LVNV direct.
The balance doubling suggests this debt has gone unpaid for quite while. When did you last make a payment on this debt? What state do you live in?
The interest rate on collection accounts will often be a high due to the credit card companies default policies.
You can settle this, and perhaps for less than the 5k you are targeting. But before you target an amount for settling, post answers to my questions. I will have more feedback to offer from there.
Hi Michael, I hope all is well. Thanks again for all of your help. I’m moving forward as you suggested previously and I have one more question. Is it safe to pay a creditor with my bank account information? Or does it make more sense to use a Cashier’s Check (considering it won’t have my bank account number and they can’t make unauthorized transactions). This could be me overthinking but I certainly don’t want them drafting my account without my consent. Thanks in advance
TS – Making electronic payments does not raise the same level of concern it did a few years ago. I do recommend that if you do authorize this type of payment on settlements you negotiate, you do it from a separate set aside account you set up specifically for the purpose. See this report.
If you make payments via cashier check, it is best to get those from your bank and drawn from your account. This provides better tracking and access to the information about the payment being cleared should you ever need that later.
My Capital One credit card has a balance of $11,000. I have stopped the pmt for 2.5 years. I received a settlement letter with a reduced balance of $6750, to make 3 pmts of $2250. $6750 is about 60% of the full balance. I have been saving money to settle the credit card. If I settle this one, my saving will be almost completely depleted. My questions are:
1. Is this a good settlement offer? or should I wait?
2. Would it be a better to settle for $5000 in one lump sum?
3. If all agreed and all pmt or pmts are made, and then the agency sensd a letter stating that the balance is zero, is that mean I no longer under any more obligation to pay or owe anything?
4. Once settled, how long is this going to stay on my credit report? How long do I have to wait to purchase a property?
5. If I do not settle this time, what’s going to happen? They sent collection letters before but never offer a reduction like this one.
Thank you in advance for your reply.
1. 60% settlement with Capital One is fair with today’s trends. I do see 50% offers approved, so it may be worth following up on that offer the collector made and see if you can shave another 10% off. If you don’t get anywhere with negotiating a better reduction you may not want to let this deal slip by. Capital One is presently the most likely to sue on unpaid credit cards. See this review: https://consumerrecoverynetwork.com/review-top-7-credit-card-lenders-best-offering-debt-relief/
2. See #1. I would not say 5k lump sum is impossible. With an account two and a half years delinquent, and a pre approved settlement letter, it could happen.
3. Yes. If you settle and make payments inside of the written agreement, your obligation will be met. Look over the settlement letter carefully and compare the contents to this outline: https://consumerrecoverynetwork.com/debt-settlement-letters-agreements/. I am considering putting up a link on this site and offering free debt settlement letter reviews. If you would like, I will start with you. Let me know in an email reply to this comment notification you get if you are up to it.
4. The settlement will not stay on your credit report any longer than the original delinquency Capital One reported. This is going to be 7 to 7.5 years from the date of last payment. Depending on the rest of your credit report, debt to income, score etc., I have seen people refi or purchase a home within 6 to 12 months. Generally you can expect a 24 month timeline to make marked improvements to your credit and access to new credit products.
5. If you do not settle you run the risk of not having the same option later. And as has been the case for a couple years already, you run the risk of being sued for collection until the statue of limitations to legitimately file suit to collect runs out.
I recently negotiated a settlement with Chase for two credit cards for my mother. They were actually pretty good to work with at first. After several calls and a couple of months we agreed on the settlement amount and that she would pay it the next day at the branch where she lives which she did. Several days later I called to check the balance and ensure everythign was done. When I listened to the automated system the accounts still had a balance so I spoke to a customer service rep. I was told I was no longer on the account even though my mother did not remove me and the accounts were not settled. I asked for it in writing and was told all I needed was his name and ID number. I’m ususally not usually so dumb and I feel terrible i got my mother in this situation. Its a shame businesses don’t have any morals or ethics anymore. Does she have any resourse? She cashed out her 401K to pay the settlement and is now on a fixed income. the only other option I know of is bankruptcy. I just wish I would have had her do that before she paid them a dime.
Jane – I would like to help you look into the situation you posted about. I want to be certain I understand what occurred. If you are open to speaking with me about the details, send an email to the same address you get this comment notification from.We can connect via email and speak over the phone at a time that works well for both of us.
Thanks Michael,
Here’s what I have:
5K with Advanta (now a defunct bank)
5K with Partners Credit Union (formerly Vista)
2K with Citi
19K with Citi
7K with Chase – account closed by me with 2% interest- payoff in 4 years
All accounts are current, nothing is behind. I also have several other active credit cards with basically no balance. I’m at retirement age and need to protect my savings and assets which are not very extensive and my current income is not covering these bills. So this is why I am investigating debt settlement though I’ve been reluctant to trash my good credit, which I may need for mortgage reasons once business turns around…..Thanks for your input.
Do you have any other loan products or insurance with the credit union?
No…nothing else with the credit union. I do have a car lease with Honda with 12 months left….Thanks
Okay, here are some estimates and some timing questions:
Without including the Partners Credit Union account I estimate you will need to pull together about 12.5k to fund settlements with Advanta, Citibank and Chase. This estimate is based on settling within about 6 months of having missed payments. The estimate would change if you could not raise the money in order to negotiate and pay the deals in that time. How long would it take to raise that amount?
I left out the credit union account because the net benefit from settling that account is not great. If you do take the settlement path for debt relief, I am going to have more to share about some strategic ways to deal with the credit union. Your answer to my first question above will change that feedback. Do you maintain a checking or savings account at any of the banks listed above (other than Advanta)?
How you set yourself up for success with your future credit needs is going to be based on some timing, income, type of credit product, and additional factors. When it comes to home loans after 1/1/2014, there will be more to your debt to income and getting approved for a home loan, than in the past. If you want to dig into the credit score and credit approval discussion, please take that discussion to the comments of this page: Debt Relief and Credit Stuff, as our comment exchange about the particulars will be better for readers to learn from on that page than this one.
Michael,
Thanks for all this information…really helpful. I can raise the 12K right away but from everything I’ve read here it sounds like I have about 6 months for the best result.
I do not have a checking account with any of these banks.
One thing I wasn’t clear on was if you are saying it’s will be easier or harder to get a home loan approval after Jan 1 2014 with regard to debt to income.
Thanks again…..
The 6 months is generally correct. There can be earlier opportunities though. Also, while there may not be an settlementagreement reached and funded for several months, there are things to be doing, and not doing, in that time frame.
After the effective date of the qualified mortgage rule, it will become more difficult to qualify for a mortgage when DTI is weighed down by the costs of monthly credit card bills.
Michael….. thanks for your reply.
In order to help me with the estimates you referenced, do I need to sign up for a membership or is there an interim step, since I’m not yet sure that debt settlement is the right choice for me. Please advise how I may go about this……Thanks.
No requirements or membership necessary. This site is a free resource. You can just post the creditor name and a rounded balance amount for each. I can provide the estimate, and offer some realistic expectations for you in a comment reply.
You do have the option of consulting with a CRN specialist to go over the details on the phone: 800-939-8357 ext 3. That is free too. If settling turns out to be the better path to debt relief, you can circle back and work with that specialist one on one to guide you through the negotiation and settlement process, or continue to participate through the comments and get online help at no cost.
I have a Discover card owe $5200 on it. I was communicating with Discover via mail, and offered to settle for 25%. I called Discovered and they said my account has been sent to an attorney. I got a call from CIR Law firm, they talked to me, I explained my situation that I cannot make any payment but can settle by borrowing money from family. I offered 25%, they said, they will not take anything less than the full amount. I recieved a letter on June 24th stating that I owe $5200 and I have 30 days to request validation, if validation is not request within 30 days, my account will be states as valid. In case validation is requested, a validation or judgemennt will be obtain and sent to you. [Question 1] How likely is that I will get sued?
Someone people have ask me to opt in for Arbitration with JAMS but i do not know much about Arbitration. I really need advice with this soon. All I have to do is send them a CMRRR saying that I dispute this debt, request validation and elect arbitration with JAMS to resolve this matter between us. [Question 2] Is this right? or do I need to also call or do something with jamsadr.com ?
I want to settle people have told me that the debt collectors will have to pay for arbitration and usually when they have to pay, they run for the hills, let the debt go or offer to settle. [Question 3] What happens if they do elect to arbitrate, will i have to pay the full amount?
1. If you are in a state where CIR is licensed I think it highly likely you are sued at this point. Are you in Southern California?
2. Depends. Your comment suggests you want to settle and are averse to being sued. The approach you outlined so far is more about:
a. Increasing the likelihood you are sued.
b. Dodging the debt because you lack resources to settle.
3. If you lose in arbitration they will get an award for the full amount which could then be reduced to a judgment.
If your goal is settling with Discover Card 25 percent is not a realistic target amount, and certainly not now that the account has been placed with an attorney.
How should I do? I am staring from 25% but like to settle anywhere to 50% or even 75%. This is beacuse I am scared of being sued. What would be the best approach in this situation?
Jay – Settlement targets with Discover Cards placed with collection attorneys can settle at 50 to 60% lump sum. There are instances where an account is flagged (cash advances or high balance of charges made just prior to payments being stopped), where settlements do not go below 80%.
You will need to call the law firm and discuss the fact that you are broke, and barely able to afford a roof, power, and food. Basically just outline the hardships that led to your inability to pay and that those conditions remain. You think you can raise a little money (loan from family friends etc), but only if it resolves the debt. Do not speak about anything other than a hardship condition as it may apply to you (e.g. hours cut, lengthy unemployment, medical, depression, family issues, mortgage reset etc). Get any negotiated agreement in writing before payment. Check out some of these critical reports about settling debt.
If you run into any trouble with your efforts, or would prefer to have a specialist guide you through the process, consider calling in for a consult: 800-939-8357 ext 3. I suggest you make the call to the collector and give this a shot on your own first.
Thanks Michael,
I did talk to the agent once and explained my hardship and did mention that I can settle the debt by borrowing some money from my dad but the agent said he cannot give me any break and the amount is due in full. I can talk to him again when he calls next.
I have been talking to some folks on creditinfocenter and people have mentioned that i need to file an answer to their mail by saying that i dispute the debt, request validation, and elect private arbitration via Jams. They say, this way the CIR Law cannot sue me and when CIR have to pay for arbitration, CIR will offer to settle. Currently I do no have any bargaining power. I got the letter on June 24 and it states i have 30 days to file a reply. How likely is that they will start arbitration? if they do, i will likely loose as they will most likely validate the debt and I have to pay the full amount. But they they don’t file for arbitration and offer to settle at 50% then it will be in my favor.
You think i should talk to the agent again or you think i should send this letter?
Jay – Our comment exchange inspired a new post about your situation and resolving your Discover debt.
I wanted to give you my perspective using what you have shared so far, which I assume is what you are looking for and why you are posting here to begin with. What I have to share is too long for a comment reply. The post linked above is a bit blunt, and required some assumptions. It is not something I wrote dedicated just to your situation. I offered some broad commentary in the post because there has not been an opportunity to do so in the comments on the site to date, and there will likely be others who can read and benefit from the editorial and any additional comments.
Before you decide whether to follow through with the dispute/debt validation/notice that you will elect arbitration you read on the CIC site, I would encourage you to consult with the experienced debt defense attorney I sent you contact info for in an email. He will be a better resource to answer your questions. He can also likely provide direct assistance to help you accomplish your goals.
I encourage you to post in the comments on that new article. If my assumptions about your sending a canned settlement offer letter to Discover is not accurate, please correct me on that, and add anything else to the page.
Addition to last post……
I forgot to mention that the current issue for me is that my income has been to low to cover the monthly payments due to the recession….so dipping into retirement savings. I’m working on turning that situation around and hope to do so soon but unsure of that timeline.
Richard – If you pay down your credit card debt to 20k, will your monthly cash flow support your ability to make the lower payments at that point, or will you still struggle with that based on current income?
If after paying down half of your credit card debt load, you would still struggle with payments, it would be a good idea to estimate the total costs of settling; how long it will take based on trends with your creditors; and what that timeline will look like set beside your credit score concern, and access to new credit products in the short to mid term. I can help you with those estimates once you determine what your cash flow will support.
Hi Michael,
I have about 40k in credit card debt. Everything is current and all of my interest rates are relatively low (2 – 7 %). My credit is in good condition, around a 700 Fico. I have some assets I could sell and possibly raise enough cash to pay off half of the amounts owed but I can’t eliminate it all. Since my credit is good and the interest rates aren’t bad, am I better off paying down 50% and working on the rest over time, rather than debt settlement. Obviously with debt settlement, I could possibly eliminate all of the debt but then I will lose the good credit that I have fought to maintain and would prefer to keep….Thanks
I have 2 cards with Bank of America and have been communicating via email. Bank of America sent me a letter stating that “Your account is eligible for settlement, you must call this number to make arrangements.” After watching your Settling with Original Creditor video, i decided to call. The Agent asnwered and confirmed my name, date of birth, and asked for the reason I am falling behind. I said my hours got cut at work. I had some health problems and not being able to work much. She said for my $10k card, settlement is available for $2600 and for my $6k card, settlement is available for $1600. I said ok. Can you send me an offical settlement letter stating that after paying these amounts my account will be settled in full. She said they cannot send any letters. They can send letters after the fact, after settling the account but not before. I said I cannot make any payments without having anything in writing. She again said they cannot send any letter. I said ok then have a nice day. She said, have a nice day. Charge off date is in 93 days. What just happend and what to do from here? Sounds like a red flag, people say if you don’t get it in writing, it did not happen and they will just post the money as a payment to my account rather than settling.
Jay, If you want to take advantage of the offers and settle these Bank of America credit cards, review the guide laid out in this post about getting settlement letters kicked loose.
I would also recommend reviewing this post about recommended ways to pay the settlements you get.
A couple of ways that are effective to get the settlement letters, or the negotiations completed with confidence at this point:
1. Let the person at Bank of America internal recovery department know that you are having to borrow some of the money, access money for another sources (or something similar). Without a letter showing that the amount you are paying is the final payment, you will not be able to access the funds. You are willing to set up the payments for say June 29th for ach payment direct from your set aside account, which allow the time needed for them to mail the letter outline the settlement agreement.
1a. Raise your discussion to the next level with a collection supervisor at Bank of America.
2. Record the call. Be upfront about the fact you are doing so. And that the reason you are dong this is in the event a letter evidencing the settlement is not mailed out by Bank of America, the recording is your only proof of the agreement. Ask for the recovery persons full name, what office are they working out of (State and city – bank of America has several collection and recovery locations).
3. Let the accounts progress further in delinquency and call BofA about every 2 weeks to assert your ability to accept the offer, but need the letter to access the funds.
Bank of America, and other original creditors, have become a bit protective of sending out the offers without a payment amount and date set up in there system. #1 above addresses this in most instances, but there are instances where you do have to escalate your concern to supervisors… repeatedly. Also, I do have files that have recorded the calls, funded the settlements on schedule, and later received the letters outlining the settlement and that the debt is resolved.
Hi,
I am looking to settle a National Grid utility $2,982.00 debt with the National Recovery Agency linked to my foreclosed home. I recently tried to settle and was told that they do not settle utility bills whatsoever because its thier policy. Off course I do not believe them because, to me, once a bill gets to a colleciton agency it makes perfect sense for them to try to recovery what they can get. What are my options? How can I best arm myself to negociate when I call back so that I can get this settlement off my credit?
Judine – How long ago was the bill last paid or considered current? What do you mean by getting the settlement off of your credit report?
Hello Michael,
I have lost my alimony benefit due to my ex husband loosing his job. I am a commissioned sales person and have no steady income yet other than the alimony. I can borrow some cash to settle. I owe $40,000 to BofA, $3800 to GECaptial, $4200 to Citi. What do you think my settlements could be? I have always had great credit, but now have missed my first payments on these cards. I do not want to commit to paying a certain amount each month for 36 mos as I do not know what my cash flow situation will be.
LM – Settling with Bank of America, GECapital and Citi, will be fairly predictable if you can come up with the money to fund what is negotiated withing the first 6 months of non payment. Assume for a moment you will need roughly 16 to 18k to settle them all. How quickly can you raise that money?
If 6 months is impossible, you then have to decide which ones you can and should settle with using the money you will have available in that time, and then target the next one to be settled in second stage collection, third stage etc. Once these banks send the accounts out for collection, or sell them off to debt purchasers, the game changes a bit, so an estimate of realistic savings through settlement cannot really be offered until you know which bucket your creditor drops the account into.
Post a comment reply with what ability you have to raise money, and over what period of time. I can then offer some more drilled down expectations and what debt settlement is going to look like in your situation, per creditor.
No, it’s annoying. I don’t know if it’s good idea to settle it for few hundred to get it over with. Do you think they going to sue even its beyond SOL?
Thank you for the advise.
I understand the annoyance. It can indeed be worth the cost to get the settlement and just put it behind you. I do not think you will be sued on a debt this far passed the SOL. If you were, you would need to respond to it, but with a simple “this debt is time barred” defense – which would put that to bed quickly.
If you are serious about settling with RJM and want some guidance on it, call in for a consult: 800-939-8357 ext 3.
Michael,
Thank you so much for all the helpful informations. You guys are awesome!!!
I’d contact by debt collector for old credit card debt , the debt beyond the statue of limtation to sue. if the attorney or credit consultant firm represent me to negotiate for lower settlement, is it going to restart the statue of limitation?
Thank you,