Is An 80% Early Settlement A Good Option or Should I Wait?

[Anonymous]

An 80% settlement will be reported as "Legally settled for less than owed" which will have the same effect as a CO, or close to it.

You will have the "Late" notations for each month your minimum payment was not made.

Therefore, you will have "double damages" show late pays plus a "settled for less than owed."

Hopefully down the road you may be successful with GW letters in getting the lates or "settlement" removed, but otherwise this is going to hurt you for 7.5 years.  While it will hurt less each year it ages, it will continue to be a bit of a scar, especially if you otherwise had perfect credit.  A late on perfect credit KILLS credit scores.  It potentially sets you up for more AA from other CCC's because it will "APPEAR" that you are in financial distress having a large balance ($10k), becoming late and then settling "NOT" as agreed.

This is a good example of shooting oneself in the foot.  I wish you luck. 

[creditwherecreditisdue]

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@Anonymous wrote:

An 80% settlement will be reported as "Legally settled for less than owed" which will have the same effect as a CO, or close to it.

You will have the "Late" notations for each month your minimum payment was not made.

Therefore, you will have "double damages" show late pays plus a "settled for less than owed."

Hopefully down the road you may be successful with GW letters in getting the lates or "settlement" removed, but otherwise this is going to hurt you for 7.5 years.  While it will hurt less each year it ages, it will continue to be a bit of a scar, especially if you otherwise had perfect credit.  A late on perfect credit KILLS credit scores.  It potentially sets you up for more AA from other CCC's because it will "APPEAR" that you are in financial distress having a large balance ($10k), becoming late and then settling "NOT" as agreed.

This is a good example of shooting oneself in the foot.  I wish you luck. 

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1) This is Chase account. Lots of luck with GW'ing anything away, and

2) The account is with the OP, the "ding" will only last seven years. A long, cold seven years though with a major derog; possibly more that one. Might as well BK. You'll have a cleaner life after the fact.

[Anonymous]

 

Q. You can't pay this or you won't pay this?

For now I can but my cash flow statement is very ugly, lots of negative numbers. Primarily due to creditors like Advanta and Chase that have closed the accounts so it's one way payments with no ability to offset them with any purchases. I used to be able to handle $50,000 in debt and kept it under 12% interest. Now I'm selling off everything and struggling to keep up with $40,000.

Big question I face today is the Case account has not gone over 30 days yet so I can make a payment that accounts for 2 payments within the next 36 hours and not have let it go over 30 days. They want a 30% interest rate now.

Combined with the other creditors it creates an interest rate of over $500 a month. So ultimately I wonder if I should continue to struggle. If I stop paying them, Wow, suddenly I've got lots of available cash All the numbers on my cash flow turn to black.

Message Edited by WarOnChase on 09-08-2009 02:09 PM

Message Edited by WarOnChase on 09-08-2009 02:41 PM

[plasticman]

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@Anonymous wrote:
 

Q. You can't pay this or you won't pay this?

For now I can but my cash flow statement is very ugly, lots of negative numbers. Primarily due to creditors like Advanta and Chase that have closed the accounts so it's one way payments with no ability to offset them with any purchases. I used to be able to handle $50,000 in debt and kept it under 12% interest. Now I'm selling off everything and struggling to keep up with $40,000.

Big question I face today is the Case account has not gone over 30 days yet so I can make a payment that accounts for 2 payments within the next 36 hours and not have let it go over 30 days. They want a 30% interest rate now.

Combined with the other creditors it creates an interest rate of over $500 a month. So ultimately I wonder if I should continue to struggle.

Message Edited by WarOnChase on 09-08-2009 02:09 PM

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Pardon me if this seems abrupt but is appears your war should be on debt not Chase. Moreover, you should first take full responsibility for your debt and not blame the CC companies.

If you can pay your Chase bill before it is 30 days late that would clearly be best, keep in mind you will pay a late fee. However, this is much better that a 30 day late reported to the CRAs.

If you will lay out in detail all of your financial obligations including your income, I am certain there are members who have been in your same type of financial despair and frustration whom will be more than happy to assist you with ideas and recommendations which will surely help you arrive at the best possible solutions.

I know  the members are very generous with their knowledge and help and would highly advise that you take as much advantage of their expertise as possible.

ETA: You are not alone here and I only wish you the best!

Message Edited by plasticman on 09-08-2009 02:46 PM

Message Edited by plasticman on 09-08-2009 02:48 PM

[Anonymous]

Im not concerned about a $39.00 late fee Im more concerned about 30% and other creditors jumping in on the band wagon with universal default. If that occurred that would be an impossible to catch up with

I differ on your opinion about people who had no problems paying their debts before the credit crisis. If we were able to pay them before they jacked up the rates without a problem then I think a great deal of the cause is with the banks. I am simply responding to market conditions.

If the interest rates were still under 12% I could pay this and get ahead of it, but if they all want 24% then is it not possible. Without ever missing a payment these banks cut my available credit, and closed accounts. I kept hoping things would get better and banks would issue more credit again so far that's not happening.

How were all those people who bought homes at 4%-6% interest supposed to know that they would never be able to get or re-finance at that rate ever again?

[plasticman]

You are clearly one of many whom were servicing to much CC debt after the rates rose significantly. I sympathize with your current situation regardless of whom you believe is to blame. 

I will reiterate, if you will post your complete financial situation on the "General Credit Issues" board I am positive there are many members with similar, past or present, circumstances whom will be extremely generous with advice and experience specific to your situation.

You will have made a positive first step by asking for overall financial help. I admire anyone whom does so, it is not easy for one to admit they need help.

Be well..

Message Edited by plasticman on 09-08-2009 03:38 PM

[creditwherecreditisdue]

I would advise a (most likely free) consultation with a competent BK attorney ASAP. You need to know what your rights are right now before things get any worse. Chase just hopes you make good on a settled amount with them and then last a few more months so the BK admisitrator can't recall your payment. Find out what your options are now.

[Uborrow-Upay]

@ waronchase: Don't trash your credit score...make the necessary payments today, before anything reports as 30 days late.  You're going to need that score for new credit to keep operating.  

@CWCID: Credit, you posted info in another thread about the Proactive Solutions dept at Chase, treating an unaffordable balance as an installment loan payable over 5 years? Would this be appropriate for the OP?

IF OP can get the payments to his original amount (or less) using that program, that might work, and he'd still look OK for obtaining new credit (I think).

What say you?

[creditwherecreditisdue]

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@Uborrow-Upay wrote:

@ waronchase: Don't trash your credit score...make the necessary payments today, before anything reports as 30 days late.  You're going to need that score for new credit to keep operating.  

@CWCID: Credit, you posted info in another thread about the Proactive Solutions dept at Chase, treating an unaffordable balance as an installment loan payable over 5 years? Would this be appropriate for the OP?

IF OP can get the payments to his original amount (or less) using that program, that might work, and he'd still look OK for obtaining new credit (I think).

What say you?

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They don't just give it to you. You have to explain yourself to them and provide income information. They look at your credit reports. I believe the program is intended for people who have been effected by the 2% to 5% minimum payment change. I do not know that it applies to other situations. If the OP is interested the information is out there in another thread.

Given OP's intent this program is not appropriate for him.

[angie204]

 I too have been in the situation where I overextended myself and was forced to use more and more credit to pay for previous purchases.  Ultimately I lucked out due to sudden increase in income, which allowed me to get out of that.  However, it was a fluke. 

My husband had a very old line of credit available from a national home improvement company.  One day he decides to walk into the store and make a purchase of several hundred dollars.  The customer service representative takes down his new address (which was a rural route address)/phone number, and issues him a temporary shopping pass.  All is well, for a few months.  Then we received a collections phone call from them, saying we are two months behind on our minimum payment of $15.  Turns out our mailing address was incorrect on the account.

My husband then asks them for the account number so that he can send payment.  The representative tells him they don't hand out account numbers over the phone.  So he replies: "no account number, no payment."  He tells her to mail a statement.  Two more months pass....no statement.  Another phone call received...our mailing address is still incorrect.  Once again, they tell him if he will just catch up the minimum payments that they will remove the derogatory and restore goodwill.  He again asks for the account number.  See where this is going?

We ended up with 120 days + past due on this account.  Logic tells me that we definitely owed the money, and therefore should have paid.  But stubborn is my husband's middle name.  It took us over eight months to get the derogatory removed.  During that time we could not get favorable interest rates on anything.  Do you think the store suffered any consequence?  Nope. 

My personal opinion is that you should begin making payments to them again to minimize the damage.  Meanwhile, take a good look at your entire financial picture and decide how it is you're going to pay all of these things off.  You need a plan.  Reality hits us all...eventually.