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I paid 30% interest on $30,000 will MBNA Settle for less


mixman55
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I did a balance transfer $30,000 with MBNA Visa back in 10/2004 it started at 3.99% interest, then it jumped to around 30% , i called them to try to get the interest lowered but MBNA refused. I calculated that I paid around $7000 in interest from 10/2004 til now 3/2007.... and I can't pay any longer

My question is based on the amounts above, what's the lowest do you think that MBNA (now owned by Bank of America) will settle for????

I have several credit card's like this where I borrowed at a low rate then the

interest jump and the credit card companies refused to give me a low rate again, so I had to juggle balance transfers and convenience checks just to make the minimum payments...

Thanks in advance,

mixman55

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There are some "debt fixers" who claim to be able to "negotiate" settlements for you with many of the major CC's. They claim to settle for 40-60% of your current balance. What they don't do is tell you about is the consequences to your credit scores, the tax consequences, and the FCRA rights you give up.

IMHO, you should avoid the debt fixers.

So, that leaves you with two basic choices...

1. Call your creditors. Ask for the hardship department. See what you can work out. Most will give you a reduced rate for a specific period of time. You do need to make sure you understand everything they're offering. Don't agree to anything until you've had a chance to review everything.

2. File BK. If you've got any income at all, it would probably be a BK 13 and the end result would be trashed credit, and you will wind up paying much of it back. But...it will put a stop to their rate jacking, and you'll have the BK court to back you up.

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I have a delinquent MBNA account, now BOA, that is many thousands. I also have another delinquent BOA account. Total combined debt for the two accounts is about 26 thousand. I talked settlement with BOA this week. They made many offers for settlement that I turned down. The offer that I am thinking about is a settlement of 4 thousand, about 15% of total debt. I am at 6 months delinquent and have a story of pain and woe. The story can be very important in settlement. If your account is not as delinquent as mine, it may not be in the same department, but here is the contact info for the department that contacted me about settlement:

800-264-6448 (if you want to call it, i will give you an extension# in a PM)

It's important to not allow yourself to be brow beat into accepting an offer that won't work for you. They will toss deadlines at you and potential dire outcomes if you don't agree to something right there and then. Ignore it all. Have a plan and a goal before you make a call. I don't like the 15% offer because I don't like the tax implications for the forgiven debt. I don't know if I'm going to settle at all, but I plan to offer $2500 just to see if they bite. I'm curious to find out how low they will go.

If your account is not at least three months delinquent, they will not talk with you at all about hardship programs or settlement.

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I settled w/ boa for 20% a couple of months ago. You need to be delinquent on the acct. In my case I was 90 days past due. I had 2 accts w/ them with a total of 24k. Settled for 4800. I dealt w/ a very nice lady. If I had your email, I could email her number and extension. Boa was easy to settle with. Cap one a big thorn in my side.

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I settled w/ boa for 20% a couple of months ago. You need to be delinquent on the acct. In my case I was 90 days past due. I had 2 accts w/ them with a total of 24k. Settled for 4800.

Just curious, did they say anything about the 1099c? You're gonna owe taxes on $19,200 of "found income". Do they mention that?

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Yes Willingtocope, I know all about form 1099. My husband is a contractor and we send out 1099s every year to his subcontractors as proof of income.

We are ready to pay the tax. We already pay taxes up the yingyang because of the business. I spoke about it to my accountant before settling.

Which is better? Losing the business or settling. Because we did meet w/ a bk lawyer. I did not even know settling existed. Thank the Good Lord it does. It has been a blessing to us. In our shoes willingtocope, I bet you would have chosen the later as we did.

Every situation is different, and one cannot judge anothers reasons for doing certain things.

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Yes Willingtocope, I know all about form 1099. My husband is a contractor and we send out 1099s every year to his subcontractors as proof of income.

We are ready to pay the tax. We already pay taxes up the yingyang because of the business. I spoke about it to my accountant before settling.

Which is better? Losing the business or settling. Because we did meet w/ a bk lawyer. I did not even know settling existed. Thank the Good Lord it does. It has been a blessing to us. In our shoes willingtocope, I bet you would have chosen the later as we did.

Every situation is different, and one cannot judge anothers reasons for doing certain things.

Absolutely! You need to figure out what works for you. The good news about taxes on the 1099c is that the IRS will at least take payments.

Just in case you hadn't thought of it...you need to get your settlements in writing...and stipulate that they won't sell the balance to a JDB.

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1099C? I settled an account with BofA that was 15K for 4600 and we did not get a 1099C. How long do they have to send one?

According to the IRS rules, they're supposed to issue a 1099c for the year in which an "identifiable" event occurs. There are several examples of what that means, but, in this case it should be the year in which you settle the account.

The bad news is...the IRS also says that even if you don't get a 1099c, you should still claim the "savings" as income for that year, and then, maybe, sort out any errors later on. If you don't, and the creditor sends a 1099c to the IRS, you'll get socked with penalty and interest when the IRS audits you.

Note that the IRS expects you to pay taxes even if the savings amount was under $600...the creditor doesn't have to issue the 1099c for less than $600, but you still have to pay the taxes.

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Well.......my taxes are already filed. We did not get a refund and had to pay anyway. I am sure ignorance to the 1099c thing will not fly with the IRS, but I guess I will have to take my chances on this one. Good to know for future referrence and I can alwasy share the info with others if they don't know.

I had no clue about the 1099C or a settle debt. I know about the ones for interest and contract labor. Thanks for the info.

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I don't know, but I hope I don't. I asked a couple other people who have settled and they said they did not know or get a form. Who knows. Maybe all banks do not report the settlements to the IRS?

The IRS rules explicitly defining this just went into effect last year, so it is possible that some creditors haven't quite sorted it all out yet...

BUt...the real kicker is...the IRS expects us debtors to claim the income anyway. And, if the creditor eventually gets around to filing their claim of loss with the IRS, and the IRS finds that you didn't claim the income, they can charge you penalty and interest for not doing it.

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Would it be a red flag for an audit?

Hard to tell if this by itself would flag an audit...I'm guessing the IRS software isn't quite up to cross-referencing the creditor's "deduction" and the debtor's "income" just yet. If there's something else that triggers and audit...it would probabl be caught.

Maybe Dive can fill us in on how it played out for him?

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My story:

I sued a large well known JDB for violations over an out of SOL repo (DOFD was 6 years before suit was filed). We settled out of court. As a part of the settlement, I got a check and a deletion, they agreed to cease collecting.

They sent a 1099c, which triggered an audit (my reported income and tax return did not match). I told the IRS that the JDB never proved that the debt was mine

The IRS didn't care.

I told them I was insolvent.

The IRS didn't care.

I filed an administrative appeal.

IRS denied the appeal. The told me I could go appeal to the tax court in Washington DC, but I would have to appear in person.

I paid them.

I was audited the next 2 years as well.

and yes, you can go to prison for that, but I understand it has to be a really large tax debt or has to be a long term thing for prison to be the result. The IRS has a whole lot of other nasty things they can do to you first.

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Well, I certainly hope this does not happen to us, but if it does it does. You would think the idiot banks would tell you this up front when you get ready to settle. I know ignorance is not an excuse. Part of the debt was not mine anyway and had been in dispute for months, but they did not want to hear it.

I will hope it is not turned in to the IRS. How would you know to report it if the banks did not say anything? Go figure. I wonder how many other people like me just plain did not know they had to claim it as income.

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I thank you all for your replies....

But no one has answered my question, how much do you think MBNA (now Bank of America) will settle for???

Do you think I can settle for 10% ($3000)???

I have 3 cards like this 2 with MBNA and 1 with Bank of America, I've paid a ton of interest on all 3 cards...

Does anyone have a similar experience like this???

I'm currently unemployed right now, I want to try to get a settlement on all my credit card debts before I start working again...

Thanks....

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I had 2 accts with BOA. I settled w/ them for 20%. I was delinquent 3 months and received a letter from them stating to call them if I wanted to settle. They were my easiest company to deal with. I am not sure about the 10%. I was so happy w/ 20 that I really didn't push.

I had an MBNA business acct. This MBNA acct was not yet in the hands of BOA. This was more difficult to settle, and they did not settle until days before charge off. When I first called them to settle the account, they stated to me that they did not settle business accounts and that I needed to prove the business was in trouble. Well, days before charge off I received a message on my machine to call them. I did and they settled. I was also able to settle w/ them at 20%.

Good luck and don't stress. I was stressing so much and didn't have a board like this to turn to. Take your time and research, research, research. If I would have researched, I may have gotten better settlements. (settled chase business accts. at 50%. At the time I was happy with that because I was on maternity leave and tired of hearing the phone ring. This along w/ post partum made me settle to soon and not wait.)

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I think you can get 15-20% rather easily, but don't wait to long. Once the account is charged off and goes to a CA you will be lucky to get 40%.

Keep us posted on your success, I'm sure there are alot of people in your situation that would like to see how this comes out.

Good Luck!

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