24k in CC Debt, should I stop paying and try settling? or stick it out

[brownsfan12 9]

Hello Everyone,

I just came across this forum 2 days ago and it has been the best information gatherer out there.

I have a major decision to make and would love anyone’s input or opinions!

Me and my wife have been struggling with paying our minimum CC payment for the last year, but so far we have not missed one payment and are up to date on all of our accounts.

Here is a summary of the accounts:

 

Bank Name   Min. Payment        Balance      Interest

Citi Card I        $93.00            $6,238.85       17.90%

Citi Card II       $26.88            $3,196.28        24.50%

Chase I            $37.00           $3,821.33        18.00%

Chase II           $28.00           $2,836.81        19.00%

Prosper Loan   $395.79        $8,595.10        14.50%

Total:              $580.67        $24,688.37

 

 

We are going to incur some serious medical expenses from now till August (High Risk Pregnancy) and we are

thinking of stopping on all of our payments and try to settle with the creditors ourselves. We have approx. $10,000

right now that we can use for settlements plus the $580.67 per month from now till 4 months  (my goal would be to settle

with the OC before it goes to collections) would equal a total of approx.$ 12,300.00 to use for settling these accounts,

is this reasonable? With my current income and the debt that we will incur via medical bills we are going to have to stop paying

in 6 months anyway so I’d rather stop now save that money for a settlement.

A couple things to clarify:

 

1.       I DO NOT care if my Credit score goes to Zero!

2.       I would be happy with settling these accounts @ 40% or less

3.       I look forward to documenting everything and handling the calls and letters.

4.       I do not want to be sued or taken to court if possible

5.       I do not own any assets (No home, or Car)

6.       I have close to $10,000 saved in cash (to be used for Settlements/ Medical expenses)

7.       I should be able to prove that I am delinquent at the end of this year so a 1099-C will not affect me

 

My main goal is to just get rid of these pesky irritating credit cards and to NEVER get them again.

Right now I plan on stopping all payments by this next month (March) and close down my account with my

current bank where I do all my payments with (ACH) on all 5 accounts. Then do all my banking with a different

local bank. (I already have an established account) I also am thinking of withdrawing all of my money that I currently

have and keeping everything in cash while I go through this ordeal. I also want to get a Cheap pre-paid phone and change

all my accounts to that phone # (that way I will know anytime that phone rings I know who it is

PLEASE GIVE ME ANY IDEAS/ SUGGESTIONS THAT I SHOULD BE DOING BEFORE I STOP ANY PAYMENTS!

 

Thanks everyone for the help

I Strive to learn!

[howucan2 86]

Get ready, Citibank will sue within six months of default and in your state usually Jovich ,Block and Rat.handles the account.

 

Chase doesn't sue as often as it used to  after the shake down few years ago, but It will drive you nuts with NCO from India call center. Make sure keep those recorded messages even if its for laugh , but they will disguise the number so the call looks like its from a local number. It usually has a + sign infront of it. Take pictures from caller ID.

 

It's a good idea to change phone number on the accounts to a prepaid phone.

 

If you have had a cell phone number as your contact with any of the two above I'd do this in case of default;  write and ask creditors not to call cell phone. I do this via certified mail return receipt. After that wait and see how miliciously they auto-dial your cell phone. take picture, record the calls just say don't call my cell and hang up ! a few of these will be a good leverage for negotiation and getting a favorable settlement.

[neweuquol 76]

I think you have a good plan to settle your debts.  Most credit card companies will not even talk to you until you have defaulted.   Normally I advise a client to pay the minimum payments on the lower APR cards while paying down the card with the highest APR and then go from card to card that way to pay them off but you indicate you are struggling to pay the minimum payment.

 

Whatever you do, do not fall for one of the credit card settlement scams.  You will be able to tell the ones trying to scam you if you pay then $x per month and they are taking the majority of that payment for fees.   There may be attorneys in your state that assist in debt settlement.  If you choose to use an attorney look for one who charges a contingency on the amount saved and nothing else other than out of pocket costs.   You may not need an attorney but most states have laws that a creditor cannot call if they know you have an attorney and you may not want to deal with all the phone calls.

 

Also, get all settlements in writing before you pay.   Settlements are worth the paper they are written on and if it's strictly oral......................  Many states require settlements to be in writing anyway.

[Coltfan1972 518]

Wait until the doctor bills are all done and then consider BK.  

[neweuquol 76]

Good advice from howucan.    The revocation letters to stop calling your cell are important because if they autodial your cell after receiving revocation, TCPA violations start to pile up.

[brownsfan12 9]

Thanks guys.. Good idea on the revocation letter! So I send that right before I stop making payments, send the letter then change the number to my pre-paid #?

So if I stop my payments next month do I call them and explain why or wait till 90 days past due?

I would rather not do a BK b/c of the publicity of it.

[howucan2 86]

Don't worry, they'll call you.

 

Just be on alert , NEVER talk to a debt collector if you are going to say something like " I lost my job or dont have money , etc."

 

Be careful, to never get angry or use faul language as you may end up presenting a copy of recording to court , it will not be received favarobly.

[brownsfan12 9]

My strategy going in is to be polite and professional and never give my exact financial details... When asked why I am not paying my response will be "medical hardship"..

Do I answer the phone those first times that they call? Or is that wasting my time?

[brownsfan12 9]

@Howucan2 any suggestions on how to get the best settlement when dealing with Citi?

[Seadragon 840]

weighing in on this turn of events I would stop paying and take the money that you would pay and put it into an account use that money to litigate and stretch it out when you are near to getting a judgment against you, If a lower balance account is suing you take a judgment on that one the others cannot collect right away until that is paid off then start to bargain such as they can have 20% of it or none of it. With a warchest then BK is possible because you have the money.

 

as for the medical debt that is sticky also because they will be the first to go to court, so to stall the medical debt, you sue the smallest balance card for FDCPA violations if they have done that or breach of contract for whatever, they will cross complain then you can dismiss yours and take a stipulated judgement once the small judgment is their they will wait for awhile because they know that you can only pay one judgment atr a time with qwage garnishment. you can even move the court to lower the wage garnishment to a small level.

 

Just some outlandish rantings but the underlying strategy is save money for a lawyer or BK. By the time the get around to sue you get a lawyer for the first case and that plaintiff will get the word out that you have a lawyer.

 

You hear the collectors crying about a 2 percent litigation rate saying it raises the cost of credit hogwash it is the selling of supposedly valid and well documented accounts for 4%of their value that is raising the costs of credit.

[Weary Traveler 19]

I can only speak from my personal experience with Chase. When I became unemployed back in the 2008-2009 Recession/Depression and notified them that I had lost my job, within the first 2 months of default while in one of my first conversations with them, the woman blurted out "We'd be willing to settle the account for 50% of the balance (which was over 15k). I could not have afford that amount at the time, but was stunned at how quickly they offered to settle. Now granted, this was at a time when CC defaults were swelling, so it would be impossible for me to speculate what their current inclination would be towards these situations 3-4 years later.

 

I remember being shocked at how quickly they were willing to negotiate without any effort on my part.  I am a wiser consumer today, though. Who knows if they would have settled and sold the balance to some bottom feeding JDB for a song, who would have then come after me for the remaining 50%. I'm glad I never took their offer. It's been sold to a JDB who has to date, not pursued the matter. It's now beyond the SOL for Delaware so I at least have somewhat of a Defensible position under Choice of Law.

[racecar 556]

The banks wont settle with you till you default.

 

You might try and get citi and chase to combine the credit cards in to one credit card account with each bank,I think you would save a ton of money on interest alone.Also it would take two accounts out of the court system that you could be sued over.

 

medical debt

Assistance programs. Ask the hospital's patient liaison to review your case and see whether you qualify for financial assistance from the government, a charitable organization or the hospital itself. Most will forgive some or all bills for people whose income falls below certain amounts tied to federal poverty levels. Also pursue this avenue with your doctor or other provider.

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Ashland Christian Health Center Bobbi Harpster, Executive Director 400 Orange Street Suite 208 Ashland, Ohio 44805 419.207.3911 419.207.3913 fax cjbobbi@zoominternet.net

Asian Health Initiative/AACS Ayako Kaino, Free Clinic Coordinator 4100 N. High Street, Suite 301 Columbus, Ohio 43214 614.220.4023 x235 614.220.4024 fax akaino@aacsohio.org

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Community Health Clinic Christine Shaffer, Executive Director 743 E. Main Street Newark, Ohio 43055 740.345.1613 740.349.0956 fax Shaffer_chris@yahoo.com

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[brownsfan12 9]

Racecar, 
Thanks alot for your all the info you provided, unfortunately we do not qualify for the assistance at our hospital (Aultman) I make 45k a year and we have no kids. And switching hospital's is not an option b/c of my wife's medical condition (hypertrophic obstructive cardiomyopathy) Aultman has been taking care of her since diagnosis at age 14.
 
We did negotiate with Aultman and they are giving us a 40% discount on all medical bills but it will still be 20k +,  but I signed up with a community program that helps with paying uninsured medical expenses and from what we have discovered we will have to come up with no more than 6k unless our bill goes over 80k.
 
A recent job change bumped my salary by 50% but in the process we lost our Insurance. 
 
I really am not interested in filing for BK.    Thanks everyone
 
The main question that I have for you guys is this:
 
Do I take my 10k that I have saved right now for my medical expenses and keep making the min. payments for the next 10+ years till they are paid off? It will be hard to make it through the next 6 months doing this but I think we could MAYBE do it but what happens the next time another emergency comes up?
 
OR

Stop all payments and default on my loans and CC and then try to settle for 40% or less and get rid of this debt for good!! That way I can then start saving for future medical bills and other emergencies ( I want to start a n HSA account)

[admin 896]

Here is the write up on how to settle with the OC. 

 

http://www.creditinfocenter.com/debt/originalcreditor_debtsettlement.shtml

[brownsfan12 9]

Thank you Admin, Been reading all of it! Great info!

 

What would you advise me to do?

[BrunoTheJDBkiller 178]

If you default, you'll have five lawsuits to eventually deal with and the amounts will be significantly higher than they are now. How's this....pay off the big Citi Card in its entirety and see if they will renegotiate the interest rate on the other one. See if Chase will do the same. Put the rest into the prosper loan, ask them to rewrite it so you can get a low monthly payment, and you may see your total payments on this pile of debt drop to about a hundred bucks a month. This will save your credit and keep you out of court.

[willingtocope 1,336]

Do they offer health insurance where you currently work?  Even if you have to pay for it, they can't turn you down...

[brownsfan12 9]

Do they offer health insurance where you currently work?  Even if you have to pay for it, they can't turn you down...

Willingtocope,

yes they do offer health insurance for me at only 30 a month (Which I have) but to add my spouse it will cost 580.00

[brownsfan12 9]

If you default, you'll have five lawsuits to eventually deal with and the amounts will be significantly higher than they are now. How's this....pay off the big Citi Card in its entirety and see if they will renegotiate the interest rate on the other one. See if Chase will do the same. Put the rest into the prosper loan, ask them to rewrite it so you can get a low monthly payment, and you may see your total payments on this pile of debt drop to about a hundred bucks a month. This will save your credit and keep you out of court.

Bruno,

Great advice and its one I have been comtemplating, my fear is if I do that in 5-6 months I will have a medical bill of 10k or so and wont be able to pay so therefore I will be dealing with defaults anyway and with no cash left over for trying to get settlements..

[BrunoTheJDBkiller 178]

Well, there are a lot of different ways to go with this, but waiting to get sued and hoping for a deal isn't the best choice. I'm sure the hospital will make you a deal you can afford. Sometimes you can put this through a city or town welfare program and the hospital will reduce the bill to Medicare rate, which is quite a reduction, maybe 75% off.

[brownsfan12 9]

Here is a little sidenote:

The reason that I am even thinking of a Settlement is because last week I received a letter in the mail from "Debt Arbitrators" saying I can cut my debt from 24k to 10k, (first I ever heard of CC doing a settlement, I'm a newbie)

So I called them on Saturday Talked with a Laurie from Debt Arbitrators and she was really nice and persuasive and convinced me to sign up Saturday ( I musta been drunk at the time)

 and here is a copy of what they purposed:

 

Summary of Key Terms:

Total Monthly Payment:    $762.17

Amount of Enrolled Debt:  $24,653.62

Service Fee:  $2958.44

Monthly Maintenance Fee:  $49.95

Estimated Timeframe:  18 Months

Estimated Savings Required:  $9,861.52

First \ Recurring Start Date: 2-28-2013

 

After signing that and actually THINKING a little I realized that this must be some kind of scam and started searching online for more information and found you guys! I have since Saturday been reading about Debt settlement nonstop.

I also CANCELED my contract that I signed and the nice lady became a little nasty.

 

Also on the contract that they gave me to sign it says that it is from "Limited Scope Legal Services Agreement" From ********* LAW FIRM, LLC I tried searching for a firm with that name in Texas and came up with a website that matched exactly the same name, but it said it only does family and criminal Law. So I called the Firm (real one) and asked them if they realize that there name is being used in a scam? She was astounded and wanted any and all information that I had.

I emailed her a copy of what I had signed and have since been talking with her and she is setting up a defamation lawsuit and wants to use me as a witness.

 

What do you think guys?  I am not releasing the law firms name b/c I dont want to further muddy the waters for them.

 

Sorry for the ramble, I should maybe start a seperate post for this..

[brownsfan12 9]

Well, there are a lot of different ways to go with this, but waiting to get sued and hoping for a deal isn't the best choice. I'm sure the hospital will make you a deal you can afford. Sometimes you can put this through a city or town welfare program and the hospital will reduce the bill to Medicare rate, which is quite a reduction, maybe 75% off.

Bruno, I have had the hospital check for any kind of program to help me but we do not qualify, they said the best the can do is a 40% discount.

For me I want to stay in good terms with this hospital as they have been great dealing with my wife's condition and they are the only one's that she will trust.

So I would MUCH rather pay the Hospital, but the CC companies can go shove it for all I care.

[willingtocope 1,336]

I'd suggest two things: 

 

1). Take the $580/mon your paying for the CCs and buy your wife health ins.  The premium is tax deductible (probably) and if there are complications, you're covered.  You might have some co-pays to deal with, but chances are the insurance plan has a cap on how much.  For my plan, its $2k out-of-pocket max, per person.

 

b. Use Bruno's approach to dividing the $10,000 among the CCs. (Although, actually, I'd pay off the 3 with the highest interest rate, and then deal with the others).   As he implies, don't wait for "default"...call them and ask for the "hardship" department.  See what you can work out, but don't agree to anythoing until you talk to them all and make sure you can stick to their deals.

[BrunoTheJDBkiller 178]

Would health insurance work at this point? Pre existing condition is what I'm thinking. Kinda like signing up for insurance a week before you go to the hospital and cancelling it after you get out.

[kutuzov 125]

As soon as I get the first bill from any creditor, I send them a cmrr letter like this one:

 

 

 

xx Bank

xx address

 

 

Re:

Account # xx

 

To whom it may concern:

 

I hereby notify you that I remove any consent I might have give you to receive calls and messages, including autodialed and prerecorded message calls, from xx Bank, xx card issuer (if is a store card), their affiliates, marketing partners, agents and others calling at their request or on your/their behalf, at any telephone number that I have provided or may provide in the future (including any cellular telephone number).

 

I do still give my consent for xx Bank, and xx issuer, to call me with a live person, exclusive to my phone number xx.

 

 

The cross out part, you might wanna put it or not, I do since is not for defaulted accounts is just to avoid beeing call by pesky machines 24/7, not to avoid beeing called by a real person if they really need to contact me.