Can I settle my credit card debt with Navy Federal Credit Union for half?
I have approx $27,000 in unsecured credit card debt with navy federal credit union. I work in real estate and thus have extreme swings. I also have $45,000 in student loans which I have learned are not able to be settled or discharged in bankrutpcy. My question is can I settle my navy federal debt for 50%? I have read the credit union in general and Navy Federal in particular is very difficult to work with. Please advise?
Can i settle debt with navy federal credit union for 50%?
—Michael
Short answer
Yes. A 50 percent target is realistic with Navy Federal depending on the collection stage you are in, and better results are possible. Navy Federal is one of the easier credit unions to work out a settlement with, but credit union settlements carry complications that a national bank does not have.
Key points on this page
- Credit unions are member owned and usually smaller, so they do not approach settlement with the one policy fits all scenarios used by Chase, Bank of America and Citi.
- Many credit unions do not sell debt to debt buyers, and they lean on attorney debt collectors more than collection agencies. That makes a credit union collector more likely to sue.
- Credit unions cross collateralize their loan products. An on time car loan payment can be used to offset a late credit card payment, and a car title may not be released while the card is unresolved.
- Settlement is typically not an option until the card is close to charge off, which for credit cards usually happens at 180 days of missed payments.
- If your budget supports roughly 2 percent of the balance each month, a lower repayment plan, offered direct or through a credit counseling agency, can avoid settlement and its knock on effects entirely.
- If you hold a car loan, mortgage or insurance product with the same credit union, work out the sequence before you start negotiating, because those contracts can block a settlement.
It is true that settling with a credit union is often not the same, nor sometimes as simple, as setting credit card debt with a national bank. I am not sure what you read about Navy Federal Credit Union, but in my experience NFCU is one of the easier credit unions to work out a settlement with.
Settling Credit Cards with a Credit Union
The basics of why credit card debt settlement with a credit union can be different are:
- Credit Unions are member owned.
- Credit Unions are often smaller banks that do not approach settling debt with one policy fits all scenarios in the way that big banks like Chase, Bank of America, and Citi Bank do.
- Many credit unions do not sell off debt to debt buyers.
- Credit Unions often have established relationships with attorney debt collectors and use their services more than debt collection agencies. In other words – collectors for credit union debts are more likely to sue in order to collect.
- Credit Unions cross collateralize the different credit products they offer their members.
There are some more nuanced differences that can impact your ability to settle with a credit union, but the above list is the overall picture.
Debt Settlement with Navy Federal Credit Union
First lets establish whether you have other options than settling your NFCU credit card. I have some questions you, or anyone else dealing with NFCU, can answer with a reply in the comment section below.
How many months’ payments have you missed with Navy Fed?
Settlements on credit cards are typically not an option until you are closer to the card being charged off. Charge off is an accounting principle that credit unions must follow on unpaid loans. With credit cards the charge off most typically occurs when you reach 180 days of missing payments.
Will your budget support your ability to pay NFCU 2% of today’s credit card balance each month moving forward?
Navy Federal, like nearly all credit unions, will participate in lower monthly debt repayment plans. Some of them offer these plans direct to their members, others will only offer these lower payment options through a credit counseling agency. If your account is not yet charge off, and you can afford roughly $540.00 each month (2% of your 27k NFCU balances), you can avoid settlement and the knock on affects all together.
If your budget supports this lower credit card payment, make a free call to a certified credit counselor with established communication with Navy Federal Credit Union and learn more at 888-317-8770.
Do you have other accounts with Navy Federal?
If you have a car loan, mortgage, or insurance products through your credit union, you can face serious obstacles when trying to settle credit card debt for less than the balance owed. I pointed out in item 5 above that credit unions write contracts that cross collateralize their loan products. This essentially means that you’re on time car loan payment can be used to offset your late credit card payment, or perhaps that the car title is not released when it’s paid off because of unresolved credit card debt. There are many ways your other loan contracts with a credit union can impede your settling credit cards with the same bank. How to navigate these concerns, if they apply to you, and still settle the credit card, is likely handled best one on one, rather than trying to apply your strategy openly online.
If settling the credit card debt with NFCU makes more sense than other payment options, or bankruptcy, your target of 50% is a realistic expectation depending on the collection stage you are in. In fact, we have successfully guided our members to NFCU settlements that result in better than 50% savings. In order to provide more feedback and tips, I have some additional questions:
What state do you live in?
When did you last make a credit card payment to Navy Federal?
If you are being contacted by someone other than Navy Federal for collection, who is collecting?
Can you come up with the money to settle with NFCU today, or do you need time? If you need time, how much?
Anyone with questions about handling credit card debts with Navy Federal, or other credit unions, is welcome to post in the comments below for feedback.
If you would like to cover your situation and options on the phone you can reach me at 800-939-8357, choose option 2, or submit my consult request from and we can schedule a good time to connect on the phone by email.
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.
Michael,
I had told you about the settlement of 6k with NFCU assigned attorney. I paid in full as specified by the agreement. However, I check the account status online and says I still owe the difference we negotiated down. Basically, account not updated….. I asked you this in the past, which was huge concern for me before. Will this be a problem, or just a case of account not updating? Negotiated settlement was paid Oct 30.
Thanks
It is likely just something with their system. Did you check your credit reports to verify NFCU is no longer reporting any balance owed?
I have had a vehicle loan with NFCU since 2009, I was making payments on time while I was in the military. I was discharged from the military in 2011 and have not been able to find work or been able to make payments on a regular basis. I did make payments in early 2012 for about 4 mts and have not paid since. about 4mts ago I started calling them to figure out or come up with some sort of lump sum payment that may resolve this debt and have heard nothing from the. Then about 2 weeks ago I get a call from a company about repossession. I speak with them and tell them I may be able to cum up with some money to stop the repo or even payoff off the debt but will not be able to come up with the full balance of the loan. So I finally get someone from Navy Fed on the phone and they say that They can do nothing I must contact some attorney. So after calling this attorney for a week now I have not gotten a call back. I want to know what should my strategy be once i get with the attorney. Is there a certain % I should shoot for to get them to resolve the debt. its about 24000. Through family and what lil saving I have now that i’ve been working I have can prob get together about 10-15000. So Should I just offer the total amount upfront and see if they will take that. Or should I wait to see what they say in case that they try to get more than I can give based on what I know I may be able to send them.
I do not see a lot of vehicle loan settlements that involve your keeping the car, but it is possible.
They could come along and repo at anytime, so you may want to continue your efforts at contacting that attorney NFCU has your account with.
Post an update with what develops after that first conversation.
Michael,
I just received a letter today from NFCU stating that my $14’000 account has been charged off. They then offered settlements: Lump sum of $6’714.00 in 30 days; or 24 payments of 522.27; or 12 payments of $746.00. The 6’714.00 is roughly 40 cents on dollar, which is great. However, I don’t have that cash on hand right now. Options? Let it ride in collections land for awhile til I get the money? What would be their next step if any??
Thanks,
Vic
The can decide to sue as a next step. The settlement options NFCU is offering now, would not likely be on the table were that to happen.
How much can you pull together in 30 days?
What amount of money can you come up with monthly with confidence?
Michael,
Going to court at this point does not make sense especially since they willing to settle for $6’700. Probably coat them more in fees just to collect. I can probably swing the 12 month settlement.
Try not to get caught up with thought process that would make sense to you and me. I see collection lawsuits filed for less than a thousand dollars as much as I see them file for more than 10k. Navy Federal is not Capital One though… they (NFCU) are far more reasonable.
Your decision on taking up the 12 month deal, or waiting it out, should hinge on cash flow and confidence you can complete the deal first, then consider outliers like mitigating risk of court collection.
Hello. I also have a NFCU credit card with a max of 16,000. Im sitting right at 15,000 charged on it and am running into health issues and financial issues. No different than anyone elses. Im in Nevada and just closed on a 140,000 manufactured home. I have a 700 credit score, and have banked with them checking/savings and visa card for last 5-6 years. A forgiven late payment or two in the last 5 years. I wont be able to afford the 310$ monthly payment that includes about 140$ a month of interest. 10% locked interest navy federal CC visa. I am unemployed , and am on the deed of the home with a different mortgage company in which i am basically a co signer. They didnt look at my income to approve the mortgage. Should i “homestead” my new house here in Nevada? Whats the worst that can happen? I could possible afford 200$ a month payment if there was no interest involved. I have about 5k in savings. No other card payments, no other monthly debt. Thanks for any advice. I am current on my payments
Best case scenario for a lower monthly payment with NFCU would be roughly 250 a month until it is paid off. If that extra 50 dollars a month is just not doable, keeping current is not an option. And sending less than the minimum required is a waste of money.
If you are serious about resolving the debt with NFCU, and will part with savings, continue to save up what you can each month, for the next 6 months, while not paying (if that is the direction you choose). You have a good shot of settling with NFCU for 40-ish percent. I would not try it unless I moved my checking and savings from Navy Federal (and soon).
Michael,
The Navey Fed account has gone past the stated deadline. All calls have ceased; there have been none for the past 2 weeks. Also, I have not heard from the collection attorney they used with my first loan. What may be going on at this point on their end?
Thanks,
Vic
It is not uncommon for there to be a lull in collection activity just after charge off. Sometimes the reasons for this can be attributed to:
Accounts be bundled for placement with a collection agency adjusting to newly created bank policy.
Collection contracts being renewed around the same time yours charged off.
Attorney or collection agency placement landed somewhere that takes longer than average to integrate new files into collection workflow.
File error (I have seen collection files get lost for months, years, and forever).
A couple weeks without collection calls or mail is well within what I would call a normal quiet period.
Michael,
Seem like it may go to a collections agency, although, I do understand that this is not a definite thing. I figured they attorney already assigned to the other loan would have contacted me already. I am hoping it goes to a collections agency. I feel I can buy more time for a lump sum payment that way.
Vic
I have 2 unsecured accounts with NFCU totaling $77K. I lost my business and can no longer afford to pay $2k per month to them. What is the best credit counseling company I can turn to and get relief? When contacting NFCU they say that my rates are at the lowest and the terms have been extended as far as they can go. At this point I just need relief, I am drowning in monthly obligations. Any advice?
Call the number you see to the right of the screen, 800-268-2706, and complete a consult with a credit counselor. Go over all of your bills, not just the accounts with NFCU.
If credit counseling provides the payment relief you need, you are good to go. If not, post an update and lets go from there.
Michael,
What are the hours of operation for the credit counselors?
You should be able to reach one between 8 am and 6 pm.
Michael,
I have paid my negotiated settlement with nfcu assigbed lawyer for one of my personal loans. My second loan of 14k with them has gone to the 187 day mark. I just received a call today from nfcu regarding the loan and that oct 24 is “last” day to work something out. I thought it would have been charged off by now…. At this point, i do not have sufficient funds to negotiate a settlement. I was thinking of letting it go to collections and placate until i do have the funds. Or, if they do send to same lawyer I delt with, settle through him. Is it possible it could go down collections pipeline and get dragged out giving me time to establish a reasonable settlement? How would I proceed ?
Thanks
The charge off date can come off as taking as many as 210 days.
You can settle your Navy Federal account with the outside debt collector, and that same attorney, or even a different one they may use. Using different strategies to buy yourself time to save up what you will need to settle, is better done when you know who got the account. My feedback will change depending on whether NFCU sent your charged off account to the typical debt collection company, or a collection attorney.
How many months do you expect you will need to save up enough to offer as settlement?
I have 9 K in credit card debt with Navy Federal and it’s been roughly six months since my last credit card payment. They have sent me letters stating they are considering legal action and are in the process of closing out an old savings, checking , line of credit account and/or other accounts. I have my auto loan with them as well and am roughly half way through the loan. Although they didn’t specify my auto loan, can they close my loan account and repossess my vehicle? Or possibly not release the title to the vehicle once it is paid off until the credit card debt is handled?
Your concerns about the auto loan are very real.
What are all the balances on these other Nave Fed accounts? What about other debts with other creditors… what do all of your debts add up to, and are you current with payments on any of them?
The only account with a due amount with Navy Fed is for $115 in an old checking account. Other than that a medical bill for $400 which will be paid off in a month with a collector. Up to date with the auto loan .
If it has not been 6 months yet since you last paid on the credit cards, can you afford 190.00 a month with all your other bills? That is an estimate of what you may be able to get your payment down to if you enroll in a DMP.
If not, you are looking at having to attempt to settle your Navy Federal debts in order to avoid potential collection lawsuits, along with the car issue that is likely later.
My brother got a loan with navy federal to buy a car from someone he met and to make a long story short the deal didn’t go through the seller is no where to be found. A down payment was requested to hold the car and that was sent to the seller and after that there was no contact. So he never purchased the car and the payment on the loan he increased because there was no title provided, which Navy has doubled the interest rate on the loan. How can this matter be resolved?
I would consult with an experienced consumer law attorney nearby. Post the name of a larger city in the area. I will see if I can help you locate someone with the experience you need, that is also likely to offer a no cost initial consult.
I have 15000 on a credit card thats max was only 14. when i found out the card was over the max it was because the card had gone 2,000 over the max before navy federal stopped it. i have since cancelled the card but i am still only making enough to pay off the interest it is growing. I called to speak with them about settling and while one lady would speak with me in detail about it the finical management lady i spoke to told me that navy federal doesn’t do that. My ex husband made most of the charges on this card. several 3000 trips in the matter of a few weeks. I spent what i needed after i kicked him out due to him selling everything he had bought and keeping the money. he also left me with no money in the bank and i still had 2 weeks till my next paycheck that wasn’t much. To this day he owes me 7000 but I’ve yet to see it. i can’t afford a lawyer, and i can’t afford the credit card. I’m drawing in debt and I’m not getting anywhere no matter how hard i try. at this point i don’t know what my best option is.
Navy Federal does settle credit card debt with their account holders, but not when you are current with payments. And not until you have missed several monthly billing cycles.
What is your interest rate on the Navy Federal card?
What other credit card balances are you carrying, and what are the interest rates on those?
Do you consider your job and income stable?
After speaking to a bankruptcy attorney fully expecting to file chapter 13 (as we do not pass the means test) I was shocked to hear them tell us they thought debt settlement was a better option for us. We have 4 unsecured accounts with Navy Federal all totaling about 61K. We have our house and a car loan with them too. We are not currently late on any payments but we just cannot maintain these payments any longer. The lawyer said that he feels strongly that they will settle with us. Obviously I am still nervous. Do you think our chances of settling are better having secured a lawyer or could it somehow make it worse? Also will a lawyer be able to settle the debt for less than we would have on our own? I am hoping to settle for no more than 30%. What do you think the chances are all things considered. Thank you.
If it were not for the secured loans, you could probably negotiate about the same as I, or the attorney could.
I think you have a better shot at settling, while still paying secured debts to Navy Federal, with the attorney.
Michael,
I began making payments to the attorney collector nfcu uses as I had told you. I keep checking my account online. Today I finally seen my payment made to them from the attorney, however, my account still reflects the total amount balance, not the settled balance. As I stated before, I hope I don’t run into a problem with nfcu attempting to collect on remainder of balance. That would be going against settled deal in my opinion. If they do, what recourse do I have? Should I worry, or this normal?
Thanks
If your settlement involved several payments, it is not uncommon for there to be no update to your credit reports until the last payment is in. It is also not uncommon for your payments to reduce the account balance on the credit reports, like is occurring with you, until that final payment reduces the balance to zero.
If you have an agreement to settle the account with Navy Federal, and you meet all the terms on your side, they will follow through with theirs. If they do not, it is highly unlikely it will be related to them trying to be sneaky and collect more. It will more than likely be because there was a mistake in setting up your file for the negotiated settlement. It will not be overly difficult to correct. If something like that happens, post an update and I can offer some action steps from there.
I lost my job in May. I have to wait a while longer to file. I was told that in CO they cannot garnish military pension or disability.
I have debts totaling about 55k to various creditors. All of it is unsecured debt. I have been making my mortgage payments every month.
Not only that, but they have to get the judgment first, which means suing, which you can do some things to postpone any final ruling in order to discharge the debts in the chapter 7. Talk to your bankruptcy attorney if you get any legal papers served on you, or even if you get a collection notice from an attorney in Colorado (signals much higher odds of being sued).
Hi there,
I am retired military and receiving disability. I was working full time, but lost my job due to cut backs. I owe NFCU about 13k in unsecured loans. I have talked to a BK attorney and I did not pass the means test for Chap 7. I have to wait to file. I have little equity in my home and a 12 year old car and no other assets. I live in CO. Will NFCU even bother to sue? What is their leverage against me besides my credit score?
Thanks!
How long ago was it that you lost the job? With the look back on income used for the bankruptcy chapter 7 means test, will you qualify after not working for 3 or more months?
Yes, NFCU could bother to sue over the 13k. That is the leverage besides the credit score… suing, getting a judgment, followed by the opportunity to lien property, levy your bank account or other assets, and wage garnishment.
Are there other debts besides those loans with Navy Federal? How much total?
Hello,
I am going to be 60 days past due on my NFCU CC for 4500 and 1500 for personal loan. I received a phone call today from them, I told them I’ve had trouble getting employment since I got out the service in April. The guy wasn’t willing to delay sending my case to a creditor saying he would do so tomorrow. He then told me that I would likely be sued by the creditor for my debt. I understand this is a scare tactic. I understand that it will ruin my credit, I’m wondering if will just eat the debt causing my credit to be ruined or if it’s a legitimate court case? What steps would they take if I didn’t make payments? Would only my credit be affected?
Thank You.
Can you confidently come up with about 125 dollars each month even though unemployed?
The problem with letting the debt go is indeed the risk of lawsuits and judgments. A judgment gives Navy Federal Credit some extra ordinary collection options that will vary by state. What state do you live in? Once I know that I can reply with what your state limits NFCU to as far as collections after court.
What if you could settle the debts with NFCU for half of today’s balance? Can you come up with the 3k somehow in the next couple months (loan from family, friend, sell a 4 wheeler, etc)?
Your credit is already affected by the 60 days you are late.
I am 70 years old and on a fixed income. We have encountered great hardship of late, due to several unforeseen circumstances, and have not been successful working out a plan with NFCU. We have both a credit card $25k and a mortgage $92k with them. I believe this is cross collateralized between the CC and Mortgage.
Contacting NFCU, they agreed to stop interest on the CC for one year, as I continue to make a minimum payment. Unfortunately, this has not been enough…we have depleted our savings and are now out of funds. I have never missed a payment on anything and am concerned about what could happen if I just quit paying the CC and wait for them to contact me. I am debating the logistics of not paying the CC, transferring the Mortgage to another company, then stop paying the CC or even some transfers followed by bankruptcy.
We are in the State of Missouri & my credit is still above 700, as I have been making payments and while letting necessities dwindle. Any help or suggestion is greatly appreciated.
Brad – What do you estimate your home equity to be? What other unsecured debts are you paying on, other than the NFCU credit card?
About 20k in equity on the home. No other unsecured debts. 2 vehicle loans w/very little or no equity there.
I would encourage you to look into the benefits of filing chapter 7 bankruptcy and compare that along side any benefits to getting a new mortgage. Missouri has a 15k exemption for equity, so depending on comps in your area,you could find you keep the home, reconfirm the car loans and keep paying those like normal (or shed one or both of the cars), while eliminating the NFCU credit card. All without moving your mortgage, and while severing any cross collateral concerns.
Even if you are not seeking cash out refinancing, there are costs to the loan, and you still have the credit card debt with NFCU to contend with. That means collection calls and stresses that you can avoid with the bankruptcy route. If you do resolve the debt later, by negotiating a lower pay off with Navy Federal, that cost could be 8 to 12k or higher.
The national average costs for bankruptcy are roughly 1800 dollars. That is start to finish. The costs in your area of Missouri could be less than 1500 dollars.
There are other things to consider about bankruptcy. You may have to sell off personal items of known value, like a china set, coin collection, motorcycle – you know, stuff….
If bankruptcy is off the table, you could indeed be better off moving the mortgage away from NFCU to another lender. Your DTI with the credit card payment so high may present a challenge. But if you are able to refi, you can maneuver around the credit card debt for a while while saving up to settle.
Do you have contact info for NFCU legal dept or one of their attorneys for the state of Ca? I have two shot loans that I have paid according to the terms of the contract, however NFCU still reflects a balance owed. Which they cannot give me a breakdown of said balance. Not to mention the loans originated with a different credit union and they took over. In the past I have requested info only to be advised they don’t have original loan records. I’m at my wits end!!!
You would call the normal toll free customer service number for NFCU and get transferred, though likely not to their in house counsel.
Do you have all the documentation (bank records etc) to show your payments? Have you considered filing a collections complaint with the CFPB (that would get to the right department I should think)?
Michael,
Yes, I just wanted to be sure that if NFCU attempts to collect on remainder that I can produce a letter from an attorney representing NFCU stating a 75 percent settlement. I hope this would hold up if further action is taken…..
As far as better deal, is that meaning if gets forwarded to separate collection agency? I have delt with this before with another account, asking them to validate etc to buy more time to save up for settlement. I have found it easier .
Thanks
Michael,
I recently logged onto my account with NFCU and I seen that it still shows my visa account at the original amount not agreed on between their attorney and I. Is this just a “housekeeping “issue on their part? I am positive the settlement letter said no further collection will be pursued. I hope that mean even by NFCU who the attorney represents…. Don’t want to pay attorney 75 percent settlement then still have NFCU chase me for rest . Maybe just paranoid?… Also, the other loan they are still doing usual collection calls. Haven’t forwarded to attorney yet. I haven’t been in contact with them about it so maybe they will just charge off.. It’s been longer than the visa account. Wishful thinking?
Thanks
Look for the account to update over time. But I have seen folks with ongoing banking relationships, and additional open accounts, still see the settled account in their summary screens when logged in, and for more than a year!
I would not say you are paranoid, but that your sensitivity is on hyper alert, and that is normal.
Whether NFCU charges off the account or not, you will still be able to settle. But if the account is not placed with attorney collections, you may get a better result (negotiate a lower deal).
Mike- I’m in what I believe to be pretty unique situation with NFCU. I have a solid 15 + year banking relationship with them. Numerous loans and credit cards over the years. Never a late payment on any one until the latest personal loan. My wife lost her income of about 90k per year when the economy tanker which forced all of out bills onto my income. I had a loan for about 12k which I struggled and juggled with for a few years before ultimately charging off in 2014.
We’re now back on solid ground financially and in the process of buying a home. My credit score was between 630-650 after a couple years of recovery but the lender had a concern with the charge off .
We received some poor advice from our mortgage broker telling us to settle the charge off which I did not knowing that it would actually hurt my score as it is now a “recent negative”. My score dropped 60 point over night. I have 90 days to repair it or I lose the house and I have to move out (we are renting shirt term form the seller).
It charged off at about $7500. I set up a payment plan for 200 a month then was advised to settle it so I did (after one month of payments) for $2600.
Do I have any options to get this reversed? I need NFCU to report as paid in full or remove the charge off altogether and resume payments. Is this possible? Thanks for any feedback!
I doubt you have any shot of undoing the settlement, and certainly the charge off.
Who are you going through for the new loan? Ask if they do FHA loans. Also ask if they have any program that utilizes the most recent Vantage score modeling – that does not consider paid collections – like what just happened to you.
Post what you learn and lets go from there.