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

[Anonymous]

Brief History,

Chase took over WaMu at the time I had over $10,000 in debt at 6% interest, Chase sent change in card agreement and I did not freeze it and close the account to keep the interest low because I had $15,000 in available credit.

One month after raising the interest to 18% they closed the account and wiped out $15,000 in available credit anyway. Needless to say I was mad and determined right then and there our of sheer principle I was not going to continue to pay them at 18% or the full amount owed, So I have defaulted on one payment so far.

Called them and told them they would not get anything if they did not give me a better deal. Their initial offer

was to settle for 80% of the debt. So I am wondering if on the credit report does it show the amount settled for?

If it does and that's a factor I am motivated to settle now so that it does not go on for months without payment and cause major problems with other creditors.

If it does not. then I'm motivated to hold out and see if I can knock another 20% off. Or what the heck I have figured out that if I put all my credit payments in a shoe box for one year I would have 2x as much cash as I would have had in available credit. Do these bank have any idea that the only intellegent reason a small businessman would continue to pay unsecured loans is to maintian available credit and if there going to take that away anyway there is no point in paying them?

I realize that settlements are bad but I'm thinking if the time frame and amount is stated then it will show that

I will make a fast settlements with banks that screw me, and otherwise everyone else gets paid.

[creditwherecreditisdue]

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@Anonymous wrote:

Brief History,

Chase took over WaMu at the time I had over $10,000 in debt at 6% interest, Chase sent change in card agreement and I did not freeze it and close the account to keep the interest low because I had $15,000 in available credit.

One month after raising the interest to 18% they closed the account and wiped out $15,000 in available credit anyway. Needless to say I was mad and determined right then and there our of sheer principle I was not going to continue to pay them at 18% or the full amount owed, So I have defaulted on one payment so far.

Called them and told them they would not get anything if they did not give me a better deal. Their initial offer

was to settle for 80% of the debt. So I am wondering if on the credit report does it show the amount settled for?

If it does and that's a factor I am motivated to settle now so that it does not go on for months without payment and cause major problems with other creditors.

If it does not. then I'm motivated to hold out and see if I can knock another 20% off. Or what the heck I have figured out that if I put all my credit payments in a shoe box for one year I would have 2x as much cash as I would have had in available credit. Do these bank have any idea that the only intellegent reason a small businessman would continue to pay unsecured loans is to maintian available credit and if there going to take that away anyway there is no point in paying them?

I realize that settlements are bad but I'm thinking if the time frame and amount is stated then it will show that

I will make a fast settlements with banks that screw me, and otherwise everyone else gets paid.

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Welcome to the forums!

You need to be careful about how this is going to report on your CBR's. Ask them. If it is going to report as a "Settled" account with the OC and no CO and you are happy with the deal I suppose it is OK. If you are going to end up with a CO I would be careful.

[Uborrow-Upay]

OP, is this a personal card or a business card?  Just curious.

[Anonymous]

There is a very good chance that your "plans" are going to result in your personal credit score getting trashed for several years.

Hopefully before you defaulted you have all the credit you'll need for the next 4-5 years already secured.

Otherwise...wow.

You may also wish to check any other accounts and see if they have any universal default policies. Once Chase starts reporting this will probably be activated.

In all reality depending on how your accounts are linked to you as a guarantor, your existing lines of credit both personal and business will probably see some type of adverse action involving CLDs and APR jacks, up to  and including account closings.

Any amount you "settle" is money not paid for services and use you did receive. it will be reflected in your credit report. Chase will probably also at the same time issue you a 1099 as the percentage savings you received on the settlement is viewed by the IRS as "income."

The second Chase reports your account as 30 days past Due you will receive a 50-100 point drop in your FICO.

Message Edited by usmc58555 on 09-08-2009 06:02 AM

[Anonymous]

 

The Chase card which was a WaMu card was personal.

I only had 2 business credit cards Advanta - now closed still owe them $7,000, and Capital one Just $2500 but now at 24% interest rate. I'm wondering with universal default how high can they go? Isn't 24% already out of the park?

I have a lot of debts in hindsight I should have waited till Feb 2010 to not pay Chase and save myself from the universal default clause.

I wonder if I settle now if that will lower the chances of triggering universal default or if I am already screwed.

[Jazzzy]

Wow.

Please don't react to credit card companies in anger thinking you are going to hurt THEM.

YOU are the one getting hurt here. THEY DON'T CARE.

I assume this payment has already gone 30-days late? If so, that damage is done.

If this was me, and if I had the means to pay all my debts, I would immediately bring this account current. One 30-day late will hurt your FICO, but not nearly as much...and not for as long...as a settlement will. If you don't have funds to meet all your obligations, that is a different story. Then you have to make choices.

Adverse action from other creditors will likely come even with the 30-day late. That damage is already done.

Your choice comes down to...try to save money by settling with as low an amount possible with Chase. Or...try to salvage your FICO sooner by not settling and, somehow, attempting to pay them in a timely manner going forward.

Are you better off defaulting on your business credit or your personal credit?

How much need do you have for future credit?

[Watchmann]

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@Anonymous wrote:

One month after raising the interest to 18% they closed the account and wiped out $15,000 in available credit anyway. Needless to say I was mad and determined right then and there our of sheer principle I was not going to continue to pay them at 18% or the full amount owed, So I have defaulted on one payment so far.

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I fail to see the principle on which you have decided to renege on a legitimate debt you owe.  We all know CC and BT loans are subject to repricing, and you got caught in the downdraft, as have millions of other people.  No one likes it but it is what we agreed to with these kinds of loans.  Just walking away from your obligations seems to be a very short sighted action which will have negative consequences in the longer term.  If I was a potential customer of yours I'd have to be asking myself if you are someone I'd want to do business with.  Or are you going to bail once things don't go your way.  Just an opinion.  It's your choice but I'd really think about the consequences of what you are doing.

In my own case I had a long term CL with Chase of $37,900 (since 1994), and once had a BT total of $23,000 on it at 3.99%.  I just paid it off last month and Chase came along and whacked the CL to $8,300 with the explanation that it appeared I didn't need such a high CL.  Sure, I wasn't too happy with that big a cut but I understand these guys are trying to cut their exposure.  Better to keep your powder dry and wait out these rocky times.  Better times will bring easier terms in the future, but if you burn your bridges now you are putting yourself in a box.

[plasticman]

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@Watchmann wrote:

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@Anonymous wrote:

One month after raising the interest to 18% they closed the account and wiped out $15,000 in available credit anyway. Needless to say I was mad and determined right then and there our of sheer principle I was not going to continue to pay them at 18% or the full amount owed, So I have defaulted on one payment so far.

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I fail to see the principle on which you have decided to renege on a legitimate debt you owe.  We all know CC and BT loans are subject to repricing, and you got caught in the downdraft, as have millions of other people.  No one likes it but it is what we agreed to with these kinds of loans.  Just walking away from your obligations seems to be a very short sighted action which will have negative consequences in the longer term.  If I was a potential customer of yours I'd have to be asking myself if you are someone I'd want to do business with.  Or are you going to bail once things don't go your way.  Just an opinion.  It's your choice but I'd really think about the consequences of what you are doing.

In my own case I had a long term CL with Chase of $37,900 (since 1994), and once had a BT total of $23,000 on it at 3.99%.  I just paid it off last month and Chase came along and whacked the CL to $8,300 with the explanation that it appeared I didn't need such a high CL.  Sure, I wasn't too happy with that big a cut but I understand these guys are trying to cut their exposure.  Better to keep your powder dry and wait out these rocky times.  Better times will bring easier terms in the future, but if you burn your bridges now you are putting yourself in a box.

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+1

[creditwherecreditisdue]

OP:

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

C. You are heading for a five to seven year disaster.

Everbody else:

+1

[creditwherecreditisdue]

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Watchmann wrote:

In my own case I had a long term CL with Chase of $37,900 (since 1994), and once had a BT total of $23,000 on it at 3.99%.  I just paid it off last month and Chase came along and whacked the CL to $8,300 with the explanation that it appeared I didn't need such a high CL.  Sure, I wasn't too happy with that big a cut but I understand these guys are trying to cut their exposure.  Better to keep your powder dry and wait out these rocky times.  Better times will bring easier terms in the future, but if you burn your bridges now you are putting yourself in a box.

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Did you recon this? It appears that if pursued vigorously Chase can back way off these decisions.