My success story!!! (long)

So here's my success story from beginning to end. I'm writing it partially to share with my brethren on this board because I am happy and proud to be done with my nightmare, but I also hope that somebody might learn from my mistakes.

I ran up a tremendous gambling debt over several years. I was making the finance payments on all the various cards I had but it got to the point that the balances were continuing to grow and I realized it was unsustainable. When the banks got their bailouts in 2008, I decided I was going to give myself one too . Judge the morality of that decision if you wish. So in late 2008 I contacted one of those debt settlement companies to negotiate reduced settlements on my behalf. After several months of sending them my payments, I finally realized the scam and stopped sending them any more money. I had sent them about $3500 total and only accumulated 400 in my "account." At that point I stopped throwing good money after bad and they promptly refunded the 400 in my account. It was actually a creditor who told me I could get all my money back from them if I filed a complaint with the attorney general. So that's what I did and what I would suggest to everybody. They didn't put up the slightest fight. What ended up happening was that the debt settlement company freaked out and refunded all my payments...and they actually refunded the full amount I paid them, including the 400 that they had already refunded again. I didn't notify them of their mistake and kept the full amount. Judge that too if you want.

Then I immediately started contacting all my creditors directly and was able to start settling the accounts immediately. A big one--about 20k--offered me a 50% settlement or I could pay the entire balance back over 5 years with no interest. I didn't have 10k so I took the later. I've been paying on that for 3.5 years and the balance is down to about 7000. I contacted another card and offered them 50%. They snatched it up immediately. That's when I realized that offers of 50% were higher than I probably needed to go. And I was able to settle most of the rest of the accounts for about 1/3 of the balance due. There were, however, two accounts that got sent to attorneys for collection pretty fast. One of them--for 13k at BofA--I was able to settle for 4k or about 30%.

But the other one was Discover. They have been tremendous ball breakers the entire time. They told me that they wouldn't entertain any offers less than 70% and they MEANT it. The weird thing about this whole deal was that I had 2 accounts with Discover that charged off. One of them they did not send to their attorneys and I was able to settle it directly with them for about 30%. But this one they sent to their attorneys, who wouldn't budge. I think two things happened here. I think they sent it to the attorneys because this account had been run up and paid off several times. And right before I went delinquent on everything, I made a large balance transfer to it. I think that pissed them off and/or indicated that I could pay...just didn't want to. I actually discussed this with the debt settlement company before we went forward. I told them that I would be super pissed if I were them...and somebody did a huge balance transfer and then went immediately into default on us. They told me it wouldn't be a problem. They lied. I also think I may have acted too eager to settle it. I sent them lots of written communications offering to settle it for 25-35% of the balance. They just ignored them all. Eventually, they filed suit against me and it was set for trial. At that point, I knew I totally did not want to go to court on this and that I would end up settling it somehow. They were calling all my bluffs. I offered them 55% of the balance and they came back with 88%. I waited a few weeks and offered them 72%. They countered and I ended up agreeing on 82% which must be considered a tremendous win in their office. It's a lot of money but then it's over. Then I'm free. That's my last account. It took me over 3 years to do it.

My credit score dropped to 589 at first but as time has passed and things have been settled, it has risen to about 660 last I checked a few months ago. But I haven't had ANY success getting anything removed. I've tried disputes, nutcase letters, good will letters...nothing has resulted in a single change to my reports. I guess that's my punishment--that my reports accurately reflect my delinquencies and charge offs and will for another 4 years.

One smart thing I did was that I kept current on two credit cards. So I do have credit and have all along. But I did let a couple cards go delinquent that I shouldn't have. A couple had very small interest rates until paid off. I should have stayed current on those. That would have been much more valuable to me credit-score-wise than the amounts I saved in settlement. Another mistake I made was that I had a couple cards that didn't have balances on them at all. As soon as my credit score plummeted, those cards were canceled. In hindsight, I should have used them and kept balances on them and they wouldn't have been canceled at all.

That's my story. Thanks to everybody on this board for sharing their experiences and insights. Unfortunately, I haven't been able to improve my credit score through any methods but the passage of time and the paying down of debt. But at least I'm not totally effed financially any more and some day those bad trade lines will drop off.

The Dude

 

good luck to you, sajooka...

I would recommend running things by the regulars on this site before you do things and you might not have to learn certain things the hard way...like the way I tossed away several good credit cards for no reason through bad planning. Also, sometimes the best course of action when you are trying to settle accounts is to ignore the creditor. I'm convinced that I was way too eager to negotiate with one creditor. So they ignored me and just kept insisting on full payment, which they came pretty close to getting. just tell them you don't have anything and let them make the first offer. If you start out with "how about 25%" they'll just reject it and use that as the nnew floor. Also, make sure you have a reasonable sob story for them. They want to hear that you lost your job fell ill, whatever. If they know you are healthy and working, they're going to want to put you on a payment plan for the full amount.

 

From my experience, you're going to have to go delinquent on your accounts if they are going to settle with you. They have no incentive to cut you a break so long as you are still sending them money. Your only leverage is refusal to pay.

My credit was very important to me too and I pursued consolidation loans too. I would have gone that route if just one creditor had given me a legitimate interest rate to do it. But their only solution was a consolidated loan with a ridiculous rate...and if I could swing that, to get a second job.

So my solution was to cold turkey stop paying all my credit cards at once. Then I started settling out the small ones for a fraction of the balance one at a time. The risk there is that those big creditors are not going to go away. You can put them off for a while but they will send that account to their attorneys for collection. I don't know why but none of my creditors ever sent an account to a collection agency or sold them to one. I was also able to avoid persnal service for a while because I moved and then set up a PO Box instead of gettingmy mail at home. But they did find me and serve me through the sherriff's dept. I don't know how but there were plenty of ways I was sloppy--drivers license, car registration and voting records.

I guess long story short, I think you're going to have to go delinquent if you expect anybody to settle with you. And at that point, carefully prioritize the accts that are pursuing you the hardest...and try to settle with them before they charge off if you can...but also don't be too eager or they'll smell that and hold out. Its a catch 22 situation and you just have to do the best you can.

 

Not stupid questions at all. You will have go go court if you are sued on the debt. And in order to sue you, the plaintiff needs to serve you with a summons for the court to establish personal jurisdiction over you. So you won't be "served" right away. Out of all my accounts (about 7 in all) I was served once to initiate a lawsuit. But if you have a big account and you just stop paying on it, they're going to sue you eventually. They can hire anybody to serve the summons. In my case, I made it very difficult for them to find me, so they hired the sherriff's office to do it and the sherriff's office had access to certain records that Joe Schmo maybe doesn't. So that's why they hired the sherriff. But it doesn't mean you're more in trouble or anything. It's just who delivers the summons.

After you are "served" then you need to respond or else the plaintiff will get a default judgment. And even if you do respond, they're probably going to get a judgment anyway because you do owe the debt and they can probably prove it. So once there is a judgment against you, I can't be of much help with regard to what they can do to satsify it. I was able to settle my last account without there being a judgment entered against me. That was really really important to me that I not have a judgment on my record and that's why I settled the account for 82% of the balance instead of continuing to play hardball with them for a smaller amount. And they probably sniffed that out about me.

What they can do to satisfy the judgment is going to be a matter of state law and it's probably going to vary state to state. If you have a bank account, they can probably snatch the funds in it. If you have a car that you don't owe on, they can probably seize it. If you have a house, they can probably attach a lien to it to be satisfied when it's sold. I'm not sure if they can garnish your wages or not. Maybe. Others may be more helpful there.

 

There's going to be pain associated with either way you choose. You don't just get to pay half on what you owe without damaging your credit first and dealing with nasty phone calls. That's just the nature of the beast. I don't know about banktupcy but I figure you need to go to court for that too, right? I didn't have to go to court but to file one answer to the lawsuit I was served with with the clerk. That was relatively painless and the only reason I did it was to buy myself a few more weeks to negotiate without having a default judgment entered against me.