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.
Please contact me ASAP. I want to settle this account.
I can help you settle your Citibank account. You will need to schedule a time for me to call you here: https://calendly.com/debtbytes/15min
Hi. lost my work and have different card total 35000$ all past due for last 2 months most of them creditor closed and giving me payment option wit 0 apr for 60 months so my question is which option is best for me can I apply for dept relief or paying minimum payment for 60 Monts payment that credit card companies offered me so which one is less effect on my credit score coz I’m planning to buy home in future .
Thanks
I tend to suggest the benefits of settling the debt for less than what is owed when you are already behind a few payments and your credit already torched. If you have not stabilized your income yet, the ability to confidently commit to the Citibank hardship repayment plan may not even exist.
How soon after you replace your income do you think you would be looking for a home loan?
Michael, thank you for this article and your continued support for people asking questions on it. I have $38k in Citi credit card debt and just learned today they’re suing me for it. I’ve been out of work and unable to make payments but if I could get a settlement for 40-50% over time, I can figure that out. When I spoke with Citi directly, there was no option for a settlement. Just a payment plan that feels like it’ll be with me longer than a student loan. What would you recommend?
Who is the collection law firm suing on behalf of Citibank?
Double check the named plaintiff on the lawsuit papers you were served and make sure it is not another name than Citibank.
When were you served the summons?
What state are you in?
Michael, I appreciate your excellent advice. There is one question that I have not seen in your comments.
Citi has offered me a 50% settlement on $6300.00 owed or a payment plan of $133.00 over 60 months totaling $7980.00.
I have several other cards with no balance.
Would either of these options allow me to repair my credit score sooner?
I do feel morally obligated to pay my debts, but that may not be the best business decision.
Illness has kept me from working the past six months, but I may be back to work soon.
Thanks Frank
Because you are already several months late with payments settling would provide the more immediate benefit to your credit reports.
Making 60 months of payments on what is now a collection account would prolong the agony, where settling would bring the debt to zero in a matter of a few months. Your credit will thank you.
Thank you for your quick and professional reply.
My wishful thinking would be that in paying off the debt in full, Citi would find the consumer as a safer investment when reestablishing credit. However, with the lack of advice when calling Citi support, it is clear that the one hand does not see what the other is doing. So prolonging the payoff schedule would be fruitless.
I will be following your advice.
Hello there,
This is my first time here. I current owe Citi $4,500. It was originally on a payment plan but the last payment from September did not go through as I forgot to deposit money to my checking so they charged it off. I called Citi and I asked what else I can do because I cannot pay the full amount. I asked if there’s a payment plan also and the lady said yea. She set me up for 31 months for $146 every month. My questions is, is that a good idea to be on a payment plan again? Also, since they were able to set me up for a payment plan, does that mean that they haven’t sold my debt yet and will stay with Citi as long as I make payments?
Thank you and I hope to hear from you.
If you are able to call Citibank directly to work out payment or settlement arrangements than it typically means they have not sold or placed your account for collection.
Whether or not the payment plan with Citibank is a good idea can vary.
Are you able to afford the 146 a month payment to Citibank?
Are there other accounts that have fallen behind besides this one? If so, who are those accounts with and how long have they gone unpaid?
I currently owe $4100 on my Citi Bank Visa Best Buy Card. Never missed a payment, always paid on time, usually pay at least a little more than the minimum monthly payment. The interest rate keeps increasing as does my monthly payment each month (haven’t even used the card in months). I have closed the account so the card can no longer be used. I need to know how to negotiate for a lower interest rate or if it is possible to settle for a percentage of what I owe. I have terminal cancer and don’t want to have to deal with a lawsuit or have this affect my husband in the future. It’s to the point that I simply can’t float $149 a month (a $10 increase from last month) – and I’m sure it will be even higher next month.
Check out this post about calling Citi to see if they will give you a hardship payment plan.
If you want to settle that will be a decent option when the account is 5 or more months late.
Are there other debts than this?
I have another credit card that can easily be paid off as the amount is lower and the monthly interest isn’t as much. The big thing is avoiding court – I’d rather pay the debt if possible so I don’t have to deal with a wage garnishment or bank garnishment. And I’m pretty sure not getting behind helps.
Thanks. I would try the hardship payment plan first to see if they can offer you something you can afford.
My husband had a card with Citi that was charged off in 2014 for $25,857. It was turned over or sold to collection, ARC, where he paid $125 per mo. for many years. There was no written agreement and no accounting. After he paid out $8000 and it dropped off the credit report, he stopped making payments thinking it was past the statute. Well, they’re suing now for $17,857. They will only accept $12501 over 24 months after negotiating through his attorney. A lump sum of less does not appeal to them. They are now at the interrogatories stage. Any advise? Should he take the 24 mo. plan and try again with a lump sum at a later time?
Settling active lawsuits with a monthly payment structure will often require you consent or stipulate to a judgment. It may not be a good strategy to try to renegotiate after that.
It doesn’t appear that Citi is interested in accepting a lump sum, which seems odd. In fact, there’s been no negotiating. Accept or else! I guess he’ll have to see if they stipulate to a judgment. Is there anything else he can do at this point? It’s possible that he could win the case on a technicality as they don’t appear to have any documents of payments being made as they were made to another party with a different account number, but he doesn’t want to pay any more attorney fees and court costs. Thank you.
Continuing with defenses and additional negotiation efforts is the path in front of you. The additional legal bill is part of the equation. Ask your attorney what they realistically think they will settle at with additional efforts and then calculate the additional costs to get there. Is it worth it? If not, settling now with a stipulation, and for the amount Citibank is stuck at, would make sense.
Yes, he agreement stipulates to the entry of a judgment in favor of Citibank. Thank you.
Hello,
I regretfully have 3 citi cards all over the limit, totaling about $23,000. During Covid I had to take a large pay cut, I have been BARELY able to make my minimums, and I think this might be the start of not being able to since they are all so high and constantly over the limit. What is your best advice? I have other cc not citi, but they would be manageable if I could get the citi ones delt with better. I’m up to $1200 per month for the 3 citi in just minimum payments- it’s just too much.
Can you afford to pay 2 percent of your Citibank accounts each month? This would be around 460 dollars.
If not, and you decide to settle the Citibank accounts, how long will it take you to pull together around 10 thousand to fund the deals? Keep in mind you would have to fall late on payments, and part of your ability to raise the 10 thousand could be from saving up each month.
What do all of the other debts add up to?
Yes, I could afford $460 a month, but how would I go about obtaining that?
You could work with a non profit credit counselor who can typically get your payment reduced to an average of 2 percent of the balance monthly, and pay that back over up to 5 years. Call my hotline at 800-939-8357 and hit option 1 to connect with a counselor live. You may even get the payment to Citibank a little lower than 460.
Post an update if the lower monthly payment plan does not work for you, and we can go from there.
I lost my job May 1, 2020. Federal & state unemployment was a drastic pay cut. I continued to make my Citibank payments. In Sept 2021 when unemployment benefits ended, I could no longer afford my Citibank payment. I called Citibank – no assistance. First missed payment, due date 9/14/21. Then Citi increased my minimum payments. At 124 days past due, on 1/18/22, I entered into a payment agreement, during this call, I made the First payment same day, and the 2nd payment was set up by Citibank for 2/14/22. Even though Citi set up the payment (I have an email showing payment would be deducted from bank account 2/14), I saw online that no payment was scheduled, so I manually entered the payment 2/14/22.
On 2/16/22, Citibank charged off the account. They did not notify me, I was “notified” when I looked at my credit report. I have spent hours on the phone with Citi. I have my own copies of 3 calls recorded by Citi, each agent could see the account should not have been charged off and initiated an investigation to reverse the charge off and resume the payment agreement. Each agent said it would take 30 days, and I would receive notice in the mail after investigation completed. Citi never sent me anything about an investigation. After the surprise charge-off, I let the agents know I wanted to make the payments due – same day – if the charge off were reversed, and after the charge-off, I could not make payments online or view statements. Agents said making the payments would not help reverse the charge-off, investigation was needed, etc.
Numerous false reports to my credit reports even after disputing. My balance still shows on my reports. I have recently disputed the debt (account should not have been charged off) with the 2nd debt collectors.
In late 2021, Citi was calling me daily, 5 times per day. Phone calls are a waste of time, and they give me the runaround, transfer me, hang up, transfer me again, etc.
Do I have any options? File a complaint with the Consumer Financial Protection Bureau?
What is the main concern you have with the charge off reporting by Citibank?
Your credit scores were majorly impacted by the 3 to 4 months of missed payments preceding the charge off. Fixing that by settling the debt, rather than a payment plan that drags out the credit pain, is what I would typically want to do in this situation.
If there is something more specific you are after with getting them to change the charge off status, on what was likely already a closed account at the time, what is that goal?
One step forward two steps back is the situation I’m in at a 26.5% apr with citi, and the way this countrys going, I’ll never get out of it with minimum payments. It angers me with the greed of it all. Minum payments go up 20.00 every month!
How do I know if the citizens charge off was assigned or sold? I’ve heard that they sell the debts in bundles for pennies on the dollar.
Is this about Citibank?
How does Citi appear on your credit reports as of now? Is there a balance showing as still owed today, or does it say zero?
If zero, they likely sold it.
You can always call Citibank and ask. They will tell you.
Sorry, yes. Autocorrect got me! I’ll check my credit report.
I owed 33K to Citibank and was in a 60 month payment arrangement at $773/mo 9.90% APR starting July 2019 until I got sick and lost my 2nd job in late 2020. The agreement I signed with them said if I need to change the payment amount to call them, so I called them and told them I could only pay $386.50/mo. They said I can’t change the arrangement. I paid this reduced amount for 10 months and now owe $24K but when I log in to my account nothing shows up. I called them and they said my account is now with the “Recovery Department.” I struggled to afford the $386.50/mo and have $1500/mo (not including the Citi payment) in other credit card bills. What will happen now and do you have any suggestions? Thank you.
Citibank will likely follow their normal collection policies and procedures from here.
They could send your account out to an external collection agency.
They could sell your account to a debt buyer.
They could place your account with a collection law firm.
I could help you settle this account for 40% and pay that over a couple of years. Could you commit to a settlement with Citibank like this with confidence?
How? How would go about settling that account at 40% discount AND pay this amount over a couple of years? I’ve seen tons of videos and read much content on here and I don’t see how both are possible. Please elaborate as I’m currently 4 months into paying some sort of sustainability payment to postpone my charge off date another month. I owe Citi around 15K and would be very happy with paying $6000 (40%) with $250 a month for next 24 months. BUT my understanding is that the banks must resolve all their settlement agreements within 90 some days. So please tell me how this is possible? I will post on an appropriate website video also in case you don’t see this response on the website. Thanks!
Getting your Citibank account settled, and with a couple years to pay, happens everyday. It’s just that you have to let the card charge off, and typically land with a collection company. Some of these places allow even more than a couple years to pay, but the deals are closer to 50%. Let me know who they send your account to for collection and we can go from there.
Perfect. Thank you for the prompt response. I was postponing the charge off thinking that my best opportunity to “deal’ would be with Citi. I think that I will take your advice on this one and wait for C/O. Is it best to attempt to make a deal with the next people in line ASAP or is there a waiting period similar to the 90 days with the original creditor? My best egg account was charged off and sent to Resurgent (LVNV) in Nov 2022 and I haven’t done anything with this account. Is there a timeline for LVNV to follow regarding their purchased accounts? Don’t know what to expect here. Thanks again!
You really should schedule a call with me. You may have missed an important opportunity with Resurgent.