How should I negotiate credit card settlement with USAA?
I have about $75k of credit card debt from medical bills and other expenses with 2 kids in college. I live in CA and have looked into debt management plans, but have a shortfall of about $1000 per month to make the payments. The non profit agency I consulted suggested to consult a bankruptcy attorney to see the best way to protect our $70k equity in our home. I did consult 4 BK attorneys and they all suggested filing chapter 7. I am the sole provider in my household and my wife is not able to work, and one daughter is underemployed even though she just earned her BA and we also have $70k in parent plus student loans. I have $60k in whole life surrender value. I received varying answers on the amount of insurance that I could exempt under 704 plan.
I sought advice in June, and as advised by all 4 attorneys, I stopped paying my credit cards then.
I did consult one additional attorney who has handled thousands of cases in my area and he says that filing chapter 7 would be quite risky as trustees are quite aggressive at present. The other attorneys suggested I use some of the insurance money to pay down student loans, open IRAs for my wife and I for 2013, and perhaps do household repairs. They said to file 90 days later. The last attorney I did contact said that the other attorneys I had consulted did not have enough experience and that they were simply after money and did not really care about my situation. He handles far more cases than the others, and he suggested to try to settle with the credit card companies with the condition that they put in writing that the settlement is satisfies the entire debt and that they also remove derogatory information from my credit report. He says I am better off doing this on my own. He said he could take my money, but he felt the situation might be quite risky. My CPA also suggested this approach.
My creditors are Bank of America, Chase, Citibank, Capital One, and USAA. The idea is to use $50k to use to try to settle the debt. I have not been sued yet, and I am trying to avoid this. Bank of America did cancel two cards. The majority of my debt is with USAA. One concern is if some banks do agree and others don't then I could have trouble filing chapter 7 later. I was told they can go back 2 years, and that preferential payment could be claimed for debts I do pay. I would greatly appreciate some guidance on the best negotiating methods for these particular credit card companies.
How should I negotiate credit card settlement with USAA, BofA, Chase, Citibank, Capital One?
—Leroy
What are the balances owed on each of your USAA accounts, and what types of accounts are they (credit cards, personal loans, auto, etc)? Also indicate in the comment section below if you still have open accounts with USAA, such as checking, savings, auto loan, other. Also, it will help me to know for how long you have had your credit cards and/or loans with them
You did not indicate your income and other expenses, but the fact that you are 1k short of being able to afford a debt management plan through a credit counseling agency, when I estimate you would need roughly 1600 a month to afford the DMP, would make the typical 36 month debt settlement program not all that viable either.
Loans and Credit Cards are Your Largest Debts
I want to focus on USAA accounts to be certain settling is the best option. Depending on how you answer the above questions, you may find settling the debts more beneficial than a 5 year chapter 13 bankruptcy repayment.
Assume for a moment that you could settle with USAA for half of all that you owe them (though you can often target better than 50% savings when negotiating USAA credit cards). Also assume your settlements with the other creditors will be what I outline as realistic targets in this article where I rank your remaining credit cards: https://consumerrecoverynetwork.com/review-top-7-credit-card-lenders-best-offering-debt-relief/.
Assuming you can settle all of the debts you are concerned with above for about 30 thousand, how soon would you be able to access that money? Does it all come from the insurance?
Settling with USAA for Less than What You Owe
I am with your CPA and the last attorney you spoke with. Negotiating a lower lump sum pay off amount with creditors like USAA, and the other banks you have, is not rocket science. But there is a science to timing and funding your settlements in the first, second, and later stage collections.
You are in your third month of non payment. I highly recommend trying to knock as many of your settlements down as possible withing the first 12 months, and I often target settlements with some of your banks earlier than 6 months late. You can prioritize the creditors to settle with first, second, third, based on when funds are available. But if you are able to raise the 30k you will need quickly, it can bee good to prevent additional collections from showing on your credit reports.
It is okay if you cannot get to settling with them all that quickly, but I like to see people achieve early settlements when ever possible, in order to avoid the A.S.S. principle I outline here: https://consumerrecoverynetwork.com/credit-cards-debt-settlement-why-banks-do-it/.
If you want to get a good grip on what you can be doing now to set yourself up for success with later creditor negotiations, read through the first stage collections and settlement guide starting here. Click through to the next article in the series at the bottom of each page. By the time you read through the 7 or so sections, you will be well equipped to make your first set of calls to USAA and your other credit cards.
After you read through the debt settlement sections on this site, and get all of your questions answered along the way, you should feel a high level of confidence that you can negotiate your debts. I do help people resolve USAA balances, but do suggest we talk about your particulars as early in the process as possible in the even I recommend against including them in your negotiations. You can reach me at 800-939-8357, choose option 2. You can also submit a consult form for me to call you (see tab at top of page).
I do not think you will need the full 50k to fund all settlements… unless the USAA accounts are not very seasoned (newly opened), or you look highly collectable on paper. And right now, with two and three months of missed payments showing on your credit reports, you look like someone in crisis, which is going to be helpful.
Anyone with questions or concerns about negotiating settlements and payments with USAA is welcome to post in the comments below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
I often see 40% settlements with USAA spread out over 12 months. This would update any credit reporting to show the account is resolved (after the 12th payment).
You can often get this outcome yourself, or you can work with someone here in the network to negotiate the deal and get it documented for you. The fee for that is 15% of whatever you save in the settlement.
Hello, I do not know if you still reply to these comments. I was just wondering about resolving some debt, 55% of which is spread across 3 usaa credit cards. Let me know if you’re still replying to this and I will post more details about the situation and amounts. Thank you
I am still responding. There are times where there are gaps in the replies, but I am generally a few days away from posting replies to questions about accounts with USAA.
I have a charged off credit card with USAA from 2011 in the amount of $4900. I have received several offers through the years to settle, though none since 2014. I would like to settle the debt in order to resume access to USAA services. Is this possible or does one have to pay close to the entire amount charged off in order to resume a relationship with USAA? This is my only charged off card on my account, all others are positive. Also, as the debt is due to fall off in less than 12 months, I want to make sure that by settling the debt it does not reset the clock on falling off of my report. Please advise and many thanks.
Paying an old collection does not reset USAA on your credit reports. SO no worries there.
Call USAA and ask about their policies for offering their products to past account holders that struggled to repay USAA. Many banks maintain a list of defaulted account holders who they will not provide credit to again. Last I knew, USAA was not one of them.
My ex husband and I have/had a car loan with USAA that was opened in 2007. He filed bankruptcy after we divorced and I am currently left with a charge off from 2012. I believe the balance is about $3,800. I am trying to use the car as a trade in but unfortunately cannot since it does say there is still a lien on the car. The car is only worth about $500 nowadays. How likely is it that USAA will work with me on releasing the title? I don’t have the money to pay off the balance.
They are highly likely to accept a settlement to release. I am skeptical whether they will go as low as it is worth though.
Good morning Mike,
I had a question about a debt I have with USAA. My ex husband and I had a truck together and when we separated he took the truck and no matter what I did he would not pay the payments. I couldn’t either because I had my own car payment. I was on the phone with USAA everyday trying to get this resolved. He wouldn’t answer anyone’s phone calls. In our divorce papers it states he has full responsibility for the truck and unfortunately that couldn’t help either. I tried everything legal I could but in the end I helped USAA repo the truck. It was auction off, but we still owed quite a bit left. I talk to an attorney and he has worked both sides of this case. He said my best option was to do a settlement amount with them and they CAN take it off your credit. I am doing this and making monthly payments for a year. My question is do you think USAA will take it off? If not I don’t see the point of paying anything if it will stay on my credit anyways.
Thank you
Bri
USAA typically does not do pay for delete. USAA will update your credit report to show the balance owed is zero. That will improve your credit situation going forward, so there is a reason to pay.
Anyway you can pull money together to pay the settlement quicker? That will speed up the credit recovery.
But I will still have the repo on my credit for seven years? How much does the repo ATUALLY effect?
I’ve been thinking about putting a thousand down to help lower payments. I pay 250 a month for a grand total of 3,000.
Thank you
An unpaid repo will have a larger impact on your credit reports than a paid one. It will prevent any home loans, and often other credit too.
You could probably settle the whole balance for 40% if done correctly. The impact to your credit will be the same… a zero balance paid collection.
USAA my estranged wife took out credit card in my name. Ran it up to the limit. I never new that she would do this. USAA states due to it has been over 90 days and other notes the account is legally mines and all debt as well. I am separated from my wife pending divorce. She used all my info to get a card in my name and hers what can I do
Are you willing to go through with filing a police report?
Mike,
I have 14k of debt with USAA and Navy Fed, with a few smaller debts. Its been past 90 days and I have no intention on welching, its just Im in college now and my children come first. The debts are just unreasonable to try to pay now. Navy Fed has my mortatage. It will be 2 1/2 years before I can really chip away at the debt again. Is there an option I can do for 2 1/2 years and not have a default status?
Check out this article about the 6 main options when struggling with credit card debt. If you are not able to make the minimum payments to USAA and Navy Fed, and if chapter 7 bankruptcy is not a good option, you may be looking at saving up to settle with them (the earlier the better).
I am currently working with a debt relief program. Can USAA repossess a vehicle to satisfy a credit card debt? The vehicle is financed through USAA, and has only 6 months left on the loan. This loan is current. The credit card is overdue by one month. The debt relief program told me they couldn’t do that, but I’d like your opinion.
There have been some problems getting title released on the car loan if your credit card has not been settled.
How much is your USAA credit card balance?
$11,000
Will you have 4500 or so available to settle with USAA in a 5 more months?
What are your other accounts and balances?
Are you 30 days late on all?
I am 74 years old and only have my SSI income. Alimony payments are past due from April 15, 2016 through November 2016 and might continue if I don’t do something about it, which I plan to.
I will have to file for Chapter 7 bankruptcy due to loss of income, alimony.
Before this happened I was with a debt relief consulting firm that I paid and with that money they were paying my debts but had to cancel that program due to loss of income.
What the cost of Chapter 7 bankruptcy and is there a senior discount.
There really is no senior discount from the courts. Attorneys charge differently. You could be looking at $1,500 in costs. Talk about your situation with a bankruptcy attorney in your county. If chapter 7 is an option that could be all the costs. If chapter 13 is the only option, find out more about settling your credit cards for less as an alternative.
Is the bulk of your credit card debt with USAA? How much do you owe total on your cards?
What credit counseling agency were you with? When did you stop sending them your monthly payment?
I defaulted on USAA Credit Card with a 14K balance owed about a year ago. Several months ago United Recovery Solutions started trying to collect. I requested DV and they sent it. They called a few more times and I told them I filed for chapter 7, I did not file and I did not hear any more from them. Recently I got a call and then a letter from Mercantile Adjust, they are trying to collect the USAA account. USAA is still reporting a balance on my reports. So could URS have sent it back to USAA and now USAA assigned it to MAB?
That is precisely what happened. Do you have a goal to resolve the debt?
Aside from waiting them out to the SOL (5 more years in michigan) I have been hoping it will just go away. I think they were quiet until Capital One reported two cards as settled for less than full Balance. Now USAA and another account have gotten the notion I might be collectable. I sent MAB a DV request to get a feel for what they plan to do.
Mercantile Adjustment Bureau is just a contingency debt collector. They do not plan to do anything other than try to get you to pay via phone calls and letters. If you are motivated to resolve the debt they can help facilitate that. If you are looking to avoid paying than there is nothing to do with Mercantile Adjustment. Their time limit to try to collect from you that USAA gave them will expire and USAA will drop your account back into the collection pipeline.
If my USAA accounts are settled or enrolled in a debt management program but my wife’s are not and she is the primary member, will USAA allow us to continue to get insurance through them.
Are your USAA accounts totally separate from her? She is not a cosigner?
List all of the accounts you have with USAA, and who is on each.
I have two USAA credit cards, and she has one,. All in our own names. We have a small loan out together I would not put into a DMP because it is almost paid off.
Hello,
After a 1099-c has been submitted to the IRS, can the CC company still report the debt to the credit bureaus? If so, does the balance stay at what was owed or does it change to zero? Thanks in advance!
V/r,
Maggie
Negative items like unpaid credit cards stay on your credit reports for up to 7 and one half years. Virtually all banks that send a 1099c after forgiving all, or a portion of your debt, are going to continue the credit reporting until that full amount of time has expired.
I have seen balances show still, and also a zero balance.
Tell me more about your particular situation.
Had trouble getting a VA loan all the way through because many of the homes in our budget in the area needed repairs. After our favorite slipped away because of $500 in carpet replacement that the seller was going to include as a $1500 concession, we started looking at land to just build as we go. Unfortunately, the cheap land we found ended up requiring a LOT of work because there was a 20-30′ drop off from the road that wasn’t obvious until after the cedar brush was cleared out. Technically, we own our home free and clear…but this is only because we used credit cards to fund it. I tried to get a home equity loan with RBFCU to consolidate the debt and knock down the APR, but they said that we would have to wait at least a year of residence (AKA next March).
Right now, I’ve been juggling payments and due dates to keep us just barely afloat, waiting until next June…but after reading many, many articles on your site, I’m stopping payments on the cards to start working towards getting settlement offers instead. However, I am not sure if I should also stop the USAA personal loan and credit card that my husband and I have. It is a payment of ~483 a month and ~225 respectively. If we stopped paying that for a few months, we could get the other big monthly payment (Upstart) of $450 paid off by the end of November and then pick it back up again, but I’m worried about possible ramifications from USAA since we have our checking accounts, home insurance and car insurance with them. We could move our direct deposits over to RBFCU (who we tried to get the home equity loan with and now have a checking account with because of this), but we really don’t want to change our home or auto insurance. If we skip payments for Jul-Nov or even Dec, what are we looking at happening?
What are the balances owed on the USAA accounts? What are those interest rates?
In fact, it would help me offer thorough feedback if I knew the balances and creditors on all of your accounts.
If you do settle with USAA you may still be able to keep your accounts open, and the insurances. You may see your premiums increase if they do keep those in place for you.
I don’t really understand if it’s possible to rebuild relationships with them in the future if we do go the settlement or bankruptcy route; but if that’s something that we need to keep in mind, I’d like to be able to continue to use USAA, PayPal and either Discover or Upstart.
Credit Cards:
Discover – 6959.36 – 19.24%
AMEX – 4998.05 – 0% through 08/22/2016, then 17.24%
USAA Platinum – 9103.68 – 18.15%
Chase – 3991.52 – 19.24%
Chase Amazon – 1975.00 – 22.49%
Bank of America – 429.65 – 0% through 06/07/2017
Barclay – 1713.87 – 25.24%
Home Depot – 225.00 – 0% for now
Synchrony – 2436 – 0% through 01/25/2017
Personal Loans:
Upstart – 5052.13 – 25.23% – 450.68 per month (ends approx 06/2016 naturally)
USAA – 21736.80 – 11.49% – 482.39 per month (~60 payments remaining, I think)
THD – 7549.60 – 7.99% – 117.44 per month
Credit Line:
Paypal – 1461.59 – 0% through 09/19/2016
Community Finance – 2000~ – $126 a month; the sooner this one is paid the better because the APR was rough (no septic, so they financed a composting toilet that meets building codes in our area)
Student Loans:
MyFedLoan Servicing – ~19000 – 6.5% – 133
Great Lakes – ~11000 – ??% – 102
It is a hard decision to keep some accounts open over others. If you are using the monthly amount that would go to pay your USAA credit cards, and payign down other debts, it means taking longer to settle with them. This means you will be negotiating with an outside collection agency that USAA uses.
When it comes time to negotiate the settlements on the USAA accounts, your being current with that many creditors may cause the settlements to be not as good. This is not always the case, but I want you to be aware of it.
If you have not already talked things over with a nonprofit counseling agency to see what you monthly payments can be lowered to when consolidating (not a loan), I would encourage you do that. It is a free call at 800-939-8357, press option 1 when you hear me start talking. You will go through a budget expense exercise on the phone. The whole point of this is to get an exact to the penny quote of what your monthly payments can be lowered to on all of those cards and loans. If the payment is low enough for you to manage, it will give you something to compare to settling.
If you cannot do the nonprofit consolidation, and are going to proceed with settling those USAA accounts, call me at that same number, but press option 2. I can share some important time lines with you that can help you succeed.