Your Options with a Repayment Plan or Settling Your Citibank Account
Have a debt of approximately $17k with Citibank Credit Card, 162 days past due. I've talked to them repeatedly about inability to pay, even offered settlements, but they won't budge. An offer they made of a 5 year 0% plan has been taken off the table, and I can't afford $1000 to bring the account current for 1 month's time. They tell me it will soon be in "pre-litigation". My question is: What does pre-litigation mean, and what can I expect next? They say making a payment of $500 will open up other options again, but I'm supposing it will just "reset the clock" so to speak, and I'll just be out the $5oo (which I probably can't afford anyway)!
What does citibank mean by prelitigation and what are my options to settle my credit card with them?
—Scott
Short answer
A pre-litigation reference from Citibank can mean nothing of consequence, or it can mean your account has been flagged for placement with an attorney who may be authorized to sue. Creditors use the phrase as an effective tool to get a payment out of you, but some accounts really are selected for immediate legal action.
Key points on this page
- At charge off, Citi does one of three things: assign the debt to a collection agency, sell it to a debt buyer such as Unifund, Portfolio Recovery, LVNV or Midland, or send it straight to an attorney collector in your state with authorization to sue.
- You will know whether the pre-litigation wording was a collection ploy as soon as you see who the account was placed with.
- Accounts get fast tracked for legal collection for reasons such as recent cash advances, balance transfers or large transactions just before default, sending a canned letter pulled off a website, paying other cards but not Citi, and even the affluence of your zip code.
- If Citi withdraws a long term repayment plan, a nonprofit credit counseling agency can often get a similar plan approved, usually with a lower interest rate and across all of your cards at once.
- Do not enroll in a repayment plan you are skeptical you can pay every month for the full term.
- If there is no realistic source of funds to settle, look at your options with bankruptcy. It is often better to be in court on your terms, with your own attorney, than on Citi’s terms with a collection lawsuit.
The reference to pre-litigation at this stage of default with a citi bank credit card or personal loan can mean nothing of consequence, or that your account has been, or soon will be, flagged for placement with an attorney who may be authorized to sue you in their effort to collect. If your goal is settling your citibank credit card, you may end up doing that with a debt collector Citi sends the account to, even an attorney debt collection firm. If you wanted to get Citi to accept a payment plan instead, even though they pulled the option off the table, you can still get on a payment plan.
Citibank, Charged Off Credit Card Debt, and the Risk of a Collection Lawsuit
Your account is a couple of weeks from charge off. When the account charges off citibank will do one of three things:
- Assign your debt out to a debt collection agency who will call and write to you on behalf of Citibank in order to collect.
- Sell your debt to a debt buyer like Unifund, Porfolio Recovery Associates, LVNV, Midland Finding etc. These debt buyers use debt collection agencies and attorney debt collectors too.
- Citibank may send your account directly to an attorney debt collector they have an established relationship with in your state for collection and authorization to sue.
Here is a quick read about what banks (not just Citi), do at the point of credit card debt charge off: Assign, Sue, or Sell.
Creditors like Citi bank use the reference to pre-litigation as an effective tool to get you to agree to make a payment. The detail you provided supports exactly that. Having said that, there are a number of accounts that are selected for immediate legal collection action. What you further outlined about Citibank withdrawing the hardship plan offer and that they are not willing to discuss debt settlement, gives me the impression that your account may well be set for fast track referral to an attorney debt collector.
There are Reasons Citi Will Fast Track Debt Collection Efforts
- It may have something to do with account activity leading up to your default in payment (recent cash advances, balance transfers, increased or large transactions just prior to default).
- If you send some canned letter you pulled off a website, Citibank may have flagged your account for legal review.
- What can be seen real time on your credit report, and whether you are paying other credit cards, but not paying Citi.
- Even the affluence of your zip code.
There are some key things I like to see people put in play prior to reaching the stage of pre charge off collection that you are in. Some prepping can help you better know why Citibank might pull an earlier offer, and even when to take the most recent approved deal to settle.
First, you mention that even the minimum 500.00 Citi bank is asking for is not within your budget, but were you to come up with it, would they offer the 5 year balance liquidation plan again? If they do, can you come up with the roughly 283.33 every month like clock work for the next 60 months? If you are skeptical that you can meet the lower payment, I don’t recommend enrolling in the plan. Do you have other credit card debts you are struggling with? If so, will agreeing to a long term balance liquidation plan with Citibank (hardship repayment), help you manage your other credit card debts?
If Citi has yanked the offer to set you up on the 60 month repayment plan, they likely would accept a similar plan if it was submitted to them through a nonprofit consumer credit counseling agency. And if you are looking to get lower monthly payments out of more than just Citi, talking to a credit counselor will make sense. Talking to a credit counselor one on one to get a lower monthly payment estimate is free.
Credit counseling companies have decades of history of getting people set up on affordable credit card repayment plans with Citibank. The counseling agency can often get you a lower interest rate and cut monthly credit card payments across all of your credit cards, rather than you struggling to get all or your credit card banks to agree to a plan, or only being able to get temporary hardship payment reductions. You can speak with a certified counselor today at 800-939-8357 ext 1, and also learn more about consolidating monthly payments.
You reference speaking to Citibank about settling your credit card debt. How were you going to fund a realistic settlement offer were Citi to make one available?
What are the options for settling your credit card with Citibank?
If you do not make a payment, or some arrangement with Citibank, the account will charge off and be put into their collection pipeline. If the threat of pre-litigation in this instance is a collection ploy, you will know as soon as you are contacted by the company your debt is placed with. As soon as you know who that is there are some predictable things that will happen next.
If you want to settle the Citi debt, you have to identify a source of funds to do so. The account is not going to go away after charge off. You will have options to make a payment plan or settle the account wherever it lands. My concern is that you do not appear to have the money to do so.
Have you looked into your options with bankruptcy? If not, you should. Without the resources needed, even if accumulated over time, and a realistic plan to settle collection accounts, the situation can eventually lead to court and being sued for your unpaid Citi credit card. It is often better that you are in court on your terms (with your bankruptcy attorney) than on Citi’s terms with a collection lawsuit.
I should mention that threats of and/or actually being sued to collect unpaid credit card debts is not exclusive to Citibank. Other large credit card issuers like Bank of America, Chase, Wells Fargo, Capital One, American Express, Discover, do sue to collect. Sometimes collection efforts on these credit card accounts wont occur until some time down the road, or after your credit card account is sold off to a debt buyer.
Post your answers to the above questions in a comment reply below and I can offer more detailed 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 was caught off guard today by a call from ADR Services letting me know that Citibank plans to take me to court over a $1800 balance on a Best Buy credit card that was opened in 2007 and finally closed out for non payment in 2012. The frustrating part is that is wasn’t me. I’m trying to find out as much information as possible but all I know so far that is that someone stole my identity, opened the account and paid on it for 5 years then just stopped. Now its looking like I will have to battle it in court and prove it was not me that opened up the account or face a penalty of up to $5000. Any help would be very appreciated.
I am not aware of an ADR Services collecting on Citi debts. And not for debt buyers of Citi accounts either. I would be careful, as this could be a collection scam.
I have 6 credit cards, all with low limits, all maxed out. I have been out of work since Feb 2016. I have been paying minimum on all cards but let the CitiBank card slide. It has been 4 months since I made a payment. I have not called them to set up a payment plan. I am wondering what will happen when it goes to a debt collector? Will they find my family’s phone numbers and being harassing them? I have basically zero income to deal with this.
It is less common to have family get calls if they know they are reaching you. If your voice mail message says you have reached “first and last name” there is little legitimate reason to do the dial around to family an neighbors. Pick up a call once every 2 months or so and that is even less cause for the dial around.
You can settle with debt collectors for Citibank. When things bounce back enough for you to do that, it is an option. Citibank sells debts that remain unpaid long enough to Cavalry, PRA and Midland. You have options to settle with those debt buyers too.
Hello. Just learned that citibank closed my account. I have been making 300.00 dollar monthly payments the last couple of months but it wasn’t enough to make the minimum payment. I will be makeing the account current at the end of this month. So i will have made the minimum payment. Will they still turn it over to collections or allow me to make my monthly payments even though the account is closed.
You can typically still continue to make your minimum payments and prevent them turning the account over to collection agencies, but call in and set this all up with them over the phone. Get a schedule of payments all set up with them proactively. If you don’t, you do run the risk of being considered late with the prior payments and them still charging your account off.
You can often get a more affordable monthly payment, even on a closed account, by calling and formalizing the plan.
Hello Michael,
I have a debt with citi bank on a Costco card for $5400 and one with Capital one for $8600, and a loan with prosper for $12000, as another person below, I’ll leave the country in a couple months, with the income I’ll have in my home country I won’t be able to pay. I will need to return for work but just a couple days as a business trip from time to time. What could happened if I just don’t pay? I was renting and sold my car a few days ago.
Thanks a lot in advance
I see very little happen with collection efforts when people leave the country. That can change if you move back and the unpaid Citibank and CapOne are still on your credit reports. In many instances this is something to deal with if/when your plans change.
You could wipe the debt out in a chapter 7 bankruptcy filing before you leave, but that process can take a few months.
You could save up over time to settle the debt long after you leave.
bankruptcy did not help me. citibank placed a lien on my home, after bankruptcy 20 years ago. I have had no luck getting that lien taken off, even after 20 years!~
I am not sure what happened with that 20 years ago, but there are ways to make sure it does not happen again, and that would typically strip the lien too.
Hi Michael! My husband has the same problem with Citi. A judgment of $3.5k against a house he owned with his late ex-wife. He continues to make the mortgage payments (w/a balance owed of $45k…give or take) but all utilities have been cut off. The house has all but fallen to the ground. In fact the property would probably be worth more if the house wasn’t on it. He has an opportunity to sell the property and all was going well until this judgment came to light. We aren’t wealthy by ANY definition of the term.
We are both retired and on fixed incomes. I wish I could say we have $3.5 in an account somewhere…,but sadly we don’t. What might be the best way to approach this? Would like to offer $2k and a certified check (or a wire??) sent on closing day. Do you think they’d go for it?
Also….there definitely IS a judgement on the books, but do they KNOW he owns this property,..and if they do NOT know, would the judgment have come into play if, for instance, he was trying to sell an automobile?
Thanks Mchael!
It is the lien on the home that must be cleared prior to, or at sale. If their is no lien on the automobile it would not be the same thing.
If the money needed to pay for the settlement is coming from escrow it is much harder to get a settlement. Check out my video about settling a debt when you own a home.
hi Michael, I have two accounts with Citibank. One is a regular Citibank card and one is a Home Depot card. They are both approaching the 6 month mark of non-payment. I haven’t contacted them. Today I got a letter from Citibank offering to settle my $1680 account for $674 (40% of the balance) for either a lump sum or with 3 payments. I have until 2/14 to decide. I called the number of that paper and asked if I could pay less if I made a lump sum payment and they said that the 40% was the lowest they will go. Is this true? Is this considered a good offer or is this just the beginning offer? Also, should I reach out to Citi about the Home Depot account? That has about a $9800 balance. What should I expect as a settlement offer on that? I know you said they sometimes deal with those brand cards differently. Any advice is appreciated it. I’m on a time clock now, I think. Thank you
I target Citibank settlements at 35%. That goes for now or later. Later can mean additional fees, and if Citi will not go under 40%, holding out for 35% with a collection agency may be the same amount of money as taking 40% of a smaller balance today.
Later settlements (after account charge off) may result in better than 90 day payment terms though.
I would target Home Depot the same.
40 percent with Citibank is a good offer.
Hi, i have a credit card account with Citibank. I stopped the last time I paid it was in September 2016. Today I received a letter offer to settle the account for 40% of the balance. I never contacted them, the just sent me the offer. I have other debts that are passed due as well. My credit is tanked. Should I accept this offer or is there a chance I can get them down to a lower amount.
thank you
You can get lower, but not by much (always worth the effort). My bigger concern would be whether or not you should settle with Citibank first if you have limited funds to work with, while have unpaid accounts with more aggressive creditors.
Who do you owe, how much, and how late are you on each account?
In 2009 I had three $12,000 accounts with citibank. Two were closed & sent to an attorney in Louisiana where i set up a payment agreement for $300 for one account. I will make the last payment if the $12,000 next month. Three years later they sent a payment agreement for the second account for $212.00 a month. A year after paying with no late payments the account was moved to an Alabama law firm which i have been sending both payments to for a year. Never being late. They have recentky sent letters that my payment was 2 days late and my account is in default. Once i recovered from my financial crises i have never been late. I mail my payment on the first of the month for a 15th due date. Why would they be difficult when im never late.
They processed the payment late; were careless with incoming mail and misplaced yours; The holiday mail slowed things down; USPS was careless. There are a number of ways this could have gotten messed up. I would call them and clear things up.
Many collection law firms have online payment options on their websites. This could prevent any additional payment issues.
Z&Z law firm returned my February payment and a letter stating that my account is in default & the agreement is no longer valid. I owe $9514.76.
Account was $12,000. My current monthly payment is $212 and cant pay more than $300 a month without dufficulty. My parents might loan me the money if i can get a settlement offer. How much would you charge to negoiate a settlment offer or a $300 month payment
Fill in the talk to Michael form in the right rail. I will email you to set up a time to talk on the phone and see if someone can help.
Everyone in the network charges 15% of savings. You pay the creditor first.
Hi,
How long after charge off were they sent to a settlement attorney? Did you attempt to settle before the attorney got involved
Hello, I am a small business owner. In the course of starting my business., I got behind on a Sears Account (Citi) and it was charged off. I am willing to settle the debt in full ($6,487) in exchange for having the account removed from my credit report. The charge off is hindering my ability to grow my business. I am told that the CITI internal recovery unit has the account and they have been very resistant to working with me on this matter. Can you help me?
You are talking about pay for delete, and that is just not common with credit card banks. Settling with Citi, whether paying in full, or getting them to agree to accept less, will update your credit to show a resolved derogatory. People still accomplish credit and finance goals with that on their credit.
Please define for me a resolved derogatory?
Meaning Paid but it still shows a charge off?
An account that went severely delinquent, and to the point of charge off, but was paid or settled fro less and now reflects a zero balance owed and resolved.
Check out this video about r-9 on credit reports for more detail.
Last month Citi offered 6K on my 14k balance for settlement. I had 4k at that time. And I called them this month (4 month past due) now they said it is 7K. Please advise what can be the best course of action. I can borrow more money but dont want to. Rep said that it can be charged off any time so I should make 200 dollar payment to stabilize the account.
The timing is a bit odd. Fill in the talk to Michael form in the right column. I will email you to set up a phone call when I see that. I want to dig into the details a bit more, and can also walk you through getting the better deal you are looking for.
I have a debt with Best Buy back when they do business with HSBC. I have checking account with Citibank. Can they settle off my checking account with Citi now that Citi has all those HSBC accounts?
Your concern is something I see more with credit unions than with national banks like Citi. How far behind on your Best Buy account are you?
Need help.Was involved in rear end collision Nov 23 2016. I was rear ended and have not had income since then. No disability or workman’s comp. I have kept payments up because of savings. I got TBI from the accident. Not sure when I can return back to work.
Are you only dealing with Citibank? What other accounts do you have that you are struggling with? What are the balances? List whether you are current or late, and if you are dealing with outside collection agencies.
I can help you target the best settlement savings. And you should compare that with your other debt relief options.
Hi Michael, I have 2 credit cards with capital one card with a balance of about 2k and a citi bank with a balance of 2200. I received a letter stating if they don’t receive a payment from me within 20 days they well send my debt to collections. Due to unforseen circumstances I can’t afford to make the $500 minimum payment on the account. What should I do?
How long until you can raise 40% of your Capital One balance, and 35% of your citibank?
Hello,
I was on a payment plan with citibank for my credit card since June 2015. Long story short – customer service did not set up the automatic payment with my new bank account information. My payment was due on Nov 15, 2016 & on Nov 20, 2016 they charged off card & sent it to collections. I called the collection agency & made my payment for November & December. On my credit report it says I failed to pay Nov & December. Is there anything I can do to get the charge off & failed to pay off of my credit report. I’ve never missed a payment & they charged off the card after 5 days & it was their error that the payment didn’t come out.
I am not sure what you have happening. The account would likely have gone 6 months without payment before the charge off occurred. They were likely never going to remove that fact. In my experience, the better outcome for your credit once you have an account go 90 days late would be to settle it for less with Citibank (or the collection agency they send it to), and get the zero balance reporting.
Hello Michael,
My name is James and I owe approximately $17k on my credit card with Citi. I will be leaving the US soon, and I would not be able to pay these cards due to unforeseen circumstances. What are the implications if I were to leave US with the credit cards unpaid.
Thanks in advance for your advise!
Your credit is harmed for about 7 years. Do you intend to come back to the US in the future?
Hi Michael, great site by the way, I have a question, I have been on a payment plan on a Citi credit card account with Capital Management and I got into that plan right away after the account charged off. Been paying since 2014 when I got out of cancer and I was thinking, what could happen if I stop paying for a few months to gather some money to offer a settlement on said account, the account is 15K and I pay $200.00 a month on the plan, what would you recommend?
How quickly can you pull together about 5k?
I have outstanding credit card balance of 16k with Citibank that has now been turned over to Debski & Associates for collections. I received a letter for collections from them in September. I did nor respond. I think they just filed a lawsuit against me. Should I call them and try to make a pay,ent plan or wait until I am served ?
Pull up the case in your county court and post a reply with who the named plaintiff is in the lawsuit. My suspicion is that you are being sued by a debt buyer like Portfolio Recovery, Midland Funding, or Calvary Portfolio. My feedback will change depending on who is suing.
Hello, I have an issue with Citibank. Back when the mortgage meltdown burnt everyone I defaulted and Citi started asking for their money. I paid on and off in the 1st year and after that I paid them monthly until the balance was paid off. I never received a statement but I did call them to find the balance from time to time. Now after paying them $41,288.89 they claim I still owe them when the original charge-off was $35,000. The corporation asking for payment has no listed address and are operating out of Canada. I have bank statements for all 65 payments made to them. How can I get them to stop this nonsense accounting problem they have. They recently sent a letter with no return address saying that Citi confirmed the debt to them but refuse to send the payment register. Help me..
What is the name of the debt collection agency you are dealing with? Have you called Citibank to confirm they placed the account for collection?
Global Credit and Collection and no, I’ve not called Citi. I guess that is a good idea. Any other suggestions ?
That is the first one. Any others would follow on the heels of that outcome.
I just settled with United Collection Bureau (Citi – Macys card – $3800 bal) 180+ past due, 50% settlement split in two payments within 2 months. Also settled a Citicard (hiltoncard – $4400 bal) for 35% settlement split into 4 months just at the 180 past due mark (sweet spot for settling). It is all possible if you call them and explain your hardship and intent to workout a deal.
Thanks Michael Bovee, your webpage has been very helpful for me. Still working on settling rest of my debts; I started in late Aug. this year, and I am in the path of settling about 25% of my total debt (about 60K) by February with settlement deals I have already made so far (still making payments).
Good afternoon: My Citibank debt was sold to Midland Consumer Credit, I paid it off just several months ago (July 2016) to Midland but can seem to get them to show the judgement has been satisfied with the local county courthouse here in Lee County Fl,.
Is this because they won’t acknowledge the judgement against myself because they purchased the debt or because they don’t have anything to do with the judgement.?
Any thoughts on how to have this judgement shown as “Satisfied” on the court docket or Credit reporting agency?
Many Thanks.
Peter Kramer
It can take 60 to 90 days for the court to be updated about a paid or satisfied judgment. Who is the law firm that handled it?
I received a default notice I paid the arrears owing as per request with default but in that time I missed my minimal payment I called Citibank and they told me they could extend the letter for me to give me time to pay the minimum payment what worries me tho is I spoke 5.30pm on 21st October and the letter ran out on 22nd oct so they lady advised that she could not guarantee that my request to extend time on letter would go through
So if it doesn’t what happens next they will see missing that monthly payment as defaulting on a default?
Is the next step letter of demand?
If u receive a letter of demand and don’t have the lump sum to pay can u do a payment plan?
What type of account is this with Citibank?
What is the required monthly payment, and what is the reduced payment you had that you are trying to extend?
For how long had Citibank been accepting the reduced payments?