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Recalculating Balance with lower interest rate


sdillinois
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This is probably unorthodox but seems reasonable to me and am wondering if anyone has tried this.

I have been with CitiBank since 1990 and have never been late with a single payment. In 2001, I wound up holding the bag with medical bills (my health insurance company went insolvent), some of which were charged. I did my best to work out payment plans, tried to get patience from medical billers as the Guarantee Association worked to sort out the bills (they didn't cover any). Some went immediately to collection. As a result, Citibank hiked my interest rate from 13.4% to 24.99% by 9/02. This was on a balance of 17,000. Big ouch! I slavishly continued to pay each and ever month on time, often at the exclusion of other bills. I have never charged anything on my Citibank card since (40 months).

Here it is 1/06 and I have paid Citibank an amount greater than my principle (it is now down to only 16,000) and my credit rating is quite bad. I have an MBNA card which I have also paid on time, never late. Also a student loan that is in deferment. Between the two credit cards, the combined minimum balance has just gone up to a monthly amount I cannot afford. I am considering my options, particularly negotiation with Citibank.

I want to ask them if they would recompute my balance from 9/02 to present at 13.4%. Their jacking my rate to 24.99% was not justified as evidenced by the fact I had no previous late payments as of 9/02 or even a single late payment til present. I calculated the amount I have paid since 9/02 and it is greater than my principle and my outstanding medical bills combined. I am very much a candidate for bk as my income is low (less than 12k), I don't have any savings, I don't own a home and my car is 11 years old.

Has anyone negotiated a "recalculation"? Am I exposing myself to Citibank promptly raising my rate for attmpting to negotiate or mentioning the possibility of bK? Any advice would be greatly appreciated.

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Hey, welcome...we'll help if we can. First a word of warning...you mention CitiBank...so real soon now you'll be getting message from people who claim to have secret knowledge of how to deal with them. Do be careful.

Now...as to your problem...Citi does have a hardship department. You might try to find them and talk it over. I doubt that they will recalculate your balance, but they may reduce your interest going forward. I'm not optimistic about that.

Do a search of the site...somewhere there's a reference to a court case in Cleveland where a CC company (I think it was discover) sued a lady over pretty much the same circumstances. The court decided that the CC company had long since made their money back and found for the defendant.

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Do a search of the site...somewhere there's a reference to a court case in Cleveland where a CC company (I think it was discover) sued a lady over pretty much the same circumstances. The court decided that the CC company had long since made their money back and found for the defendant.

Hi Willingtocope!

Do you mean that the interest that was paid to the CC was the same amount or more of what was originally charged?

If so ...can a person request a similar point to get rid of the debt??? :shock:

Suki

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The OP has asked this question on other board and because he has lates etc., Citibank invoked the universal default clause. In most cases Citibank does reduce it after 6 months after all if the accts. are up to date. If the OP wants to get into the hardship plan he will be unable to use his card, but I am almost positive they will not use int. that has already compounded so he can be frre of the debt. You can talk to them and see what they say about joining the hardship program or see can you borrow the money or get extra work to pay off this card. MBNA is almost certain to ratejack you as well. Question, when you got the MBNA card, why did'nt you BT Citibank? Good Luck!

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Guest sifxpert
First a word of warning...you mention CitiBank...so real soon now you'll be getting message from people who claim to have secret knowledge of how to deal with them. Do be careful.

I'm sure this was for me. Just to clarify, theres nothing secret. Do not DV or send a C&D to Citi. If you do, you get sued. Very plain and simple. Contrary to popular belief, Citi does settle for 50%. Its much easier to settle with the CA once the account charges off. Of course, if that is what you are looking to do.

My warning to you is to watch out for people who offer advise with little or no experience...i think willin is the guy from the holiday inn express commericals sometimes.

Regarding the first post....Citi is very difficult to deal with. If I were you, I would write a letter to one of the exec's at Citi. I would try to get online and find out some contact info for Citi brass and send them a letter. I'd start there and see what happens.

Unfortunately, the creditors put your back to the wall and keep you making your monthly minimums for the rest of your life. This is how they work and this is why they are rich.

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I have done hardship programs with Citi and MBNA. My experience was Citi lowered the rate to 0% and accepted a lesser payment for 9 months. But that did nothing to the balance ( and their outrageous vig). And while the person I spoke with said they would reage my account for CRA purposes to show I was current, they never, ever did.

MBNA, which no one seems to love, did everything they said they would.

I would consider BK, or if you have some other resources, letting it go and seeing if you can negotiate a payout, as sixpert alludes to.

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Guest sifxpert

Citi and MBNA will both work with you although, in order to qualify for a hardship, you must be delinquent or prove disability. The Max Citi will do is 12 months at 0%. They will not offer this more than once either and as soon as the 13th month comes you're back to 29%.

MBNA I despise only because of their use of the NAF which is a total sham. Other than that, dealing directly with MBNA has always been very effective and I normally settle for 25-30%. Sometimes less.

You obviously need to do something. I suggest you research your options and make the best choice possible taking into consideration the consequences of you and your families future. I certainly do not ever try to convince a person that settlement is the way to go. However; CCCS or credit counselors will do nothing for you. Settlement is the last resort before BK.

I would not be optimistic in regards to having Citi forgive anything. I see them sue all the time for very low accounts even $300.00.

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The OP has asked this question on other board and because he has lates etc., Citibank invoked the universal default clause. In most cases Citibank does reduce it after 6 months after all if the accts. are up to date. If the OP wants to get into the hardship plan he will be unable to use his card, but I am almost positive they will not use int. that has already compounded so he can be frre of the debt. You can talk to them and see what they say about joining the hardship program or see can you borrow the money or get extra work to pay off this card. MBNA is almost certain to ratejack you as well. Question, when you got the MBNA card, why did'nt you BT Citibank? Good Luck!

That "universal debt clause" is really something. Borrowing is not an option as it would take a rather substantial loan. The hardship program sounds like a possibility (though BK is tempting to spite them). Not using the card is no problem at all... I haven't used the stupid thing in over 3 years. I should have BT Citi to MBNA but at the time, I had larger issues which consumed my attention. MBNA jacked up my rates but not taht badly at all.

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I thank you all for your input and advice. From everything I have read, Citibank is one of the most unfortunate of the lot. It is amazing they get legislative favors such as the recent BK act to "protect" them from us. The irony is massive. A reasonable person would think the fact that I have never been late would be considered in determing whether or not to jack my rate. The again, ethics and fairness is not what makes Citi so hugely wealthy.

I am leaning toward the approach of forming a letter addressed to one of the higher ups in hopes of getting the ball rolling. I am quite eligible for BK but do absolutely wish to avoid this. Does Citi put any value on a customer of 16 years who is honestly interested in arriving at a fair conclusion instead of BK? That is probably a naive question.

If someone attempts to negotiate an arrangement with them to avoid bankruptcy, can they use thatand any material (letters, emails, etc.) to futher hike your interest? And can such materials be introduced into your credit file with the three major groups?

Also, thanks for noting the court case. I will try to locate it.

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Guest sifxpert

As long as you continue payments nothing should happen to the account. If you stop making payments then you can find yourslef in a legal mess by contacting them with offers to settle.

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I would recommend consulting with a few BK attorneys. They certainly will want to sell you their services, but you may gain some insights as to how to avoid BK, or it may become your course of action. I have no personal experience settling with Citi, but have settled with MBNA for 30%. You will need lump sums of cash to settle.

If you dont expect your income to improve the hardship progams may only delay the inevitable, whether it be BK, Settlement, or DVing and stalling the creditors.

If you dont have the cash to settle, BK may very well be your best option. Others here have used the DV method to stall the collection process. I personally am not up for the stress. SIFXPERT has serious warnings regarding Citi and the DV process.

Read read read. Ultimately you will have to decide what is best for you. Once youve decided your course of action you will likely find a Mentor here to assist you.

Good Luck

Gettinout

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