Divorce Final and I Got the Credt Card Debt with Chase, GE Capital and Discover
Hello Consumer Recovery Network:
Please allow me to briefly explain my situation. This June I was involuntarily laid off from a good job in pharmaceutical sales. My only form of income at this time is unemployment. This August my divorce was finalized and I became responsible for nearly $29,000 of credit card debt spread out over 4 different cards with 3 different creditors:
1. $10,500 on a Visa Card with Chase Bank. This account has just gone to collections with Allied Interstate, LLC.
2. $5,400 on a Visa Card with Chase Bank. This account has also just gone to collections with Allied Interstate, LLC.
3. $7,200 on a Master Card with GE Capital Retail Bank. This account has not yet gone to collections.
4. $5,500 on a Discover Card with Discover Bank. This account has also not yet gone to collections. Discover recently sent me a letter, however, offering a 40% settlement with the promise “upon receipt of the agreed settlement amount, we will send an update to the major credit reporting agencies in your area informing them that this account has been settled in full for less than the full balance.”
I haven’t made any payments to any of these cards in over 180 days. I’d like to negotiate lump sum settlements with each creditor. I may be able to access these payoff amounts from wealthier relatives. This is where I’m asking for your help, based on Michael Bovee’s video encouraging viewers to contact CRN specifically to do so.
Please consider my situation and let me know your thoughts on my situation. Thank you in advance for your kind assistance.
Q1: What kind of floors am I up against in each of these instances, given the variables we know? Q2: How aggressive can I reasonably be in terms of proposing settling the debt for 15%, 20%, or 25% of the balance owed? Q3: What kind of deal is a good deal at this point? Q4: Is there any reason why I should accept Discover’s 40% settlement instead of trying to reduce the 40% figure to, say, 30% or 20%?
Before drilling into the 3 question about the lower thresholds for settling credit card debts with Chase GE Capital and Discover, I want to hit on the divorce decree.
Taking on credit card debt payments as part of a divorce decree.
It is not uncommon for accumulated debts, like credit card balances, to be divvied up the same way assets are divided in a marriage. One spouse may take on the credit card payment obligations in total. What can happen as a result, when you are the one the divorce saddled with the credit card bills, and where you find yourself unable to keep current:
- If the debts were joint liability, the missed payments report to the other persons credit report.
- If the debts were set up as one or the other spouse only being an authorized user, and authorization was not removed, as is often wise leading up to separation and divorce, the authorized user, though not a cosigner, still gets their credit report whacked.
The information you gave suggests the credit cards had not been paid prior to the divorce being final, and the late pay credit report damage is already done. I wanted to point this out for later readers of this page because I do not think I have ever covered this issue on the CRN site before.
What percentages and amounts to target settling your Chase credit cards that are now with Allied Interstate LLC.
Chase credit card settlements can trend between 20 and 40 percent of the balance owed at the time you are settling. When doing an estimate with someone who can settle Chase debt pre charge off I target 40%. When settlements come in lower that’s great, but 40% is reasonable expectation for many profiles. There is rhyme and reason to accounts that get settled for 25% with Chase, but drilling down to that level is difficult to do with confidence when limited to online assessments.
Now that the Chase accounts are placed with Allied Interstate as assignment debt collectors, the targets can change. It is less likely 25% can be targeted with Allied. As an assignment collection agency, Allied Interstate can only settle at rates dictated by Chase. They can look for approval of lower settlements from Chase on a one off basis, but they also do not want to hit the Chase approval button too often. Here again, settling at 40% with Chase debt Allied Interstate is collecting is a good target, but lower targets may apply in your situation.
Taking aim at settling a credit card debt with GE Capital Retail Bank (GECRB).
If the credit card with GE Capital is not charged off and still with internal collections and recovery, targeting 40% in a lump sum payment is a fair expectation. You may be able to target a lower settlement with GECRB in certain circumstances and while applying a very last minute settling strategy.
GE Capital bank credit cards do get placed with attorney collections often enough that targeting pre charge off settlement would be good to do if it is a financial option for you.
Taking advantage of the 40% offer to settle your credit card with Discover Bank.
This one is a no brainer and something you should follow up on and take advantage of. The target settlements with Discover have been between 40 and 60% on pre charge off credit card debts for a few years. You are at the low end of this.
Discover sends out offers for settlement on some credit card debts that pass a certain delinquency threshold. The offers vary depending on multiple factors like recent account activity, how long a Discover credit card holder, even geography and the calendar. I would recommend taking advantage of this offer if your overall plan is to settle off the credit card debts.
Settling with Discover at lower than 40% is not impossible, but it happens rarely. Discover is among credit card issuers who, at least at this time, do not sell off debt. Discover is also known for a high percentage of charged off accounts being placed with attorney debt collectors.
There is room to maneuver with settling the Chase accounts with Allied Interstate. Seeking settlement with GE Capital quickly makes sense from a limiting attorney placement view (settling with attorney debt collectors takes on a whole different set of concerns). Settling with Discover on the mail out offer just makes good sense when set beside their current collection practices and settlement trends.
I hope this was helpful. I am glad to hear that you found the debtbytes videos informative. All of our videos can be found at: Debtbytes You Tube Channel.
If you have additional questions or concerns post them in the comments below and I will respond with additional feedback. Anyone reading with similar concerns about settling with the above creditors or collection accounts is welcome to post in the comments.
As a caveat to anyone reading this post. The target settlement percentages shared are general in nature. Targeting settlements is best done on a case by case and creditor by creditor basis using up to the day details. What is happening on 12/3/12 may not be what is happening a month or three from now. It is best to participate in comments and get real time feedback, or start your own page like Dave did above.
Also, not everyone will be in a position to settle credit card debts all at once. It becomes important to prioritize which creditors to target for the earliest settlements available not just for increased savings, but also for limiting known risks with some creditors.