New Member - Aspen Matching Funds Offer - Should I bite?

[Huggy Bear]

Hi folks -

First, thanks to everyone who contributes - this forum is incredibly informative. I've been reading it all day.

I'm currently in the process of trying to clean my credit up so I can buy a house - hopefully within the next 12 months. Current stats:

TU - 502

EX - 489

EQ - 529

My loan officer tells me that if I can bump the score over 600, I'll be eligible for financing, but I'm shooting for higher.

I have a lot of questions which I will get to over time, but this one is more immediate than the others, and one I did not find addressed in other posts (though, admittedly, my search skills are still somewhat green, as I've only been registered for a day):

I had an unsecured Aspen CC with a ICL of $300 - maxed it out in two months, made minimum payments for the first 5 or 6, then bailed. Right now, I'm 120 days overdue, and I owe $831 - virtually all of which is late charges, finance charges, over limit fees, etc. According to my credit report, this account is closed, with remarks of "Closed by Credit Grantor" and "Closed due to inactivity."

I called today, and they told me I could make a minimum payment of $13 so as to be "current" and that if I called back tomorrow, they would "match" whatever I paid, as long as I paid half - i.e., they're willing to settle for half. The other option, if I so choose, is to pay a minimum of $13/month until the $831 is paid off.

Has anyone experienced this? My question is: by which scenario am I more likely to be adversely affected? Having a "current" account, I presume, is better than a "Closed by settlement" or whatever.

Any thoughts?

[Shae]

Hi folks -

First, thanks to everyone who contributes - this forum is incredibly informative. I've been reading it all day.

I'm currently in the process of trying to clean my credit up so I can buy a house - hopefully within the next 12 months. Current stats:

TU - 502

EX - 489

EQ - 529

My loan officer tells me that if I can bump the score over 600, I'll be eligible for financing, but I'm shooting for higher.

I have a lot of questions which I will get to over time, but this one is more immediate than the others, and one I did not find addressed in other posts (though, admittedly, my search skills are still somewhat green, as I've only been registered for a day):

I had an unsecured Aspen CC with a ICL of $300 - maxed it out in two months, made minimum payments for the first 5 or 6, then bailed. Right now, I'm 120 days overdue, and I owe $831 - virtually all of which is late charges, finance charges, over limit fees, etc. According to my credit report, this account is closed, with remarks of "Closed by Credit Grantor" and "Closed due to inactivity."

I called today, and they told me I could make a minimum payment of $13 so as to be "current" and that if I called back tomorrow, they would "match" whatever I paid, as long as I paid half - i.e., they're willing to settle for half. The other option, if I so choose, is to pay a minimum of $13/month until the $831 is paid off.

Has anyone experienced this? My question is: by which scenario am I more likely to be adversely affected? Having a "current" account, I presume, is better than a "Closed by settlement" or whatever.

Any thoughts?

$13/month? Sounds like you could be paying forever. You should try to work with them while they still have your acct. You don't want them to charge it off.

[Huggy Bear]

$13/month? Sounds like you could be paying forever.

Yeah, that seemed kind of like a small amount to me, too. Something like 5 years?

The minimum is $13/month. I'd pay it down faster - I just don't know how it will affect my credit if I take their offer or pay it in full over time...

[Bigwoodystyl]

Hi folks -

First, thanks to everyone who contributes - this forum is incredibly informative. I've been reading it all day.

I'm currently in the process of trying to clean my credit up so I can buy a house - hopefully within the next 12 months. Current stats:

TU - 502

EX - 489

EQ - 529

My loan officer tells me that if I can bump the score over 600, I'll be eligible for financing, but I'm shooting for higher.

I have a lot of questions which I will get to over time, but this one is more immediate than the others, and one I did not find addressed in other posts (though, admittedly, my search skills are still somewhat green, as I've only been registered for a day):

I had an unsecured Aspen CC with a ICL of $300 - maxed it out in two months, made minimum payments for the first 5 or 6, then bailed. Right now, I'm 120 days overdue, and I owe $831 - virtually all of which is late charges, finance charges, over limit fees, etc. According to my credit report, this account is closed, with remarks of "Closed by Credit Grantor" and "Closed due to inactivity."

I called today, and they told me I could make a minimum payment of $13 so as to be "current" and that if I called back tomorrow, they would "match" whatever I paid, as long as I paid half - i.e., they're willing to settle for half. The other option, if I so choose, is to pay a minimum of $13/month until the $831 is paid off.

Has anyone experienced this? My question is: by which scenario am I more likely to be adversely affected? Having a "current" account, I presume, is better than a "Closed by settlement" or whatever.

Any thoughts?

If they're offering you current reporting, do what you can to get the current reporting.

I have to ask, if what you say is true:

-the original CL was $300.00

-the current balance is $831.00

-you are 120 days late

-they are offering you a 50% settlement if you pay up front

-you are contemplating accepting this offer and paying 50%

Am I missing something, If you are able to pay $400.00 now, why didn't you pay $300.00 then?! That way you wouldn't be in this mess... LOL, did you simply choose not to pay the bill?

[zfire]

If the original creditor still has it...pay it now.

Half is good.

I don't think 13 a month will get you anywhere very fast.

You do NOT want this to list as a charge off, so do it ASAP

to get yourself back on track.

[skot0123]

If you have the ability to pay at least half now, why not ask them if you can pay that and they change the account to current then you pay the remainder down over two or three months, if possible, and then have an open account when you are done? Tell them that doing this will allow you to pay the entire amount owed to them and will benefit both of you. Maybe I misinterpreted your post but if not maybe this will work to your advantage. It's worth a shot.

[Huggy Bear]

Am I missing something, If you are able to pay $400.00 now, why didn't you pay $300.00 then?! That way you wouldn't be in this mess... LOL, did you simply choose not to pay the bill?

Are you crazy? That would have been <i>logical!</i> I didn't get where I am today (terrible credit, living paycheck to paycheck) by being smart and responsible. Jeez!

Seriously though - I live in a resort town, and my work is seasonal - I make scads of money between April and October, and then it all falls off. I've recently taken on more year-round employment, however, so I ought to be able to avoid this kind of thing in the future and, hopefully, pay a mortgage 12 months a year...

[Huggy Bear]

If you have the ability to pay at least half now, why not ask them if you can pay that and they change the account to current then you pay the remainder down over two or three months, if possible, and then have an open account when you are done? Tell them that doing this will allow you to pay the entire amount owed to them and will benefit both of you. Maybe I misinterpreted your post but if not maybe this will work to your advantage. It's worth a shot.

Nope - you got it right. I just couldn't get a straight answer from them regarding whether or not they would make it "current" if I paid it down over the next several months, rather than paying a chunk and having them pay the rest.

It seems that some people have had success with the "goodwill" letter - I may try that, or I may talk to a supervisor to see if I can get a more satisfactory answer...

This wouldn't be nearly so maddening if only I'd paid the bills last year...

[Bigwoodystyl]

Are you crazy? That would have been <i>logical!</i> I didn't get where I am today (terrible credit, living paycheck to paycheck) by being smart and responsible. Jeez!

Seriously though - I live in a resort town, and my work is seasonal - I make scads of money between April and October, and then it all falls off. I've recently taken on more year-round employment, however, so I ought to be able to avoid this kind of thing in the future and, hopefully, pay a mortgage 12 months a year...

LOL, at least you are learning from your mistakes. Did you simply ignore the bills?

Also, at least you have taken this on while it still with the OC. It sounds like you still have a chance to learn from this particular instance without it impacting your credit score at all!

For future reference:

Credit Cards 101: Overlimit Fees, Late Fees and Finance Charges

"The story of a charge off"

Let's assume that:

-you first opened your credit card account on August 16.

-The limit was $300.00

-The APR was 16.5% variable.

-The late fee is $35.00. The OL (over limit) Fee is $35.00. The returned payment fee is $35.00

-Finance Charges are assessed using a 2 cycle-ADB (Average Daily Balance)

-The "Performance Based Pricing" or "Penalty" or "Default" APR (the rate charged if you miss payments is: 33.33%)

Let's assume your first statement closed on October 1 with a balance of $278.00 and a minimum payment of $10.00 due on October 23. You made a $10.00 payment on October 24. (1 day late!)

Your next statement closes on November 1 and the balance is now approximately $343.00!! A minimum payment of $48.58 is due November 28 (you get a longer time period to pay your bill now that it is determined you don't pay in full. This is the difference between a "transactor" and a "revolver" in industry terms). The $48.58 payment is determined by taking 2.5% of your outstanding balance plus the late fee and plus the outstanding finance charges.....

To find out how in the heck they got a balance of $343.00, take your $278.00 balance and subtract your $10.00 payment. Then, add approximately $5.00 Finance Charges. (.165/365*46*ADB). Then, add $35.00 late charge because you paid the minimum late. Because that late charge brought you over the limit, add a $35.00 OL Fee.

It is now November 2, and you have entered the next statement cycle. Your balance is still $343.00. You haven't had any activity since your last payment. However, because you are now into your next statement cycle, the statement which will close on December 1, and, because you are over the limit into this statement cycle, you need to be aware that an OL fee is coming on December 1 regardless of what you do!!! Even if you PIF on November 3, you will still get an OL fee on December 1!!!

Let's now assume you didn't know about the above OL fee. You are determined not to let this happen again. You will pay off this card within 2-3 months and "never use it again" you're so angry at this point, so you make your payment of $60.00, slightly more than the minimum due, and you make it on November 15, two weeks before the due date of November 28.

The next statement closes December 1 and your balance is $326.00!!! A minimum payment of 16.30 is due on December 28

343.00 (beginning balance) -60.00 (payment) + 35.00 (OL fee) + 8.00 (finance charges)=326.00

Keep in mind, it's now December 2 and your balance is $326.00, so you are again over the limit and will receive an OL fee on the statement that closes on January 1, regardless of what you do. At this point you become so upset you go right to the company's web site and you PIF on December 3. You'll be damned if you pay another nickel in fees or in finance charges to these "crooks" The credit card issuer gives you provisional credit for your payment the day that you make it. The balance on the card as far as you know from their credit card online services web site is showing $0.00.

Then you’re out on the weekend and you see something you just have to have. You are still carrying this credit card in your wallet that has a $0.00 balance, despite your intentions of never using it again. You have paid over $100.00 in fees and have learned the lesson to always PIF!! So, you feel safe using the card again, knowing that you will PIF by the due date this time….. You therefore spend $250.00 on the card. The balance on the card is now $250.00 as far as you know.

You don’t check your statements online and the next statement which closes on January 1 comes and the balance is $712.00!!! WTF!! What happened?!

Well, in your haste to PIF on December 3, you accidentally keyed in the wrong routing number into the card issuers web site, and while the card issuer gave you provisional credit for the payment, that credit was withdrawn, backdated, effective to the date it was made, once the payment was returned, “unable to locate account”. Since you did not make another payment by the December 28 due date, a late fee was applied. Since you were over the limit, an OL fee was applied, since the payment was returned, a returned payment fee was applied. That’s $110.00 in fees for something you thought you had PIF!! Now, because you have paid late twice in the last 3 months, your APR skyrockets to 33.33%. So, your finance chares this time are more substantial at approx. $30.00

So,

$326.00 (beginning balance) - $326.00 (payment) + $326.00 (returned payment) + $35.00 (returned payment fee) + $250.00 (your new purchase) $35.00 (late fee) + $35.00 (ol fee) + $31.00 (FC)= $712.00

Now, you’re upset. Your $300.00 tradeline has a balance of $712.00. The minimum payment is now $152.80 due on January 28.

And, again because it is now January 2 and you are over the limit, an OL fee will be applied on February 1 no matter what you do. Worse, still, interest is now accruing on a more significant balance of $700.00 at a rate of 33.3%!!!

You decide not to make the payments, (you’re already delinquent from December 28, b/c your payment was returned and never paid.) When you miss the payment due January 28, the December 28 payment becomes 30+ days late and gets reported, when you miss the February 28 payment, you get a 30,60. When you miss the March 28 payment, you get a 30,60,90. When you miss the April 28 payment, you get a 30,60,90,120.

The balance on the Feb 1 statement is: 817.00

The balance on the March 1 statement is: 920.00

The balance on the April 1 statement is: 1038.00

The balance on the May 1 statement is: 1160.00

So, this balance of $1,160.00 consists of only $528.00 of purchases actually made by you. The rest is bank fees.

Now it gets charged off, add another 30% for attorney’s fees. It goes to court and they state in a complaint that you owe $1508.00, or 500% of your original $300.00 tradeline!!!

The lesson of course is always PIF before the due date. Always verify the payment has posted both to your credit account and to your deposit account. Always verify and always pay. If you cannot pay, call the card issuer to tell them you cannot pay before the fees add up.

Now that you know, there's no excuse not to pay. It is absolutely not an interest free loan! If you use the card, you must pay the card, and you must pay it on time.

[skot0123]

Wow! Very nice explanation and example. I always wonderd how Cap1 did that to me. I paid one off and closed the account...I thought...and a coupel of years later it showed up as about a $900 CA. All in the past now but you hit the nail on the head.