woeisme

Please help with big credit mess- want to fix problems

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Hi,

I have been reading and researching the last couple of days as I try to figure out where to begin with my credit problems. My story in a nutshell:

I had a premature baby in Nov 2003. At that point my husband and I were both students with pretty good credit. However, the insurance left a lot of medical bills unpaid and I just couldn't get any affordable payment plans with the various hospitals and doctors. I paid some of the bills, but the rest went to collections. I pulled my credit report today and I have the following medical bills in collections. (None of them are with the OC anymore):

1) Medicredit has 2 accounts from a hospital totaling $7131. I know that they have both accounts because I spoke with them yesterday, but only one of the accounts is on my Credit Report.

2) West Asset Management (formerly Attention LLC) has 3 accounts totaling $36,704.

3) Credit Collections U.S.A. has 1 account for $826.

To make matters worse, at the same time I was out of work for several months and we stopped paying our credit cards. They were pretty high (we had settled some medical bills on them). Then we figured there was no way out of our mess and we would have to declare BK, so we haven't paid any of our 5 credit cards since Feb 2004. They are on our credit reports as closed and charge-offs. The OC are:

1) MBNA for $6336.

2) Citibank for $1305

3) Citibank for $10,824

4) Citibank for $3,835

5) Citibank for $2200

Collection agencies were calling every day and I thought there was no way out, so I paid a BK attorney and started in on that paperwork. I haven't yet filed, and really don't want to if there is a way to salvage this situation.

I'm looking for opinions and advice. I can supply more information if you need it to help me. We are in Florida, by the way. We don't have much cash, but my dad is willing to loan us a little money if we can make settlements. We would really like to settle these accounts. I am really scared of judgments. Can a creditor still get a judgment on a charged off account?

Unfortunately, I have spoken with the CAs. I haven't given them too much info I don't think, but I did tell them that my dad might help me settle the bills. Bad idea, probably. I said we would probably send them settlement offers. West Management Assets (CA) offered to settle the $37k medical bill for 30%. I said I would get back to them. All the creditors are aware that I hired a BK attorney in nov 2004 and have had some contact with her. I have told them that I am in a last ditch effort to avoid BK. Apparently, Citibank has taken back their accounts from the CA and they are in their "bankruptcy office". I left a message there yesterday asking for their address. How should I approach the settlement, since I can't afford to settle them all at once? I thought about trying to clear my husband's credit first, since only 3 of the charge-offs are on his credit and everything else is on mine. I also thought about clearing all the charge-offs before the medical debt, because the medical debt doesn't accrue interest. Any ideas on what to do first?

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You will probably need to proceed with a bankruptcy filing. Unless you can find a way to mostly bail (sufficiently settle with ALL creditors) yourself out of this mess, filing soon is the way to go.

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By the way IF you settle make sure they can't sell the balance. MANY times CA will settle then turn around and sell the "balance" to another CA and they will try to collect on the balance you though you neg. :shock:

DO NOT TRUST THEM, get everything in writing.

I'd take a serious look at BK.

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Thanks for the quick replies. I appreciate the advice. Bk might be the best route, as much as I would hate to do that. The biggest creditor offered a 30% settlement. If I could get all of them to settle for 25-30%, my dad would loan me the money. What do you think the chances are for that? The alternative of BK would give them nothing, as I have virtually no assets. Do they take that into consideration or do they just stick with the 80% rule regardless of individual abilities? Thanks again.

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Also, be stern with the collection agency idiots...if you settle with them or agree to pay anything off..be sure to get a letter stating that all "negative" data will be removed from your CR...if you cant handle the calls anymore..and they are getting to be a pain in the arse, send them a "cease and desist" letter and they will NEVER contact you again, if they do then that is an FDCPA violation and you can sue and win $1000 against them.

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The biggest creditor offered a 30% settlement.

WOW how old is the debt? what is the name of the company? Odds are they are planning to sell the 70% remainder. When you settle, you almost always get ZOMBIE debts. Debts that come back from the grave! 8-)

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OK... IMO, you should send letters to all of your original creditors... tell them that you are working with a bankruptcy lawyer- but don't want to bk except as a last resort. Explain to them that you would like to offer a settlement of 25% of the amount owed to be accepted as payment in full and that they must agree not sell or transferthe rest of the original balance. Also- require that they retract all accounts from the CAs and have them delete any negative marks on your CRs. Emphasize to them that this is their only real chance at getting money from you considering that if your offer isn't accepted, you'll have no choice but to file bankruptcy. You've only a certain amount of $$$ to work with- if they don't want to work with you, your money goes elsewhere.

So- to sum up...

Include in your CMRRR letter:

  • 25% settlement offer contingent upon:

  1. 25% is payment in full.
  2. Other 75% will not be sold or transferred.
  3. Retract account from CA
  4. Delete negatives and mark paid as agreed

  • Your only other option is BK- which you'd rather avoid- but will have to do if offer not accepted.
  • Limited funds to work with.

Use an agreement to settle debt similar to the one found on the sample letter page...( http://www.creditinfocenter.com/forms/ )... and don't send ANY money until you have a copy of the signed agreement in your hot little hand. YOU'VE got the upper hand here... They'll have a quite difficult time getting anything from you otherwise- so it's in their best interest to work with you. Stand up, take charge... and show 'em you mean business!!! Good Luck!!! :)

(Oh.. and love on that baby!!! ::BigBaby:: )

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WOW how old is the debt? what is the name of the company? Odds are they are planning to sell the 70% remainder. When you settle, you almost always get ZOMBIE debts. Debts that come back from the grave! 8-)

Can they sell the remainder if they agree to "...considered to be paid in full..." in the settlement letter?

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They do it all the time and the new CA will tell you that the previous agreement has nothing to do with them and golly gee, it is not in the file they sent.... blah blah blah.

BK is always a last resort. But I want you to consider it. With that debt level, you would be hard pressed to pay the bills and you would be stressed which will transfer to the baby. You would be amazed at what they can sense. You are young and will recover from the BK.

A baby doesn't know that your home is rented. ;) You can file the BK, stop the harrassment and the stress. You can then bop around here to get help cleaning up the CR and then begin rebuilding with BK friendly CCs. It seems like it will take a long time just because you are young. I had to file a BK7 once and it is hard to believe that it has been 13 years! Wow time flies! Like most will tell you, you give birth and the next thing you know they are moving out! I have 3 on their own and 2 remaining at home. Don't lose precious time and joy by straining your life over these bills.

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I completely agree with Momof5. I had a situation like yours with both of my children. Paid many bills with credit cards and got behind. We ended up going the BK route. You will never believe how much more relieved we were after that. We had enough excess cash to never need a credit card again and give our babies what they needed.

Just one word of advice -- don't do what I did. Make sure you get CC's -- even if you just put $5 on them. I was sworn off the suckers and now I have to work on raising my credit scores to get a decent mortgage rate. If I had gotten the CC's 8 years ago after my BK, I'd be sitting pretty now.

Good luck to you and your little one!

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You've got about 55,000 in debt. I think BK is probably your best bet. While you can SOMETIMES arrange a partial pay for delete with creditors, it isn't always possible and your credit will still be trashed if just 2 or 3 of those creditors don't agree to delete. I think BK and then starting right away to rebuild your credit is your best bet.

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When I decided to BK in 2000, I had about $65,000 in debt (not nearly all of it attributable to me, but I was legally responsible. We live and learn in relationships. He lived, I learned...). I was not behind on one payment, nor was I overlimit on anything. But I knew that I was at the point where the minimum payments alone were more than I was taking in. And soon I would be late, and I would be racking up late fees, and accounts would go into collections. I didn't want that.

I first tried credit counseling, and that made things worse. Payments were made late or not at all. Late fees piled up. On some cards I now owed more than I did when I started. A total mess.

BK was my only logical option. I didn't want to do it, and I tried everything I could to avoid it. I lived well within my means (I'm not a big spender by nature anyway, and I loathe shopping). I paid everything on time, even if it meant I ate Ramen noodles every night and scrounged in the conference room for leftover bagels every day. So I filed. Best decision I ever made, despite the difficulties that came with it and still do.

But all that aside, we are advising someone who posted their question a year and a half ago. ;) I'm adding to this thread because although it was resurrected for a different purpose and the OP's original question somehow ended up being addressed again, the ensuing posts contain good advice for the benefit of future searches.

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