Greetings! As a new member of this community and a novice in the world of GWs, PFDs, etc., I would greatly appreciate your advice about a serious problem regarding my daughter's credit situation. She is in her early twenties, living on her own, and has had two credit cards with Citibank for approximately two years each. Her payments on each card, which were subsidized by me, were timely until November 2010 after which I sold some stock in part to help her pay off both cards. However, there was a delay in my receiving the proceeds of the sale and then in transmitting the needed funds to her, so that by the time she contacted Citibank in February to make payment, one card had a balance of about $1700 and was 90 days overdue, while the other account had a balance of $2700, was 120 days late, had been charged-off/closed just 4 days prior to her call, and is currently awaiting transfer from Citibank to a lawyer. My daughter immediately paid the total balance due on the open account, but was told that it might still be subject to adverse action at some future time because it was already “in a liquidation portfolio in the escalation department.” We are also willing to pay off the entire balance of the closed account but have several questions about the best way to deal with this urgent situation, namely:
1. Would it be preferable for us to (1) pay the entire charge-off and then send Citibank a GW letter requesting that the account be removed from my daughter’s credit report?, OR (2) pay a settlement amount and then send a GW requesting that the account be removed from the report?, OR (3) pay a settlement amount and then send a PFD letter indicating our willingness to pay the remaining balance? In the latter case, can we request a PFD even if the debt is not being disputed?
2. Regardless of which type of letter might be best, is it premature for us to send one at this time, since there has been no opportunity as yet to demonstrate renewed and consistent responsibility in making timely payments?
3. I am very distraught over my partial responsibility in precipitating this serious credit problem for my daughter and would be glad to send such a GW or PFD letter myself, clarifying my role and sense of responsibility, etc. However, would it be more appropriate and effective for my daughter to send the letter and to indicate that I encouraged her to do so? Also, if I were to send the letter, would they check my credit score (not good) and take that into consideration?
4. Is there anything we can do at this time, in our written communication with Citibank, to minimize the possibility that the bank might take adverse action on the other account which is still active but was 90 days overdue at the time we paid the full balance? Or is it better not to refer to this account at all in the proposed letter dealing with the charged-off account?
5. With regard to my daughter’s future judicious use of the remaining active card, I understand that her monthly charges should be modest in relation to the credit limit, but for the sake of averting adverse action by the bank, is it preferable for her to pay off the entire amount each month or to let a small amount of interest charges accrue and be paid?
6. Does a successful outcome for a GW or PFD letter jeopardize one’s future ability to obtain a new credit card from the same bank, even a secured card?
I apologize for this lengthy posting, which is a sure sign of my lack of knowledge and experience in this area, and would be very grateful for any assistance you can provide. Many thanks for your forbearance!
