In our previous article, Introduction to Debt Settlement, we covered what settlement is. Now, it’s important to discuss the why. Why is debt settlement an option that’s available to you and what’s in it for the banks? The more you understand the basics of settling, the better you will know if debt settlement is going to work for you.
NOTE: This post is part of our Debt Settlement Guide. If you’ve missed any of the previous content, or would like to start at the beginning, please see the links at the bottom of this page.
So why is it that banks are willing to accept less than what you owe them? Won’t they go out of business if too many people just quit paying on their credit cards?
Not in the least.
Before a bank makes a loan, or extends a credit card, it knows that a small percentage of accounts will go unpaid. They are expecting it before it happens. When you stop paying your credit card, the bank sees you as a statistic. And the more you understand what banks have set up in order to handle the statistical certainty that not everyone will repay their debt, the more you will see that you have opportunities to resolve debts and recover from financial setbacks sooner than you may think.
There is a multi-billion dollar industry built around the known fact that not all debts can be paid. This collection process begins with your lenders effort to “lose the least”. The tools and mechanisms in place for this effort are, by and large, predictable. And it is the preset and predictable collection procedures that banks, and debt collectors use, that enable you to prepare for settling your credit card debt after you have not made a payment for some time.
The Many Debt Recovery Pipelines
Once an account becomes seriously delinquent, the odds of ever being paid another penny on it decrease dramatically. Creditors have the option of accepting less than the balance in satisfaction of the entire debt (settling), or to drop the account into the collection pipeline and see what they get on the other end. This pipeline consists of 3 options – assign, sue or sell.
I could write several chapters on each of these collection pipelines, but the purpose of this post is to focus on the math your original creditor has to work with when you are unable to pay them.
Your banks have statistical data showing them that only 1 out of 5 of their accounts that go unpaid for more than 90 days will ever get paid. That means about 80 percent of debts they drop into their collection pipeline are not going to result in any form of payment.
The fact that banks typically only collect on 20 percent of accounts that default is one aspect that guides their internal collection and recovery goals. Being forced by our nations accounting rules to charge off your debt is another.
Before I get too much further into how your banks settle debt directly with you, let me briefly outline more of the collection pipeline. This is going to further help you understand why many banks provide you an opportunity to settle with them directly.
Assigning Your Debt to a Collection Agency
Assignment collectors are collection agencies who, on behalf of the creditor, are attempting to collect on unpaid balances. Generally, whatever they collect, they are paid a percentage. Credit card issuers will grade the performance of those they assign debt to, and will continually award collection files to the best performers, the companies who get them the most money.
Assignment of debt also has different tiers. You may be contacted by one debt collection company for a few months, then a different one after 90 days, and even another one 90 days after that. Your account can bounce from one debt collection agency to another for several years.
The collector’s job is to get as much as they can for their client, the bank, and to secure the best return for themselves on their performance-based fee. Assuming the collector is able to collect 50%, the creditor may see a return of as much as 35% of the assigned credit card collection balance. This number is a moving target, and will likely be different per account, per portfolio, per tier, per creditor, and can often change based on which collection agency has your account.
Contingency debt collectors – those who get paid only when they get you to pay – are the most common to have to deal with. Some debt collection agencies are large, and others small. How settlements get negotiated with these debt collectors is also largely predictable.
Being Sued to Collect Your Credit Card Debt
Creditors select accounts for referral to law firms in order to collect. Some law firms’ collection attempts will be very similar to an assignment debt collector, where the firm is paid a performance fee just like a collection agency. Others may start off with that appearance, but will then begin the legal process in order to collect.
Attorneys who sue in order to collect will generally add legal fees to the final judgment amount. Most lawsuits for unpaid credit card debt go uncontested and default judgment is entered against the debtor. The judgment itself is a piece of paper, but with legal enforcement implications, which allow for collection of the debt via property lien, bank account levy and wage garnishment.
Being sued in order to collect has its own costs that will vary, with no guarantee the judgment can be collected on. For your creditor, this means higher costs with an unknown return (rest assured the return as an aggregate justifies the expense enough to keep this part of the pipeline in tact-otherwise it would no longer be supported).
Your Credit Card Account is Sold to a Debt Buyer
There are different tiers of debt sales. Your account can be sold several times and will have a different value at each sale. I want to focus on the sale done by the original creditor, who you opened your credit card account with.
Years ago, while attending a collection industry seminar, I sat down briefly with a VP of risk management for the now defunct WAMU. He told me, at that time, WAMU was catching bids of 15 cents on the dollar for freshly charged-off debt (that number was consistent with the daily updates I was seeing from industry newsletters I receive). That time frame represents some of the highest prices banks could fetch for portfolios of charged off credit cards.
Charge-off generally means the creditor is no longer expecting to be paid and is recording the debt amount as a loss. Banks are obligated to move your account from their asset column, over to their loss column, and no later than a prescribed period. This time frame will often look to you like 6 or 7 months of missing your payments. Credit cards can be charged off earlier than that, but it is not typical, and for the reasons I point out in this article about why your account getting charged off is important to settling for less. Be sure to read that so you understand that your bank charging off your debt does not change the fact that you still owe it.
When your account is purchased, some debt buyers will then subject the accounts it purchased to the same assign, sue, or sell (now re-sell) principle described above. Some of the larger debt buyers, like Midland Funding and Portfolio Recovery Associates, have their own debt collectors on staff.
These buyers risk their capital with an expectation that they will be profitable by collecting on enough of the bad debts they purchase.
Historically, the percentage of non-performing credit cards has been low, less than 5%. During the recession that number skyrocketed to all time highs. Default on mortgage debt, commercial debt, revolving unsecured consumer debt (credit cards) all approached, or surpassed, any prior precedent. Debt defaults have now slowed in pace when it comes to credit cards, but have picked up in other lending segments, like student loans and auto loans.
Focusing on unsecured credit card debt; how has all this affected your ability to settle a credit card with your bank? Well, look at the math. Your creditor will often “lose the least” by reaching agreements with those in serious delinquency before they drop your account into the collection pipeline. This is why debt settlement works, whether 15 years ago, or today.
When it comes to credit card portfolio losses, banks would prefer to work with you in order to lose the least. Someone whose financial situation suggests settling credit card debt is a good option to pursue, and can work directly with their bank, will often be in the position to save the most. Having said that, there are times where you will get a better settlement by negotiating with a contingency debt collection agency that first gets your account. If you want to run your situation by me so I can help you understand how much you can save, fill in the “talk to Michael” form in the right column and I can review your accounts with you.
Conclusion
Banks settle debt for less than you owe, and that’s clearly in their best interests. Many banks are not all that obvious about it until you are past the 90 day late mark (sometimes not until the 6 month late mark).
Our debt settlement guide is designed to help you at an individual level so that you can use debt negotiation to get out of debt in the quickest way possible.
Let’s move on in the debt settlement guide to credit cards and other Types of Accounts to Include in Your Debt Settlement Plan.
If you have a question or concern about how your banks settle debt with you, post in the comments below for feedback. Be sure to include the name of the bank you are dealing with, the amount owed, and how long it has been since you last made a payment. If you would prefer to talk on the phone you can reach me at 800-939-8357, ext 2.
This Debt Settlement Guide includes:
An Expert Guide to Credit Card Debt Settlement
How and Why Banks Settle Credit Card Debt with You (you are here)
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
Gabriel says
What’ can I expect to settle with In dollar amount or percentages??
Chase 11k
Citi 6400
Capital one 11k
Elan financial 10k
Michael Bovee says
How low you can get a settlement will vary from one persons situation to the next, who is collection at the time of negotiations (creditor, collection, attorney).
Generally speaking non legal collection may be:
Chase settlements between 25 and 45 percent.
Citi Settlements between 35 and 45 percent.
Capital One settlements can vary greatly based on whether doing lump sum or payments, but 50% on long term payment arrangements are common.
Elan settlements range from 35 to 45 percent, though I do see some lower ones from time to time.
Keep in mind that some of us will see improved settlement opportunities during COVID.
Hi Michael,
I owe 14,000 in credit card debit. I owe $8,000 with Chase but did a structured settlement with them. I owe $5,000 for Whydman and under $2,200 with Amazon. But since splitting up my amazon payments three months in a row, now I’m three months past due. I owe $476.71 and in order for them to let me use my card I have to pay them the minimum of $261.71.
I’m on a Social Security and I work a part time job. When I spoke to the lady on the phone she didn’t seem at all interested in listening to the fact that I would pay her only $100.71.
Should I call Synchrony and do a structured settlement with them or just wait until income tax and pay it off entirely like I plan too?
It’s not the Amazon prime card so there’s no APR.
My decision here would be whether I want to continue to use the card, and if so, I would make that payment.
Hello Michael,
I currently owe around $10,000 to Wells Fargo. My account is going to be charged off on the 30th unless I make a payment of $160. I tried to negotiate a settlement amount with a lady yesterday, but she informed me she wasn’t the person to speak to about it and that I will have to call Monday. I’m almost at 7 months past due. What do you suggest I ask for when I call tomorrow?
Is this a business or consumer account?
Hello, I was dealing with Bureaus Investment Group Portfolio NO 15, LLC, for an account that was originally opened with Capital One for about 4700. I first dealt Frontline Assest Stragtegies LLC. I had asked them to send me a confirmation of debt and total amount owed as of 11/11/15 was 4,579.12, I asked for a settlement they would agree to, they sent me a settlement offer of 4,121.21, Settlement letter stated that if I was unable to pay them the amount in the settlement letter by 11/30/15 it would accrue interest.. “Because of interest accruing on this account, the total balance will continue to increase” I don’t understand how they can hold me liable for interest that they are incurring on this account OR why it was different then the original amount. Did I some how agree to something by asking for a settlement letter? I was unable to come up with the funds and they went as far as to ask me if I could borrow the money from a family member… I stopped all correspondence with them. October of 2016 I received contact from a new company, Credit Control LLC in the amount of 4,738.74 which I believe is, if not extremely close to the original loan amount. They listed my original creditor (Capital One) and a client ” THE BUREAUS INC. I can not find the original paperwork but this account is incredibly delinquent as a payment has not been made since the beginning of 2014 maybe even late 2013. Can I call and confirm last payment and ending amount with Capital One? I’m concerned it keeps switching hands and the dollar amount never is the same.. I really need some advise on how I can make sure I’m not being bullied into more money and how I can successfully deal with Bureaus Investment Group Portfolio NO 15, LLC so I can settle with a fair % and be done with this.. One collection agency sued me for a lot less, In your experience do these guys typically put interest on old accounts?.. That does not seem right to me, Ill have to confirm the amount but none of this feels right.
Unfortunately, you can find the way to get to the bottom of how interest is being charged, is when you have the power the discovery process after you have been sued.
Frontline Asset could have been collecting on behalf of Capital One, and that may have been a more reliable balance. The Bureaus is not likely to cough up the details unless you live in a state that holds debt buyers to a higher standard, like California, until you are in court.
Hey Michael, great website you have here, thank you for your invaluable column advice. My debt totals $145,740.00. Through negotiation, I’ve managed to negotiate a settlement with almost every creditor between 20-30% of the balance owed. Here is a breakdown:
AMEX – Settled for 20% of a $80,787.00 balance
Barclay – Settled for 30% of a $9,120.00 balance
Capital One – Settled for 22% of a $34,185.00 balance
The reason I am contacting you though is to ask you about a credit union account that I owe $21,648.00 on, and I haven’t been able to settle. The debt is still outstanding. I live in Texas, and the statute of limitations for a creditor to sue in this state is 4 years from the date of last payment. Well, it’s been 3 and a half years since I made the last payment, and I haven’t heard from the creditor in over 2 years. The 4 year anniversary for this debt will be on June 19, 2017. I’m reluctant to say anything or even remind the creditor that time is running out for them.
What would be your advice. Should I attempt to settle with them again or just wait them out? Please advise, thanks.
When it comes to credit unions, I encourage folks to read through the comments on this page about accounts to keep in or out of debt settlement.
Had we spoke 3 plus years ago, I may have wanted to look for alternatives to stopping your payments on the credit union card. Now that you are as late as you are, my experiences suggest waiting to see if you can cross over the SOL finish line. The risks of waiting are that you are sued prior to the SOL expiring. How much of a risk is that really though? Not much, as you can often find you will settle for the same amount whether sued or not, when dealing with a small local or regional credit union. There are situations where you can actually get a better deal settling after a lawsuit is filed than before.
Waiting is what I would do in this situation. You can circle back and settle in a more relaxed manner after the SOL expires.
There are things that can complicate the decision making process in situations like yours. The goal of purchasing a home in the near future being one of them. Anyone that applies to can fill out the talk to Michael form in the right column to set up some phone time to go over special circumstances.
I received a letter from a law firm saying that i needed to dispute the validity of the debt with Bank of America . I stopped paying in 2014. I did not respond and have recently been served. The court date is January 3 2017. I called to settle and spoke with someone in the collection department and said that I m not working and being self employed I am not taking a paycheck. I said I could pay $1000 and the collector said the attorney would not go for that. Ge said that Bank of America wanted minimum $3800 .The amount increased by $400 to file the suit. He said to call back when and if I got more money to settle and he would run it by the attorney. I told him I am also in foreclosure and the pressure may force me to file bankruptcy .I don;t want this credit card showing as a judgement on my credit report. Do you know how much they would settle on not to go to court?
What is the total balance owed? Can you raise half that quickly?
I am retired and living on social security. I do not have a house payment or car payment. I owe $12000 to Citibank and can no longer afford to make the minimum payments. My last payment was June 26, 2016. They just sent me a packet of information on arbitration, giving me the option to opt out. Should I opt out? At what point would be a good time to try to have them settle for less? I could probably come up with $3000-$4000 in the next few months.
If your goal is to settle with Citibank there is little reason to consider arbitration. You will need about that much money to settle, and that will me Late January or February (if you can swing it).
I was contacted by GC Services. They urged me to make the minimum payments so that the Citibank accounts wouldn’t become “charge offs”. Total balance is appx $10,000. When I asked if a lump settlement would be possible they agreed to $7000 if I could pay it in the next few days. They also said they would relay to Citibank that the debt was paid in full. Is that correct? And how does that affect my credit report?
Do you think they would agree to less than $7k?
Settling for a good bit less than what GC Services is offering on your Citibank account is possible. There are a host of reasons why someone can be flagged for a higher settlement deal by Citibank though. Fill in the talk to Michael form in the right column. When I get that I will email you to set up a quick phone call with you.
Hi Michael,
My husband has credit card debt with BOA of $22,000. He is not delinquent on payments but has recently lost his job and will have a much harder time keeping up with the monthly payment of $500. He would like to try and negotiate a payment without being delinquent and affecting his credit.score. Is this possible? If so, how do we go about doing this?
You really cannot settle with BofA without hurting your credit.
You may be overly concerned about how much damage will occur, and for how long. You may want to read this article about a client and the impact to her credit score from settling. If you have a bunch of good things going on your credit report it can absorb the shock from settling a debt, or provide a good amount of elastic for your credit scores to bounce back.
You are welcome to call me to go over your credit and near term goals so that you can evaluate if taking the credit hit is worth it or not. You can reach me at 800-939-8357, option 2 rings to me.
Hi Mike. I see you’re giving some good advice here, so thought I’d chime in with my own question. I’m in Oklahoma. Have been in a chapter 13 BK for about 30 months. 2 vehicles and about 15k in unsecured debt. All of that looks like it is through either Portfolio Recovery Associates or Antonio LLC.
The unsecured debt is set to get a 7% payout, they aren’t getting anything currently, all is going towards the vehicles.
Problem is both vehicles are in bad shape and we’re looking at options. Don’t want to go through trustee to get approved to trade in because our income has gone up quite a bit since we filed.
Our attorney has suggested we consider dismissing the case, and then said at that point it’s a gamble if the debt collectors will come looking for their money or not. If we do dismiss, would you suggest waiting for them to contact us, or should we reach out to them? Considering they were only going to get a 7% payout, would that work in our favor potentially in what we could settle with them?
Thanks!
The 7% payout set by the trustee will not translate over to that type of savings from settling with PRA and Antonio LLC. I would target between 30 and 50 percent in your settlements after the BK is dismissed.
You could do nothing and hope that they do not catch the dismissal, or become more aggressive by suing, but that is something of a gamble. I would rather be proactive, but only if I had the resources.
Hi Mike, An Attorney called me harassing me that I was being sued for a credit card debt I opened in 2000 indicating I made a last payment in 2007. Is it possible for them to sue me for an aged debt. It was my understanding Citi Bank sold the debt to a collection agency years ago. I am also certain I would have made a last payment in 2004-2005 when I was injured in an accident in 2004 and could no longer pay my debts at that time. Can they file a judgment against me? Thank you.
The time limit to sue for an unpaid Citibank credit card debt is different for each state. Yours is too old, but to be sure, what state are you in? What is the name of the attorney firm trying to collect?
Citibank. Originally 4000$ credit limit. Every time now that I pay a portion they reduce my credit limit to only a hundred or so more than what I pay it down to, I have a mortgage going into foreclosure from a divorce but other than that I haven’t missed ANY payment in over 2 years. Had a credit card settled 3 years ago at less than 50% and did it about 7 years prior to that as well, my credit is horrible from the credit settlement and now the mortgage, I’m considering just trying to settle my citi card since clearly they aren’t interested in giving me any credit available. Otherwise I’ll be wasting 60-100$ a month sending them money that I could be using elsewhere. Right now it sits at 2500$. I could easily pay off the rest of my credit card debt in the next few months. Why keep paying a creditor who doesn’t want me as a customer?
Citi and other credit card issuers will lower your available credit limit each month similar to what is happening to you when they identify high risk accounts.
Paying off that Citi credit card may be part of what you need to help your credit bounce back over time. It is going to take some time to bounce back from the foreclosure, but an open and paid off credit card will help you do that.
Settling with Citibank is fairly common once your payments go into default long enough. Continue reading through the debt settlement series to understand more about when it is typically optimal to settle with your bank.
Hi Mike – I have a balance of $35k with BofA and I just lost my source of income. Do I have to miss a payment to initiate a settlement? I have some savings and I would like to use to settle.
You will generally want to miss several payments before you are able to optimize your settlement results. I would suggest you read more about settling with your bank prior to charge off.
Hi Mike………….I am in Massachusetts.
Income is good and foresee no problems with carrying student loans and car payments as part of our monthly budget. The credit card companies were getting about 200 a month in total from the BK plan, I believe it worked out to them receiving around 17% of their balance
By judgment debts do you mean already been sued for ? if yes, none as far as I know………..so I should reach out to them as opposed to waiting to hear from them ? What would be the best way to start that conversation?
thanks
I did mean existing judgments.
I do prefer being proactive by making calls to the banks and collectors, rather than waiting for them to call. How soon after the dismissal will you be ready with the cash resources to fund the settlements you negotiate?
The conversation in your situation might be started off with something like: “I filed chapter 13 and became a statistic. I guess roughly two thirds never complete their payments, and that is me too. I have been able to pull together some money to try to settle with you, or some other creditors”.
Your offers should be lower than your end expectations. Some of these can settle for much less than half, where others that will be just about right.
I have the money now, I’m not sure how long the dismissal will take to become official, but my lawyer was going to file the paperwork last Friday.
So give it about 30 days after the dismissal then make contact , explain that I was not able to complete the chapter 13 ….then tell them that I have scraped together a little money to try and settle with them and others .
would it help my negotiating position to stress that I am still in over my head with federal student loan debt?
And if a settlement amount can be reached, the most important thing is getting it in writing that the debt is paid in full before making a payment , correct ?
Lastly, do these type of settlements always trigger a 1099, or is that something that could be negotiated out ?
Thanks for your advice, and for providing this great service.
All of the debts are something to stress, the student loans equally so. Debt collectors do not care about your other debts, just the ones they have in front of them. But all of the other debts help to paint a picture of whether and what to accept as payment in full. The student loan debts added up as a huge liability may help you meet the insolvency exclusion to not owe tax on those 1099c’s that will be coming in January.
See these reports about settlement letters and tax on forgiven debt.
Hi Michael
19 months into a 60 month chapter 13 bankruptcy plan that will soon be dismissed without being completed.
How long can I expect before I start to hear from creditors ? Some of the debt claims filed were from the OC and others appear to have been passed on . Also , any advantages or disadvantages in dealing with them under this circumstance ?
thanks
It can be a matter of weeks or months, longer in some cases.
What is your goal for resolving the debts after the dismissal? Knowing the answer to that will help me offer better feedback about pros and cons of settling with the banks and the debt buyers proactively.
thanks Michael , ok, a little more on the situation
had a large amount of student loan debt in the bankruptcy plan that will be going back into repayment, then have some cash left from a recent inheritance which I will be using for resolving about 50k of unsecured debt spread out over about 15 various credit cards and store charges between my wife and I, ranging from 500 (smallest) to 22,000 (largest, a Citibank MC ) another 6k in discover cards, 7k on a citizens bank cc, 5k macys……….on our bankruptcy claims register 5 or 6 of the claims were by PRA……..the 22k for citi was claimed by Antio LLC………..I know that credit repair after all of this is a long way down the road , my main goal is just to resolve the unsecured debt as feasibly as possible and move on.
My BK lawyer has suggested the potential plan of using the inheritance to pay off car loans and pay down the student loans , then after the proper time period refiling the BK for whats left of the student loans and the unsecured debt……..but to be honest, that idea doesn’t make me sleep any better at night, and If at this point I could settle the unsecured debt for even 60-70% and move on with our lives I would be thrilled
thanks for your thoughts
If you have a consistent and stable income to carry the monthly payments of auto and student loans, I do not like refiling the chapter 13 much. But just in case, how much were the credit card companies getting from the trustee each month?
I would target the bulk of your credit card debts for settlement at 50 percent of the balances owed. You may come in lower on some, but it is good to be prepared to go that high.
If I were working your file, I would not reach out to creditors and banks to negotiate settlements until you are at least a month out of chapter 13, and perhaps longer. And ideally, I would look to negotiate all of them near the same time, and would play one off the other as I speak with them.
That strategy could change with additional information about the debts, like were any of the credit cards judgment debts?
What state are you in?
Hello, I have a very interesting situation. I have been contacted by PRA, first time was over a year ago. I was contacted by them after my Ex, filed for chapter 7, and he was relieved of the joint debit we had. At first I received a letter from them, stupidily, I contacted them. Explaining to then my situation, now single mother of two children, limited income (even though I have a job) my ex did not pay child support, nor what he owed in allimony, and that I was Awarded, this debit, per our divorce judgement, due to the fact that at the time he was in chapter 13, originally, and converted
To 7 after our divorce was final. I have been called by them at first a couple times a month, then everyday, and now a couple times a week. I’ve asked them to stop, or to send me information by mail. No payments have been made to the account since the end of 2011, As far as I know. I don’t have any original documents for the credit card, which was bank of America. Part of the situation, is how the debit on the card got so high. While we were married he charged on my credit card 7000 from my card to his business account. ( this was noted in court) . The total on the card is some where around $14,600. I have absolutely no means to pay the debit in full. But know I need to do something. I could file for chapter 7, but really don’t want to do that. I’d like to settle in a lump sum, I think I would be able to get about 4-5000 from family. But have no idea how to do it. I recently had surgery and will be out of work for about 6 weeks if things go well… any advice would have to give would be helpful! Thank you, Angela
You may be able to settle the old BofA debt with PRA for as low as you would need to. But before going in to more detail about settling this debt, do you have any other credit card bills you are late with (or paying on time)?
I have a debt under a
corporation that has been dissolved in New Jersey. It is from a line of credit given under the Corporation. It does not show under my personal credit reporting as I have applied for credit many times and it is never shown as a personal debt. The Bank has asked me to offer a settlement amount based on a percentage of the loan. I have notified them that I couldn’t continue making payments as I am on S.S., as is my wife and we cannot keep up with the payments. This prompted them to call me and ask for an amount I would be willing to pay or restructure the loan for lower payments. What are my best options.
The first thing to establish is whether you can get a settlement negotiated and approved that is affordable. Assume for a moment you could settle this debt for 50% of the balance owed. Can you pull together that amount of money? How long would it take? If 50% is out of the question, is your bank one that has a history of approving better offers? What if you can settle the loan for 30% of the balance? How long would it take to raise that amount?
While you are thinking about this debt, it is also a good idea to factor in all other accounts. What other credit cards and personal loans are there? Are those balances manageable going forward when you have a limited income?
Michael, thank you for your response. I can gain access to 30 to 40% of the loan. It would take me about four weeks. My next question is concerning how the settlement is recorded. Since in the past the loan has never shown on my personal credit but only on the dissolved Coporation as a business line of credit will it continue to not effect my personal credit scoring? And since the loan was made to the Coporation, and the business is dissolved, is the loan still recoverable by the Bank?
Did you have a copy of the original loan documents?
Do you recall giving your social security number to the bank in the process of the loan being approved?
No I do not have the original documents and yes the Bank does have my Social Security number. If they accept my offer will it show badly on my credit report since it is not paid in full?
Most of the situations and files I have seen that are similar to yours did not show on the personal credit reports (as the result of settling a business account with the bank). The situations where I have seen that occur were with Capital One, or smaller regional banks.
If this settlement were to show up on your credit reports, the damage may be limited and acceptable, when weighed next to the savings from negotiating a lower pay off. Do you have any financing goals identified in the next 12 to 24 months? Are you concerned about other creditors periodic reviews?
Well that gives me a sense of relief. We were thinking of moving South in about 12-36 months and that would require selling our home and possibly buying another. Thank you very much for your information.
Hi there
I have debt with Citibank – one personal card. The original debt was $19500, I stopped payments a year ago. I had done my homework and called them once a week to negotiate. My situation is I was a victim of a crime that left me with a head injury, severe PTSD and a number of other health issues – I have been in and out of the hospital, living with family and while on disability my position at work was eliminated. I told them take what I can offer now because it will likely not be there later- no budging. For a year I have continued to receive a monthly bill from Citibank asking for payment in full. I had the aggressive calls and stopped taking them once I could see there were not willing to budge.
I have received a letter from Citibank every month asking for the full amount (now 24,363). Does that mean they are still in the game?
This week I received a letter from Global Credit Collection Corp asking for $17000.
My question is after a year now, will they take me to court?
Should I make contact with this new collector?
I can’t imagine any judge fining me as I have multiple health issues and was an outstanding client prior to that.
Any help is appreciated!
If you are still receiving collection notices in the mail directly from Citibank, than they still have your account.
Yes, you can be sued for collection. The longer the debt goes without being resolved, whether Citibank has it, or your account is sold to a debt collector, typically the chance of being sued increases.
Should you make contact with Global Credit Collections Corp to settle? What is the amount you have been offering to settle this debt for with Citibank? What is the amount you would target to settle it now?
If you are sued, the judge is not going to side with you in any way based on how well you paid your bills in the past. Your health issues will be anecdotal to the court process and will not prevent a judgment being entered against you. Your inability to pay based on your income, sources, and state exemptions will get the courts attention, but that would be after a judgment.
Michael… wow… I’m VERY impressed by your depth of knowledge on the whole debt subject. I’m trying to absorbe everything that you have written… but will reach out to you if I get in over my head (which means I will be writing to you VERY soon!)
Michael – I recommend posting questions and concerns in the comments on the pages you are reading when they occur. If your questions are specific to settling with a specific bank, or a debt collector contacting you, search for the name (upper right of each page). There are ongoing discussions covering debt relief with all of the larger credit card issuers, and most of the collection companies. If you do not find what you are looking for, start a new page using the Ask Michael feature (also upper right).