Please don't flame. My inquiry is genuine and I can't find answers anywhere else on the web.
History: Yahoo Visa - originally through First USA, then Bank One and now Chase Manhattan. Original balance $25,000, current balance $8,300. Two years ago I became involved with the Credit Counseling Foundation in an effort to get a lower apr so I could pay down my balance and my card was closed. I was being charged 22% (although I had never missed a payment) and they got me down to 11.9%. I had been promised 5% or less by the CCF, but that is another story.
Due to changes in my personal life, I have been single-income since October. My paycheck covers my mortgage, utilities, food, etc. and I am current on the one active card I own. I had been paying on my Visa and a Nextcard through CCF. I have not been able to make payments since October.
Current: Receiving the phone calls and explained my situation to Bank One (I have not had contact with whoever is currently handling Nextcard). I am now 99 days past due and they told me they will be sending my account to collections shortly. They gave me two options.
1. Pay $700 and re-age my account to make it current. The new apr will be 21%. 2. They offered to let me settle for 60% which would be $5,000 which has to be paid within 4 months.
If I get my account current, it would wipe out most of my savings and I would still be facing nearly $8,000 and the high apr. I checked and I can take out a loan for $3,500 from my 401k. With my 401k, my savings and the change under my car mats, I can pay the $5,000 but it will wipe me out.
I have always paid my bills and feel bad even asking this, but if I continue to let this account go, will they lower the percentage settlement? The agents I spoke to at Bank One told me they have never seen an account go lower than 60%. The same thing is happening with my Nextcard but since I can't get hold of a human, I don't know if they will be willing to settle.
Thank you in advance.
Scully
mayer31
Member
posted: Mar. 11, 2005 @ 11:04p
Are you looking to make any major purchases in the next 2 yrs? like mortage for a new home. car purchase/ if not HURRY and dumpt it before the new Bankruptcy law goes into effect. hold the cash and in 2 years you can qualify, for a mortgage etc. don't let them hold you hostage for past mistakes and This is your LAST chance before the new law takes effect.
mayer31
Member
posted: Mar. 11, 2005 @ 11:07p
Just reread the post , MOVE the savings to a relitive, under the mattress, etc , wait 60 days and file against it. Do Not loose your savings which they can attach... Hurry
I would rather not file bankruptcy on this amount. I puchased a house this summer before things went south. I don't have enough equity built up to get money that way.
I was hoping someone else had previous experience in dealing with credit card settlement offers.
Sorry to hear your situation but folks at creditnet will be able to help you more than folks here.
Crazytree
Senior Member - 8K
posted: Mar. 12, 2005 @ 2:23a
mayer31 said: Just reread the post , MOVE the savings to a relitive, under the mattress, etc , wait 60 days and file against it. Do Not loose your savings which they can attach... HurryDefraud your creditors... always great advice.
mayer31 said: Are you looking to make any major purchases in the next 2 yrs? like mortage for a new home. car purchase/ if not HURRY and dumpt it before the new Bankruptcy law goes into effect. hold the cash and in 2 years you can qualify, for a mortgage etc. don't let them hold you hostage for past mistakes and This is your LAST chance before the new law takes effect.
Best advice. Hurry before new law gets into effect. Also should check at creditnet.
You were successful with CCF in the past. They helped you pay down $17k of a $25k loan (CC debt). You should consider using CCF again.
You have a house and a job. You should have little problem getting an $8k HELOC ( FatWallet thread on HELOCs) ).
I must disagree with the rush towards filing bankruptcy. Many employers will not hire you if you have a bankruptcy on your credit report. This is mainly true for white collar work, if you are in a skilled trade (carpenter, plumber, mechanic or technician) it is not really an issue.
MrHopeMac
Member
posted: Mar. 12, 2005 @ 7:50a
what is today? bad advice day? - dont file bankruptcy it isnt worth it for a minor debt like that. dont borrow against your 401k - that is your future - dont borrow against your house - the heloc is secured loan with your house - you mess up on that bye bye house and all to pay off an unsecured debt - worst comes to worst they charge it off - find out the SOL (Statue of Limitations) for your state to see how long they have to try to collect on the debt once it is charged off - do not settle as they can still sell the remaining portion that you havent paid to a collection agency and they would hound and bother you - you can (and this is what i suggest) call explain you are going through hard times (almost all credit card companies have hardship programs) and tell them at 22% the payments are overwhelming and you are considering filing for bankruptcy but if they change the rate to something like 5% you would beable to pay off this debt. usually just threatening bankruptcy will worry them as they wont collect anything - but if you get a decent rate maybe you can make min payments and keep current - when talking with people on the phone make sure you get employee IDs(phone sign ons) first name and what center they work at - just names arent as good - you want to make sure you can trace back what you were told and who told you it Marry from India isnt going to cut it. best of luck - for more info you can visit creditnet, artofcredit or creditboards.
Changes in your personal life resulting in your being single income - sounds like a divorce/separation. If so, your spouse may be on the hook for some of this as well. Could you get a pro bono lawyer to review this and find out what your spouse's obligations are?
$8k is NOT WORTH FILING BANKRUPTCY OVER...definitely go to creditnet and ask the same question there...you will be overwhelmed with advice telling you not to file Bankruptcy..which is good advice. Most of the folks here have good credit, with little to no debt...so most cant' relate to what you're going through. You'd be much better served by checking the forums at creditnet.
Thanks guy, I appreciate the help. I kept looking last night after posting this and found an old post by SIS about good credit discussion boards. I spent several hours at Creditboards.com looking through postings there. I have also been to CreditInfoCenter.com.
I did explain my situation and I asked about a hardship program. I was told that since I had already gone through CCF that option was not available to me. I have spoken to several agents and all of them quoted the same ridiculous high apr.
For now, I am going to let it go. I want to get this monkey off my back, but doing so will wipe me out unless they lower the settlement. My credit report has been taking hits for two years because I was in CCF. I am going to keep my one active credit card (MBNA) paid down and hope they don't try to close my account when my other account(s) go to collections. I checked and the Statue of Limitations in my state for open-ended accounts is 5 years. Hopefully, things will soon be looking up for me and I can back to sum zero.
Thank you all again.
Scully
HuzorDaddy
Greedy Member
posted: Mar. 12, 2005 @ 3:36p
You could save at least $20 a month by cancelling your Internet provider, and probably more by cancelling your cable/satellite TV, cell phone. These are not necessities. A house is a necessity.
hiphopsoop
Member
posted: Mar. 12, 2005 @ 3:53p
I think that it is a no brainer to take the offer of paying back the $5000 instead of the $700 and 21% apr. By doing this you are effectively getting an instant 66% return on your $5000. I wish I could do that! By taking a loan from your 401k you are losing the expected return on the 401k's assets, which can't be above 10%. Or as mentioned before you can get a HELOC which would have an interest rate even below the expected rate of return on the 401K.
Next you'll have to make sure that you'll be able to sustain yourself going forward. This could be a good thread
SenorJoe
Tired Member
posted: Mar. 12, 2005 @ 5:43p
Don't forget - No more hot deals... Sell your stuff on eBay... Sell your car...
SenorJoe said: Don't forget - No more hot deals... Sell your stuff on eBay... Sell your car...
LOL. No Hot Deals for a long time. I have E-Bayed, cancelled my cable and cell phone and my car is 14 years old and has over 300,000 miles on it. I spent today applying for part-time jobs around town. I am going to do the $5,000 settlement, get this over with and get on with my life.
Thanks to all!
Scully
SenorJoe
Tired Member
posted: Mar. 12, 2005 @ 6:30p
lmscully said: SenorJoe said: Don't forget - No more hot deals... Sell your stuff on eBay... Sell your car...
LOL. No Hot Deals for a long time. I have E-Bayed, cancelled my cable and cell phone and my car is 14 years old and has over 300,000 miles on it. I spent today applying for part-time jobs around town. I am going to do the $5,000 settlement, get this over with and get on with my life.
Just a heads up after the settlement. The bank will 1099 you for the difference between your balance and your settlement (in your case $3,333 or thereabouts). You will need to include this amount on your tax return next year, so do some tax planning from now to avoid a potential $600.00 or so of tax surprise next year.
mrbean
Senior Member - 2K
posted: Mar. 14, 2005 @ 12:31p
lmscully said: I have not been able to make payments since October. ...
I have always paid my bills and ...
Which one is it? Those can't both be true.
budfox
New Member
posted: Mar. 28, 2005 @ 10:08p
I too have a similar situation..I also have an account with Nextcard,but they went bankrupt and Im not sure who took over their accounts. I have heard nothing from them in many months..I just settled 2 Capital One accounts and a personal loan from Beneficial Finance,which was charging incredible interest at 29% ! ouch .. I settled all 3 accounts at 40% of the owed amounts..they made several offers and after about 1 year or so they got low enough that I could affore to pay them. there is no fixed settlement account,so sometimes it pays to wait until they make a better offer..Bud
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