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.
Greetings Michael,
I had 2 credit cards and a personal line of credit (8K, 7K & 1.5K respectively) with Navy Federal Credit Union that were all charged off in late 2010. At that time, I explained to a CSR in the NFCU collections department that I was unemployed, about to go onto social security (62 years old) and had no assets. Consequently, I could not afford even a token good faith payment.
Since that time (almost 5 years), I have not heard a peep from NFCU. My credit situation has, however, improved somewhat (675+ FICO) and I have managed to acquire a few low limit credit cards and a couple of store/gas cards with an aggregate credit limit of approx. 8K. However, I am still unemployed and on social security. My only asset is clear title to an 8K used car.
I am amazed that I have not heard from NFCU, OR that they have not sold this debt to a collection agency, OR assigned it to an attorney. I find it difficult to believe that NFCU would just “forget” about a 16.5K obligation for going on 5 years.
What is your assessment as to why I have not heard from NFCU? Also, do you think that my improving credit situation might trigger some “collection scoring model” showing a potential ability to repay the debt, and thus, subject me to being sued prior to the statute of limitations?
Sincere appreciation for your consideration of my dilemma.
What state are you in?
NFCU may have flagged your file as noncollectable. That can prevent your accounts from being dropped in to the general collection pipeline. But it is odd that they have not checked up periodically with some collection calls, especially given the fact that you have had new credit accounts showing up on your credit reports.
Wow….such a quick response! Thank you!
I am in Massachusetts. I have moved twice in the last 5 years (within the state). My new credit activity has mostly occurred within the past 2 years.
If they do sue me, is my car/personal effects exempt from judgment (forgot to mention that I have $5k in savings)?
Many thanks…
You are not out of the woods yet to be sued for the Navy Federal accounts (6 year limitation for legitimate collections action in the courts in MA).
Massachusetts protects (from judgment creditors) 85% of wages; $7,500.00 value in your car; $125,000.00 value in your home (up to 500k if your declaration of homestead is recorded); $15,000.00 value in household/personal items; $2,500.00 cash in your bank account.
You should have ample warning that any of those risks loom large by the fact you have been sued.
I am not shocked that you have not heard anything about the debts from NFCU or a collection agency working for them. It can happen. No need to go poking a sleeping bear either. Perhaps it is better to have a wait and see reactionary response if something comes up between now and the SOL to sue in MA expires?
….again…Thank You for your help and patient responses.
Follow-up question. I have 3 open collection accounts which are relatively small from a couple of years ago ($1600, $600 & $500). I get occasional letters/calls from the CA’s on theses accounts (all charged off) and I am tempted to attempt to settle them, before they escalate to legal action. My thought is that (once the CA’s realize that I have only SS income, which is exempt, and no attachable assets)…..perhaps these could be settled for a “song”.
Question is….if doing so might be “poking a stick at a sleeping bear” aka….NFCU and my $16.5K debt with them???
….your thoughts?
You can use the search box in the upper right corner at the top of this page and enter each debt collectors name. I have likely covered them on the site. You can read what the general settlement targets are for each. If I have not covered a specific debt collector that you can find, post a new question about then here: https://consumerrecoverynetwork.com/ask-a-question/ and I will put up a new page with what I know about them.
As far as the whether your strategy to settle non NFCU debts is taking a poke at NFCU, I think that is possible.
What are your finance and credit goals between now and when these accounts cross over the SOL to be sued?
My primary goal is NOT to “wake-up the bear” (Navy Federal) to the extent that is possible, and just hope that my luck holds out until statute of limitations kicks in.
My secondary goal is not to get sued by Calvary over a $1600 Cap1 charge-off.
I guess I should wait and see if Calvary assigns this to an attorney in my state. And only then attempt to negotiate a settlement? Or should I preempt that by
attempting to settle now? I am seeing a lot of folks on this forum being sued by Cap1 over amounts less than what I owe.
Is Calvary calling and writing more recently? Are they reaching out directly or working through a collection agency?
Calvary (thus far, at least) only sends me a “form letter/settlement deal offer” once a month or so. The letter says that, “I have been approved for a settlement offer of a 30% reduction of my debt”. I have yet to receive any phone contact from them.
I have a growing concern that if my credit report begins to show that I am starting to pay off some of these small collection accounts……NFCU will “awaken”. Paying these small collection accounts would be a real hardship for me, but I could never pay NFCU.
Paid or unpaid, these collection accounts are beginning to age on my credit reports, thus mitigating their effect on my score. Consequently, my only real concern (other than waking up NFCU) is trying to avoid being sued.
In the final analysis, I am “judgment proof”. I have only social security as income, live in subsidized senior housing and have no assets to attach. Big question…..does it serve my cause to call/write Calvary and tell them my situation (in hopes of pre-empting an assignment of my debt to an in-state attorney)? Perhaps they might “move on” and direct their efforts toward someone who is actually “collectible”.
You are in good shape to weather anything that comes up, and that goes for Navy Federal as well as the debt collection agencies. Nothing like a free hassle though, so perhaps avoiding making any moves on any of the accounts until the SOL passes is the better move for your credit reports.
Thanks Again, Michael….
Thought you might be interested in the following contact that I had with Calvary over the telephone today (they called me…totally coincidental to my postings on your website this weekend).
A disarmingly pleasant lady confirmed my info and identified herself as a debt collector for Calvary and was attempting to collect on my debt owed to Capital One ($1600). I confirmed who I was, acknowledged the debt and told her that my only income was Social Security. I further explained that I was living in a subsidized senior living facility and had no appreciable assets. She said she was sorry to hear that and would note my file. She wished me luck and asked me to contact her if my circumstances changed in the future. Based upon my conversation with her, I am now somewhat hopeful that this issue may not be escalated to an instate attorney for legal action (at least for the immediate future). Your thoughts…?
I think they may just play nice, like some debt collectors actually will do in situations like this. I would expect them to call and send a collection notice in the future though.
Hi sir, well where to start? I have 3 accounts with NFCU. A car loan, 25k owed, another one, about paid off, but about 200.00 owed and the biggy, a Visa, 22k owed. I had a payment plan for the Visa in the past, I was fresh off of a divorce, etc, so I had it for a year or so. I was not supposed to open anymore credit cards as part of the agreement. Well I went out on a medical disability from work July 2014, (cancer) and have not been back to work. I started collecting LTD, (long term disability), which was 60% of my regular check, so Christmas started to come about, not making enough money, I opened some other cards, nothing major, a few hundered here and there. Well Dec 2014 my payment plan with them ended and they would not renew, because of the new credit. So my payment went from 220 approx month to 450 approx month. With 60% of what I was making its been very very very difficult to make this payment. I’ve been doing so, and I was never late with my previous payment plan with them, however now I am about to not afford to continue to do it. They don’t seem to really care of my medical/financial problems or anything. I’ve tried to do debt management with exterenal companies, and its not bad, it really cuts down on how long I would be paying on the CC however the payment is the same, so its not helping short term. And I know they at NFCU can cross collateralize my car payment with them. I really don’t want to ignore them and I can afford the 220 or so a month with them, but the 550.00 is too much of a strain in my current situation. Any suggestions?
When you say you are working with a debt management company do you mean a nonprofit credit counselor? Are there other accounts in the debt management program other than your NFCU credit card?
Do you have a mortgage?
How much do you need the car that you still owe 25k on?
I am not currently working with a DM company, I had contacted several, both for profit and non profit. The problem with any of them is they were indeed cutting down the time for paying but the payment was about same and in my current situation that didn’t help…..and no only my Visa WAS in the debt management program, (but no longer in the program for reasons stated above)…..I do have a mortgage, not behind on it and well I do have a pickup paid for but we need the Soul though, yes.
I am wondering about additional debt in order to get a better picture of what bankruptcy might look like for you, or whether monthly payment relief on your other bills might help make a debt management plan more affordable.
With the fairly dramatic drop in income, and the need to shave off some of the obligations, it could make bankruptcy a good financial decision.
You can reconfirm the car and home loans in a bankruptcy, which can allow you to keep the property as long as you continue to pay. Your states bankruptcy exemptions will play a role in this.
Settling the NFCU credit card is possible, but it is highly likely the car loan will cloud the issue. Bankruptcy would prevent that.
Have you consulted with anyone about bankruptcy yet?
No I have not contacted anyone about that yet sir.
I would encourage you to make that part of your due diligence in determining your next step.
You can connect to a bankruptcy resource and have an initial no cost consultation at 800-939-8357, choose option 3, and you can also search for one near you on http://www.nacba.org.
To follow up, I suppose it doesn’t matter if my income is disability, LTD? I’ve been out of work since last July for medical reasons. Just wondering.
It matters to some e.g. Midland Funding is a large debt collector who pledges to cease collection efforts from the uncollectable. LVNV Funding is another, but they do not publish that as openly as Midland. There are others.
ok, but what about NFCU? all of my income is LTD which is 60% of what I was making while working.
Banks tend to not offer a reduced monthly payment plan to anyone recently on one in the last 12 months, and in some cases, at all once you drop out of a debt management plan with a credit counseling agency, or drop an internal hardship plan.
If you cannot carry the payments until 12 months goes by (since you dropped off the DMP), I do not thing NFCU will put a pause on any of their collection policies in the near term. That would leave looking at how you can pull together money to settle, or bankruptcy as a means to discharge the debt in a chapter 7, or force NFCU to take the payment the trustee tells them they will get in a chapter 13 (I usually prefer folks look at negotiating settlements instead of chapter 13 where possible).
My comment about the debt collectors above was out of context. I did not reread our comment string before posting that, but I did before posting this reply.
So, I have an unusual issue. I am currently working on correcting small aspects of my credit score to make the process of buying a home easier. As such, I recently signed up to Credit Karma’s website and immediately noticed a $1, 100 balance due for a NFCU credit card ($1, 000 limit) so it is affecting my card utilization rating. The issue: I did not open this card, nor charge the item(s) on said card. When I was eighteen years old, I had a brief marriage to a member of the Navy and he obviously opened some type of joint account without my knowledge. We have been divorced for seven years…how do I settle this debt, if I am unable to prove I did not accrue it? And if I settle it with NFCU will it still negatively affect my credit score, or am I stuck paying off the $1, 100, in order to move forward in the best possible way?
How old is the charge off that Navy Federal credit card is showing on your credit reports? If it is close to as old as when you got divorced, it may be deleted soon due to age.
If it is only a couple years old, I would look to dispute the account with Navy Federal, and with the credit bureaus, as “not mine”.
Settling an account that you got no benefit from, nor even opened, is a last resort. It can make sense when you have other financial goals that are being held up, and more so when the balances at issue are relatively low.
What time frame are you looking at for shopping a mortgage?
I have (had) an account with Navy Federal for many years. I have enjoyed working with them and would use NFCU as my only financial institution if I lived anywhere near a branch.
But I have had to go through a chapter 13 bankruptcy where I had to name them in the list of creditors. The reason for the bankruptcy was that my building maintenance job was outsourced and the new company felt that Wyoming was “too small” to employ a person in (irony and sarcasm intended).
The bankruptcy is cleared now but NFCU sold the $2000 debt I had and now claims that I caused them to loose money. I paid the debt, I never asked NFCU to sell the debt or take a loss, my problem was with a different bank.
But I am permanently shut out of my account except for checks and in person visits. Also when I call in I keep getting told that my account (all my accounts) were sold off. How is that possible?
So why am I being permanently punished for NFCU’s actions?
Did you complete the Chapter 13, and I mean make the 3 or 5 years of payments?
The repay was supposed to take 5 years and only took 3.5. Paid in full.
Bank policies can be set up to heavily bias against anyone who has defaulted on payments, discharged debts, or otherwise not fully met account obligations. I know that you paid fully through the bankruptcy trustee, but if took a guess, Navy Federal does not distinguish between the fact that your file is tagged for bankruptcy, and the full repayment.
I would call NFCU corporate and ask their policy on this. They like to advertise how they are there for military families, but are they under the assumption that military families do not hit tough financial spots? They are sorely mistaken. But then again, they have policies and procedures that try to do too much. That is not an issue exclusive to NFCU. It is an issue with virtually all banks.
In the end, you may determine to take your business elsewhere.
I let NF know that 40% is the bottom number I can possibly do pending going to family and friends. I also stated I an working with other creditors settling and I am close to an agreement so whoever settles first will get paid first. I also told them I will go as far as consulting with a bk attorney. So I will see what they come back with soon.
Is 40% typical for NF settlement? Or have you seen lower percentages?
I see them get stuck at 50 percent, but my targets tend to be 40. NFCU, like other credit card issuers, can look to settle at different rates of savings depending on a host of different inputs.
If they refuse to budge of the 50 percent settlement, can you swing it?
I did speak to NFCU today. She offered i 50% of balances. I countered at 35% and she said she couldn’t submit an offer that low. So I said I will try and reach out to family and friends at 40% and that’s the furthest I can go. I’m waiting to hear back.
I would follow up if you have not heard anything within a week, and certainly a couple weeks before your accounts go 180 days late.
I have my mortgage through NFCU and a credit card owing $28k. I am considering settling some of our other debts held outside NFCU (totaling over $70k), but am concerned about this particular debt due to the cross-collateralization. Will NFCU settle that without affecting our home, or should I transfer the balance to a different creditor and then try to settle? If so, how long do I need to make payments on the new account before attempting to settle? Thanks.
I would just as soon refinance my mortgage with a different lender, than balance transfer the 28k over to some other card(s), if you even can, and then pay for a year or more before later trying to settle.
That way would be potentially less of a complication.
How does that scenario look for you?
Michael,
I am in a very similar situation to Jason. I have $19,400 in credit card debt with NFCU. I also have a VA loan through them for our mortgage. I am switching jobs soon, and the overtime will be gone for about a year at which time there will then be plenty of overtime. Changing jobs is the best option for my family in the long-term, but in the short term, I will have to default on the NFCU credit card to be able to survive. My question for you is, if I just stop paying on the CC for the next year (maybe giving them a couple hundred dollar here and there), will it affect my mortgage? I plan on paying this CC debt off completely, but i just need time to get to that point. Thank you for your time and consideration.
-Steve
You will be okay on the mortgage side, but just to be sure, call Navy Federal and ask about their policy with what you have coming. Post what they say and lets go from there.
NFCU will offer hardship payments on the credit card withing a month or so of being late. That may open up some options to keep this out of collections, or otherwise stagger your delinquency a bit.
At the end of the day, if you are going to fall 6 or months behind, I would settle for the best savings (and payment terms on the settlement), because that may then be the best outcome for your family finances.
I have an unpaid unsecured “home improvement” loan from Navy Federal Credit Union for $50,000 with an 18% interest rate. I obtained this loan about 2 years ago and was making payments on time for about a year until my family and I fell into hard times. My wife became mentally ill and had to stop working. We began to receive some money from disability insurance. (half of her income). We continued to make the payments, as we continued to scrape by. After about a year, the disability insurance payments stopped and we were left with a single income. So we were forced to stop making payments to keep food on the table. We have settled with other accounts, before they charged off, but the NFCU account is too much to settle with. This account is about to be charged off. What should I expect to be the next step. I can not afford to pay for this loan. What are my choices / rights (if any) The account is now about 55k. (Fees and penalties)
Are you certain the home improvement loan is unsecured? If it is, you are looking at the same types of concerns you read about above, and in the comments.
How much equity would you estimate you have in the home right now?
What state are you in?
I live in CA and I had contacted Navy several months ago and they called it a signature loan. With this increasing amount, are the chances of getting sued greater than not? I don’t know what to do or what to expect. They recently asked for me to send them a letter indicating an amount I could afford for them to consider a settlement amount, but I think its a ploy to restart the SOL. I really wish I could pay them off and put this behind my family and I.
You do not have to send a written offer to settle a debt with NFCU in order to reach an affordable agreement. You can do that over the phone. I would not say they are trying to get you to reset the SOL to sue. Navy Federal internal collection policies are just not that well thought out. But your think of that stuff means you stay on your toes, which is a good thing with this king of stuff.
Your chances of being sued are pretty good.
Could you afford a monthly payment at zero percent interest?
If you were to settle this account later on, how long would it take to pull together 30 to 40 percent of the balance owed?
Would it be better to try to settle with NFCU before they sue me or wait until or if they do sue? What are the best chances of getting a lower % rate?.
Is it unheard of getting a settlement with zero % interest?
At the current time, I don’t have an approximate time line as to how long it would take me to pull together 30 or 40 percent because we are living paycheck to paycheck, so I really don’t have a choice at the present time.
Settlements that require payment plans, that have zero interest, are fairly common.
When your choices are food on the table vs settling a credit card bill, the choice is being made for you. Settling should first be based on your ability to pay.
You will have options to consider all along the way. It might be a good idea to talk with a bankruptcy attorney to learn how that can help you later if push comes to shove.
I had a checking and savings account last year that was closed after i failed to pay my overdrafts. Do you think they would allow me to reopen my checking account with them so that i could open a secured credit card with them or would i be better off going elsewhere? I am willing to pay off whatever debt i owe them.
Call the bank and ask about their policy for opening accounts with customers with prior overdrafts and closed accounts. Some banks are open to doing this.
Even if you go somewhere else, you may not be approved for an account due to the past account issues with another bank. Paying off the past overdrafts will increase your chances.
I have an unpaid credit card from Navy Federal. The total balance owed is $4000 and I had a medical emergency in summer of 2013 and after trying to maintain the payments and falling behind 30days apx. 2 times I found out that before the medical happened and I had ever had a late payment, the visa was closed due to lack of activity, because I was trying to pay down the balance and not use it! after fighting with them to re-open the visa and not delete the oldest trade history I had, I was no longer able to keep up with it, (and ethically did not want to because they had already affected my credit score by closing it) and stopped payment in March of 2014. This morning I was served with a summons to appear/repay. Now I have researched this situation previously with many comments of Navy Federal doing everything in their power to scare you into paying. Do I have any options of settling this or is this a scare tactic and if I were to ignore it what would the repercussions be? Also, my fiancée was active duty and has a collection from Navy Federal that was reported finally in 2011 after stopping payment in 2007, he has since had auto loans and other services and states the same thing was done to him but has never had any further action against him. Should I take the loss and ignore or will there be further action?
You can probably still settle your credit card with Navy Federal, but the amount you can realistically expect to settle for is often going be higher now, than if you had not been sued.
As far as Navy Fed scaring you into paying, I suppose the debt collection process can be viewed that way. It is really just the collection process. Some people get sued, some people don’t.
If they get a judgment, they can potentially look to garnish your wages, levy or freeze up your bank account, or lien property. Those are not scare tactics either, just how collection works if they get a judgment, which can now happen since they sued you. That is basically what you need to be concerned with if you ignore this.
If you were to try to negotiate a settlement, what amount of money would you be able to pull together, and how quickly?
I just wouldn’t expect that a balance of $4000 would create such a large legal action. If I was able to settle any amount it would probably only be for $1-2k. I am 25 with no assets and working paycheck to paycheck supporting myself. and I know everyone has a sob story but I just don’t see myself being able to repay in full. They also never sent any notices of settlement like some of the previous comments I ready today. Is there a way to fight the judgment or delay the process?
I see collection lawsuits filed for less than 500 dollars regularly.
You can definitely fight the lawsuit, and you may even be able to get it dismissed. At a minimum you can fight and buy yourself many months of time.
Post the name of a nearby larger city and I will email you contact details for any experienced debt collection defense attorneys I know of in the are that offer a no cost initial consult.
I live in San Diego,CA. And thank you for all of the advice. It is so helpful.
A default judgement was awarded to Navy Federal Credit Union for approximately $43,000 in credit card debt in Sept of 2008. I was just notified by my employer that my Navy Federal has garnished my wages for 25% starting Jan 23. The toal on the garnishment order is now $70,547. I found out about the judgement in 2010 when I sold my house on a short sale an attorney for Navy Federal put a Lien on the property preventing the sale. I was recieveing no cash from the sale and the buyer agreed to pay the attorney a nominal amout of $2,500 to remove the lien. Unfortuneatley I have know about the judgement since 2010 but have never done anything about it. I am now considering contacting an attorney regarding vacating the judgement since I was never served for the original law suit. I do not believe a bankruptcy will work for me.
What would be the best way to negotiate a settlement with Navy Federal to remove the judgement and wage garnishement? Should I try to negotiate with NFCU and or their attorney myself or hire an attorney to negotiate on my behalf? Thank you
Now that there is a garnishment, unless you can show how you meet exemptions for your state, the attorney for NFCU is believes they have all the leverage, and that is true. The garnishment will typically not go away unless you leave the job, can show how the amount they are allowed to take causes undo hardship on your family, you settle with a lump sum, or combat the situation.
What sort of reasons can you bring up to the court to show that the garnishment will cause you to not meet your basic bills and living expenses?
Can you come up with 75% to settle if you cannot get the garnishment reduced or eliminated?
Why is it you believe bankruptcy will not work for you? What state are you in?
If it were me, my first step would be to contact an attorney with a consumer law practice. But not just general consumer law, one who regularly defense consumers in debt collection cases. I can help you locate one with experience that offers a no cost initial consult if you like. Just post the name of a nearby larger city.
Vacating a judgment when you have good challenges to raise is the first thing I would talk to the attorney about. If that is not a reasonable goal, settling in this instance may be better handled by the attorney than on your own.
Hey there.
So to start, I am current on all my bills.
I have the following:
Nfcu cc: 10,500
NFCU Auto: 19,100 (upside down by about 7,000)
NFCU consol. Loan: 15,100
Chase: 5400.
I want to consolidate or offer settlements. How should I approach. I’ll have about 9,000 to spare/offer in cash.
Thanks.
Can you afford a monthly payment of roughly 590 dollars for all of the bills aside from the auto loan with NFCU? How much is the car payment?
Is your current income something you consider stable?
Yes I can. The auto loan alone is 425 a month the consol loan is 425. Credit card is 200 and chase I pay about 200 a month. What is best course
You appear to be in the position to consider all legitimate options to get out of debt. The most common by far would be to aggressively pay down the debts in an accelerated manner, like the debt snowball method.
You could also benefit from talking to a credit counselor about a managed repayment plan, which is what I had in mind when I asked you those monthly affordability questions. You can talk to a counselor at 888-317-8770 (I do not think they are in tomorrow – Sunday).
The debt snowball or roll up method I mentioned first will keep your credit scored and financing options in tact.
The managed repayment plan through a credit counselor will leave your credit scores untouched for the most part.
You appear to have an interest in settling your debts. But I do not like this option with all of these NFCU accounts when it is not out of necessity. You will likely need roughly six thousand more dollars than what you have now to be prepared to settle the credit cards and loan. That does not account for the car loan which can often have a cross collateral condition that could impact your ability to keep it if you stop paying your credit cards and loan with NFCU.
If you can qualify for chapter 7 bankruptcy, you could be out from under all of these debts, including giving up the underwater car, and with no concern for any deficiency balance after the car is auctioned. You may have other assets that you do not want to be affected by a bankruptcy, or a host of reasons to want to avoid it.
Out of these, which would you be more inclined to pursue?
Well due to my position and clearance I am more inclined to speak to a counselor through military one source and get an idea, but the debt snowball looks like the route otherwise. I’d prefer to avoid bankruptcy all together . Would you recommend taking the 9 I have in Cash and paying off the lower credit card and then rolling those payments. Or would you recommend putting that 9 in an acct to make the accelerate payment towards one card and then taking my usual income and payments and making accelerated towards another debt. That way if an emergency were to arise, I’d have a little cushion rather that having to use a credit card.
Again thank you
My preference would be to keep some powder dry for surprise expenses or an emergency. How much of that cash in reserve is the right amount for you is a question you have to answer. Lets assume you took 5k and used it to pay down an account. What are the interest rates on all of the loans?
Michael,
I posted on Jan 5 2015.
No i have not contacted a bankruptcy lawyer yet.
You did not say when they send the accounts to charge off nor when they sue.
It’s been 4 months since the loans were initiated.
How much time would i have till they sue pls?
And do they sue on all high debts accounts?
Thanks
Signature loans traditionally charge off at 120 days of nonpayment.
Credit cards traditionally charge off at 180 days, though some banks appear to be moving to more of the 4 month timeline.
Creditors can charge accounts off much soon than the above timelines, but accounting principles, and bank regulator guidance, does not want to see charge off timelines going beyond what I have posted (though the OCC uses a 7 zero billings cycle that could appear to leave room for 210 days).
My experiences show that creditor risks of suing to collect begin predominately right at charge off. But there are creditor policies I can point to in the past,and even now, where placement with attorney collectors with known reputations for filing collection lawsuits, can occur within the first several months of payment delinquency.
Yours are high risk accounts if they were recently opened, maxed out, and payments missed. That said, I cannot tell you when that will happen. I suspect within the next several months.
You would think that higher balance accounts would see the most lawsuits filed, but that is not always true.
Michael,
It’s a new year. As you know, I’ve been receiving the usual letters of settlement offers, credit reporting, etc from NFCU, with most recent on Dec 4. On Dec 4 they offered the lowest settlement yet, but I am seeing what I can afford. What could be the situation with NFCU now. They stated that the account was charged off, is the account with them still, or with collection agency etc? I know they get if “off the books” as loss for the year, but is the account considered not worth the effort of bothering? I know the banks considered certain amount of risk when writing loans. Why would a loan that has been wrote off as loss be on their minds.. ?
Thanks.
The account is more than likely still owned by NFCU. You can call them to verify that. You could learn the account is placed with an outside collector, or in queue to be sent out.
The account being charged off is just an accounting function. NFCU, like other banks, still care about defaulted accounts. I have seen files, out many thousands over the years, seemingly get lost in limbo, and not follow the normal life cycle of an unpaid credit card or loan.
The best way to determine where things are at is to call NFCU. You may even be able to resolve the account in the process.
Hi Michael,
I have a total of $29,000 in unsecured debt with NFCU. A personal loan and credit card debt.
I lost my job barely 2 weeks after getting them. the money was in an overseas business venture which now has turned kaput.
I have not made any initial payments on any of the accounts to NFCU so i dont qualify for hardship.
What are my options?
Will they sue seeing as i have not made any payments since initiating the loans?
How soon will they sue/charge off?
The loan and credit card are 4 months old.
Can they take my only car?
Is banruptcy an option?
i have no income and have had to move in with family.
Bankruptcy may offer the best solution.
Have you connected with a bankruptcy attorney about your options with these accounts? Are there other debts besides with NFCU?
Michael,
I checked my credit report for the account NFCU and I negotiated to settle. It says that I have balance (the difference of full amount and settlement). In the remarks it says “cancelled by credit grantor.” What does this mean? Also, I checked my NFCU account and it has the updated bill with interest charges as if I hadn’t settled. Could this have something to do with other account they attempting to settle, or are they mutually exclusive?
Thanks
Your NFCU accounts as related to credit reporting are each exclusive of the other. The error in reporting of an amount still owed, when NFCU agree none is, can be corrected. You could skip normal credit reporting disputes by filing a complaint against NFCU with the CFPB about the error. Your concern would reach the right set of eyes at the bank. If it were me, I would wait until the other NFCU account is resolved before doing anything about the credit reporting of the settled credit card. It could flag your account in a manner that is not conducive with your current goals and timing.
If there is an immediate need for your credit profile to show that you do not owe the amount that NFCU is incorrectly reporting (debt to income ratio short of some financing goal), post about that in a follow up reply and lets go from there.
Ok. I will keep you posted.
Thanks
Michael,
I was thinking of waiting til I have the full amount for payoff. Also, I just checked account online again. Also, as I as telling you in the past the CC account with NFCU that I had settled for 6’400 has not updated. I am now seeing a delinquent message on the account main page. I still have all the paperwork from their assigned attorney. I hope I did not get duped. Is this an easy fix? Can it be done without shaking the tree or should I ignore it and hope it gets ironed out?
Vic
You did not get duped. If they try to collect more from you, or report anything about the debt being unresolved, or a balance still owed on your credit reports, post an update. I will have some actionable suggestions for you that should make quick work of them fixing any mistakes.
If it were me, I would not do anything to shake any tree, or otherwise put critical eyeballs on your files, until I settled the final debt.
Michael,
As I previously told you I received a settlement letter from NFCU on Nov 11 advising me the loan has been charged off, however, I did not respond. I just received another letter of settlement for $5’900. This is now 39 cents on the dollar as opposed to their first offer of 45 cents. It stated that the offer is not valid after 30 days. They also said “don’t wait!” as if it was a sales circular. Kind of amusing. Thoughts??
Vic
All offers and notices will generally come with some form of “call to action”. Some have multiple, and some are better put together than others. I have even seen $50.00 gift cards included in getting people to call in and take advantage of an offer.
40% is a good offer. Can you gather up the money to take them up on it?
I have seen credit card settlements with NFCU go lower. I have also seen them only reach this low. And years back only say them accepting 60 percent deals. It boils down to affordability, and the risk reward in holding out for something lower.