Hello to All, I'm new to this board, so be gentle Due to a loss in income at the beginning of this year, I discontinued paying on my credit cards. The loss has been recovered and I'm in a position to repay/negotiate. Most of the accounts are in collections and a few have been charged off. My question is, I'm in the process of drafting a settlement offer letter, but I'm stuck on how much of a percentage should be offered. The most I owe to one creditor is $2000.00. (Total debt= +$12,000). Is 10% of the total debt too low? Is 50% too high? Should I start low to see if they will accept or go high and quicken up the process? Of course, I will get the agreement to delete or report the account paid off/no delinquencies from the creditor before sending ANY money. Your advice is appreciated. LB
How much they will settle for depends on what they think they can get out of you. If you now are working in a good paying job and they think you can pay back everything, that is what they will settle for. If you are retired, disabled, or unemployed with no income, they may walk away with nothing. Put yourself in their shoes. It was not that long ago that you defaulted. You are back on your feet. They may reasonalby expect you to repay everything. Another factor is the company you are dealing with. Some, like Sears, don't compromise very much, if at all. Others, like Penneys, are very reasonable. If you can tell us who you are dealing with, some of the people here can give you some ideas about how tough they are. When I helped my father in law, I think the average settlement was 20%. But, he was retired, minimal income and minimal asets. They were just glad to get something. Their prospects were not good.
Thanks for responding. Background Info: I did not lose my job. My fiance did. We have 2 children and my income had to support us for the past 6 months (he just got a new job that started last week). After household expenses there was no room for credit card payments. My income is $26,500. His will be $26,500.00. I am 21 and he's 23. While we will soon have the capability to repay, it would be on a monthly payment and I don't know if they would be willing to delete my negative information.(We will be looking to rent a new apt soon and the negative information will surely get us declined) I thought that by offering a lump sum they would accept since I'm so delinquent and most of the accounts are headed to being charged-off. For your reference, I've listed my (and my fiance's)accounts below: (All are at least 5 months past due and all want a past due amount of at least $300.00 [I don't have that much money to give to each creditor; creditors]. Capital One; 24.40% Providian; 16.90% FCNB; 27.60%; Capital One; 24.40% Capital One; 19.80% Capital One; 23.40% Providian; 23.99% Providian; 23.99% Charter One; 19.00% Cross Country; 28.24% Providian; 24.40% Orchard Bank; 22.90% Gateway; 28.99% Macy's ; 21.60% Cross Country; 28.24% Advice is appreciated. If you need balances, I would be happy to oblige. LB
I don't have experience with any of those so I cannot tell you how aggressive they will be. Here is an idea I have used with some success (not on my credit but with someone I helped): Your goal is to get back on track with regular payments and also to clean up your credit. Assume you have $1,000 now that you can use to pay down debt. Contact some of the creditors, tell them you have limited funds but would be willing to pay $250 now if they will delete all negatives on your report, lower your interest rate to a reasonable level, and reinstate monthly payments. You have only limited funds to do this with, so can only do it with the first few who agree. Next month, when you get a little more cash, call some more creditors with the proposal. Just don't obligate to do more than you can handle. I know some will bite at it because I have done it. Soon, the ones who agree will be getting paid and the others won't. It is an incentive to get on board. Not all will agree in the end, but I think the majority will, especially when they see some creditors getting paid.
Thanks for the advice. I'll definitely get right on it. Question, though. Before sending negotiation offers, I was looking over various websites and reading books that said even if an account is yours, dispute it and wait for the outcome of the CRA. If they provide the co info and verify the acct, THEN offer a payment plan to the creditor. I sent out dispute letters to the CRA's last week. Should I wait for the outcome before continuting or go ahead and try to make arrangements? What's your opinion on this??
If you are in a position to negotiate, you should definitely make sure they will update your creditlines to reflect: PAYS AS AGREED.. you shouldn't really worry about them reopening the credit account and insure them you don't want that anyway.. but you want to take care of the debt as opposed to not. YOu can use bankruptcy as a threat if they don't budge.. but definitely make sure they don't update your CR to say CHARGEOFF - PAID... get a PAYS AS AGREED and ACCOUNT CLOSED AT CONSUMER'S REQUEST.. that should be your goal, nothing less. Good luck..
Wow! Some of those interest rates ought to be illegal. Our state governments are selling us down the river. breeze
During those wonderful early Reagan years I financed a new car at 24%. That was considered slightly high but the best rates were just around 20%. A good martgage rate was 12-14%. SK
