topic What if I just stop paying everything and let it go to collections then PFD later? in General Credit Topics

What if I just stop paying everything and let it go to collections then PFD later?

Anonymous — Fri, 30 Sep 2011 07:37:05 GMT

Ok this is just completely outside the box what if thinking ok? No need to yell at me or anything, I'm just throwing the idea out there.

I currently have 4 credit cards and my total debt is combined about $15,000. Last year for the 1st time EVER I had a financial slump and BOA reported a 90 day late on my VISA and closed the account. After having the card for 7 years with no lates they closed it but yet I still have to pay the $11k balance and the monthly minimum is around $250.

So I'm already kind of ticked off, this screwed up my credit BIG time.

Well I am back on my feet and making good income. But honestly I'm kind of having a hard time parting with my cash. I like to see my balance grow and now that my credit looks like crap anyway I just am finding myself not giving a damn about my credit score or making sure these creditors get a dime from me. I pay for everything cash now and tossed all my cards.

I have read on this forum about paid for deletes. I guess when you don't pay your credit payment the creditor actually "sells" the debt to a collection company. At that point you then negotiate a pay down or pay off and you also somehow arrange to have the negative mark deleted from your credit report?

I don't pretend to know all the details, but what if I let everything go to collection? What if I just stomach the 3-6 months of phone calls and collection letters and just let my debtors sell my debt to a 3rd party collection company? Wouldn't I then have the opportunity to settle the debt for much less than I owe and also possibly arrange for the negative marks to be taken off my report?

I know it sounds radical and I don't expect anyone on here to actually encourage/advise me to not pay my debts and run my credit into the ground, but try to look at it from outside the box. If I make good income and use only cash now then to hell with my credit for a brief period of time right? Best case scenario I continue to pay all my bills and try to build up my score but regardless of any effort won't the 90 day late be on there for a good 7 years? There is something appealing about debt collectors willing to negotiate with me 6 months from now to settle the debt for half, maybe even less of what I owe. Plus the possibility of getting the negatives taken off.

Maybe there is a key part I am missing but if I am willing to make the sacrifice of not using credit for 7 years, worst case scenario won't it all drop off anyway?

Re: What if I just stop paying everything and let it go to collections then PFD later?

GB44 — Fri, 30 Sep 2011 08:19:30 GMT

Hello and welcome to the forum.

I understand your frustration, especially because B of A is not friendly when it comes to changing information on credit reports. However, If it were me, I would do everything possible to prevent myself from going down that dark and lonely path.

There is no guarantee that the OC will sell the account to a collection agency. Depending on the SOL for your state and whether the OC feels that it's a collectible debt, they could CO the debt and sue to get a judgment for the balance. If a judgment is rendered, then they could find your bank accounts and/or attach your wages until the balance is paid.

If the debt does go to a CA, then there is no guarantee that a PFD would be negotiated or settled on the account because YMMV depending on which CA buys the debt.

I would come up with an action plan to stop the bleeding and protect my credit at all costs. While you may not foresee needing credit for 7 years, your financial situation could change over time. Also, credit laws are ever changing, it's 7 years today but it could be 8,9,10 in upcoming years (doubt it, but you never know).

What it boils down to is there are too many variables in this credit game to take a chance on debts being CO'd and getting to a point where PFD is accepted by the CA.

Just my 2 cents.

Re: What if I just stop paying everything and let it go to collections then PFD later?

RobertEG — Fri, 30 Sep 2011 08:22:45 GMT

With what you are planning, the very first thing you should do is determine the expiration of your state statute of limitations on the debt.

Up until that time, the creditor/debt collector can bring legal action for its recovery, and you could find yourself faced with a court order to pay.

Then determinine the relevant date of the beginning of the SOL period. That date is usually the date of your first delinquency with the original creditor, but can vary under certain conditions under your state SOL code. Credit reporting is but one cog in the wheel....

Re: What if I just stop paying everything and let it go to collections then PFD later?

Anonymous — Fri, 30 Sep 2011 09:13:18 GMT

Hmm, well I have seen so many videos on youtube and tons of articles/forums that indicate it is HIGHLY unlikely a creditor would actually take you to court and pursue legal action. Of course 1 should never believe everything they see/hear so many some members here could give some more realistic expectations of that. Do creditors generally go the judgment route?

I am in FL by the way if that makes any difference.

I don't want to be dooped into something. I mean there are quite a few "respected experts" claiming it is pretty easy to settle your debts on your own and that legal action from a creditor is highly unlikely. Are they just selling a hill of beans?

Re: What if I just stop paying everything and let it go to collections then PFD later?

pizzadude — Fri, 30 Sep 2011 15:01:34 GMT

Basically it is a crapshoot if your creditors would sue you. Perhaps they will, or maybe they won't. Who knows.

I would guess that the larger the balance, the higher the chance that you will be sued. But people have been sued for small amounts too....

Honestly that is not something that I would want hanging over my head for 7 years, or 5 years or whatever the SOL happens to be in Florida.

Another thing to consider is that you will be relentlessly hounded by debt collectors until you pay up. They will call you nonstop.

They will call your parents, siblings, relatives, etc. Think about that.

If you do this, your credit will be WRECKED. PFD's are NOT a sure thing, in fact in many cases creditors will report negatively for a long time on your CRs.

All of the lates and chargeoffs will destroy your credit and will make it VERY difficult for you to obtain financing. Can you live without credit ?

"Settling" your debts may save you some money now but will cost you a lot more in the future.

This can also negatively affect other areas of your life, such as when you might apply for a job, or need a security cleareance.

You could easily be rejected due to deragatory information on your CR.

Lastly, I would argue that it is the right thing to do morally - pay your obligations as you agreed.

Please don't take this as ranting, I speak from experience, I've been in your shoes. I've made mistakes and seen what the consequences can be.

Re: What if I just stop paying everything and let it go to collections then PFD later?

Anonymous — Fri, 30 Sep 2011 16:48:21 GMT

pizzadude: absolutely man. I don't consider ranting, I appreciate the input!

I just see so many vids on youtube and "success stories" via websites that make claims that it isn't a big deal at all and that you can "easily" settle your own debts by yourself and always come out smelling like roses. Let them go past 180 days, let the bank be forced to charge them off, then they will either sell the debt, attempt to collect themselves, or attempt to sue via attorney.

According to the internet (lol) the rarely ever choose option 2 and 3, and pretty much tend to just sell the debt. After dealing with some nasty debt collectors who paid for your debt for pennies on the dollar you then have the negotiating power to settle with them directly for pennies on the dollar and get it in writing that the derogatory will be erased. 12-18 months later batta bing batta boom your credit is actually looking pretty good and in the end you paid a fraction of what you owe.

Sounds like a sales pitch, but what I am trying to figure out is how realistic that scenario is.

But in the end I do question the morality of it. I guess I am just downright angry that BofA won't respond to dozens of my Goodwill Letters (sent to various addresses) and after not a single blemish on my credit ever they won't grant me the request of getting rid of the 90 day late. Yes I know it is my fault but it was such a brief period where for the 1st time I was financially strapped in all my years of working (I'm 31 now). If they don't agree to get rid of that 90 late derogatory that will make my credit look like crap for years, regardless of what I pay on time elsewhere.

Plus they closed the damn credit card! I don't have access to the balance even though I have been paying it on time now since January.

I'm trying not to make an emotional decision but honestly I froze my credit about 4 months ago because I heard it was a great way to prevent identity theft. So I haven't had access to new credit for anything in awhile and I have been living a completely cash lifestyle. When I see my debt balances and the crazy interest rates and the amount I would have to pay to get it all done within a few years it's just nuts.

The RIGHT thing to do is pay my debts. I understand that and that is the way I was raised.....but damn it is just SOOOO tempting to tell these banks to go to hell and if I can do that AND come out ahead, well that is pretty tempting.

Re: What if I just stop paying everything and let it go to collections then PFD later?

Lel — Fri, 30 Sep 2011 16:54:22 GMT

@pizzadude wrote:

This can also negatively affect other areas of your life, such as when you might apply for a job, or need a security cleareance.
You could easily be rejected due to deragatory information on your CR.

+1. I've heard that employers are increasingly checking credit reports. If you want to work for the government, your credit will be checked. If you want to work for an employer who does contract work for government entities, your credit will probably be checked as well. Automobile insurance companies also check credit reports periodically; a bunch of new derogatories will probably lead to a big increase in insurance premiums or difficulty obtaining new insurance.

Re: What if I just stop paying everything and let it go to collections then PFD later?

Anonymous — Fri, 30 Sep 2011 17:18:31 GMT

Well I sell insurance now and make good money. No credit check required. My car is paid off and I plan on driving it for the next 5+ years, so no new auto loan needed. I rent an extremely nice apartment and have no plans within the next 5 years to have a mortgage.

Now things can change, so can I say with 100% certainty that I won't need credit in the next 5 years? No, but I do feel like more than the average person I am not going to require credit and honestly guys I have a huge desire to never need credit again. I am making good money now and it gets better every month. If I can keep this pace I can just buy a home cash when I need to.

Re: What if I just stop paying everything and let it go to collections then PFD later?

cdtotten — Mon, 03 Oct 2011 13:19:24 GMT

This would be the single worst decision of your life if you decide to make it. You have wracked up some debt and need to pay it off. It stinks, but it is reality. You think your credit is shot from a 90 day late, it's nothing compared to a report full of charge offs and judgements. When you owe multiple thousand dollars to a bank, they are most likely not going to ignore it. You might think you are fine and then 4 years down the road, they obtain a judgement and begin garnishing your wages. You never know what is going to happen tomorrow, so trying to predict it is useless.

I will say 1 think for certain; if you default on 10 accounts, there is a 0% chance that all will allow a PFD, so that is unrealistic. I would also venture to say that if you defaulted on 10 accounts, with that high of a balance, someone is going to take you to court. Your car could break down tomorrow and you need to purchase a new one.

Dont do it... there is NO reason to. You didn't just lose your job and are about to lose your home and have no choice but to file bankruptcy. You have money, you just decided to consider reneging on all your debts. Morally and legally wrong thing to do.

Re: What if I just stop paying everything and let it go to collections then PFD later?

Anonymous — Fri, 30 Sep 2011 18:05:12 GMT

Well that is a confident vote of NO.

LOL.

Thanks for the warning, I probably won't go this route. I'm just angry and looking for options. I'm also angry that some people out there are truly are sticking it to the banks and settling their debts for less. My interest rates are out of control.

Oh well, I can just come up with a plan and pay them back, but it stings 8-)

Re: What if I just stop paying everything and let it go to collections then PFD later?

GregB — Fri, 30 Sep 2011 19:42:06 GMT

I'm completely ignoring the moral issues here and addressing the question as presented.

I think people here are giving you advise from their perspective and not yours. I think the answer will vary according to your situation.

You haven't given us enough information here. Do you own a house or other property that you will lose or that can be liened? Do you have wages that can be garnished? What is the source of your income? Are you disabled? Collecting Social Security? What type of debts are they and what are the individual amounts?

Re: What if I just stop paying everything and let it go to collections then PFD later?

Anonymous — Sat, 01 Oct 2011 03:53:45 GMT

I do not have a house. I have a 2003 Ford Explorer that is bought and paid for. Only thing I own (well minus my tv, electronics, etc.)
I am a 1099 employee/independent insurance rep. I get paid daily whenever I fax in an application
I am not disabled
I do not collect Social Security (I am 31)
The debts are all credit card (unsecured debt)

List:

BOA Alaska Airlines Visa: $11,250
Barclay Mastercard: $3,250
Capital One Mastercard: $930
HSBC Mastercard: $750
Best Buy card: $1250
American Express: $1063

Given my level of income it would be great to get a personal loan from my local credit union to wipe all this out. But with that 90 day late on there via BOA we all know I would never be approved.

Re: What if I just stop paying everything and let it go to collections then PFD later?

Booner72 — Sat, 01 Oct 2011 04:29:24 GMT

I don't know that you wouldn't be approved. It's better than letting it all go to he- - in a handbasket. Esp. the smaller accounts. I could see letting BoA go, but def. pay off the rest first. Too messy otherwise for relatively small amounts of money.

I could kill my 31 year old self for the stupid things I've done to my credit. Don't make that mistake. And I know you won't because if you were, you wouldn't be thinking this so clearly and carefully. You'll do the right thing. Hopefully you'll get a better rate via installment loan to pay BoA off. I've heard of people taking their cards into the credit union in exchange for an installment loan - and/or closing the accounts, etc. It would help if you had an established relationship with a bank/CU to get that loan you need.

(SEE....you DO need credit ).

Re: What if I just stop paying everything and let it go to collections then PFD later?

haulingthescoreup — Sat, 01 Oct 2011 17:57:24 GMT

@Anonymous wrote:
Well I sell insurance now and make good money. No credit check required. My car is paid off and I plan on driving it for the next 5+ years, so no new auto loan needed. I rent an extremely nice apartment and have no plans within the next 5 years to have a mortgage.

Now things can change, so can I say with 100% certainty that I won't need credit in the next 5 years? No, but I do feel like more than the average person I am not going to require credit and honestly guys I have a huge desire to never need credit again. I am making good money now and it gets better every month. If I can keep this pace I can just buy a home cash when I need to.

You have a lot more confidence in the future than I do. (Especially since you've recently had a job loss.)

Anyway, the following is not being preachy, just an observation: there's not a d*** thing that I can do about other people's behavior, and I include corporations and other businesses in this. At times they're going to treat others badly, and they're going to treat me badly. No matter how hurt or angry their behavior makes me, I choose not to stoop to their level. This allows me to peer at my face in the mirror when I brush my teeth without feeling guilty.

If I owe someone something, and they crap all over me while I still owe them, I will pay them back, and I won't try to attach little zingers to the repayment, because I owe them, plain and simple. And then I never, ever, ever have anything to do with them, ever again, not because I'm still in a rage at them (holding on to anger doesn't damage them, but it does damage me), but because they have shown themselves to be non-trustworthy. Sort of a forgive, but don't forget.

It's very easy to get emotional about credit, but in fact, it's a business relationship. If you let emotion into your business decisions, you will often make choices that wind up hurting you in the long run, in one way or another.

Re: What if I just stop paying everything and let it go to collections then PFD later?

haulingthescoreup — Sat, 01 Oct 2011 18:02:58 GMT

--oh, and whatever your decision is about whether to jump off the credit grid or not, I'd strongly advise building up at least six months' worth of expenses in an emergency fund, maybe even more. Expenses = rent, gas or commuting costs, food, clothing, insurance premiums and co-pays, cable, internet, phone, prescriptions, clothes --all the dreary realities of life.

You are apparently self-employed selling insurance, right? It's a scary world out there, and there isn't much of a safety net out there for anyone any more, other than (it appears) for banks.

Re: What if I just stop paying everything and let it go to collections then PFD later?

Anonymous — Sat, 01 Oct 2011 18:26:46 GMT

I'd say no.

Yes, BoA is horrible about showing goodwill despite having received a nice chunk of the same from US taxpayers. That's not going to change.

Let's ignore any moral aspect to the debt being yours and look at it from another perspective: What if you're wrong about not needing any form of credit for the next 10 years and the unlikelihood of getting sued? You'd be 100% screwed, or more! If you will be able to pay cash for your next car, house and will not ever need a credit check for work or changing banks. You may get a job offer that requires background/credit checks. Do you really think a prospective employer would find "I didn't think I'd ever need credit again and decided... Screw 'em!" acceptable?

If there's a judgment and lien, that's a public record for 10 years.

Even cell phone companies check credit these days!

You're making good money now..... What if they garnish your wages?

What if the history that lead to the 90 day late repeats itself?

What if you get married and the apartment isn't big enough?

What if the response to your PFD offers is "No"?

What if the accounts report "Settled for less than full amount"?

What if you have to move?

Would it be OK if someone stiffed you for $15K?

There are just too many variables.

You could get lucky, though. Odder things have happened.

BoA is BoA, Man. They won't show me any love on lates from 2005, LOL! The account is so old they have no record of my SSN until transferring me up twice, but the lates still come back as verified if disputed.

Re: What if I just stop paying everything and let it go to collections then PFD later?

Anonymous — Sat, 01 Oct 2011 20:56:58 GMT

Well guys thanks for all the words of wisdom. My anger is going away a little. But what I think is complete BS is that the banks won't do anything for you until you do stop paying. When I fell 90 days behind they called me all the time and told me I needed to pay like $1200 or something. I had the money but I asked the guy on the phone if I were to make the payment would they not report it on my credit report. He said yes.

Clearly he lied.

Which ticks me off because if I call them today after paying it on time for 9 months and ask for the lates to be taken off or a reduction in the interest rate they tell me to.

So by that rational if I do stop paying the card they will once again start hounding me and being desperate to get their money. So maybe I should do that again except this time be like "look, it's 12 grand. I know you want it, and you guys know I can pay it based on my income and payment history over 7 freaking years! So with that being said lets meet in the middle since you lied to me back in December about not reporting the lates. I will give you another opportunity today to make the same promise, send it to me in writing, and I will pay the full $12k today!"

See guys I have the 12k. I could pay them in full right now, but am I so wrong for wanting something out of it? After 7 years and god knows how much I have paid them in interest the only thing I am asking for is they remove the negative reporting on my credit. Which is what they said they would do but didn't. This is why I am so angry. If I just bend over and pay them monthly or off in full I still have the 90 day late on my credit for 7 years, they have the money, and I have nothing but a REALLY bad mark on my credit.

Sorry, that is a bit too unbalanced for me. Yes I screwed up, life happens, but I am willing to pay the price. That price in my opinion should be the debt and years worth on interest. I will part with my money. But to hell with BofA if they want to take it all and still keep that 90 day late on there.

Re: What if I just stop paying everything and let it go to collections then PFD later?

Walt_K — Thu, 06 Oct 2011 14:23:38 GMT

@Anonymous wrote:
Well guys thanks for all the words of wisdom. My anger is going away a little. But what I think is complete BS is that the banks won't do anything for you until you do stop paying. When I fell 90 days behind they called me all the time and told me I needed to pay like $1200 or something. I had the money but I asked the guy on the phone if I were to make the payment would they not report it on my credit report. He said yes.

Clearly he lied.

Which ticks me off because if I call them today after paying it on time for 9 months and ask for the lates to be taken off or a reduction in the interest rate they tell me to.

So by that rational if I do stop paying the card they will once again start hounding me and being desperate to get their money. So maybe I should do that again except this time be like "look, it's 12 grand. I know you want it, and you guys know I can pay it based on my income and payment history over 7 freaking years! So with that being said lets meet in the middle since you lied to me back in December about not reporting the lates. I will give you another opportunity today to make the same promise, send it to me in writing, and I will pay the full $12k today!"

See guys I have the 12k. I could pay them in full right now, but am I so wrong for wanting something out of it? After 7 years and god knows how much I have paid them in interest the only thing I am asking for is they remove the negative reporting on my credit. Which is what they said they would do but didn't. This is why I am so angry. If I just bend over and pay them monthly or off in full I still have the 90 day late on my credit for 7 years, they have the money, and I have nothing but a REALLY bad mark on my credit.

Sorry, that is a bit too unbalanced for me. Yes I screwed up, life happens, but I am willing to pay the price. That price in my opinion should be the debt and years worth on interest. I will part with my money. But to hell with BofA if they want to take it all and still keep that 90 day late on there.

This isn't as bad as you might think it is. I was out of work in 2008. I had many more accounts go late than you. I had 7 accounts go late and several of them went 120 days with a couple 150 day lates. My scores rebounded fairly quickly. They went from around 500 to 700 in two years. They've improved a bit more over the last year. That single 90 day late isn't going to crush your scores forever. A big part of what is hurting your score right now is likely those balances on all those accounts. Once those balances are paid down and your utilization is back under control, you'll have a better idea of how much the 90 day late is dinging you. Even then, it will fade over time. I would guess that it will fade more quickly than you could accomplish this scheme of defaulting and then negotiating PFDs.

And if that is what you are concerned about, your credit score, then that is what you should do, pay your debts and let the 90 day late age. You can always try for a goodwill adjustment after you pay it off, but BofA can be difficult in that regard.

If what you're interested in is sticking it to them by paying them less than the amount owed, I'm not even sure why people are entertaining the idea of purposeful default then PFD. This seems very similar to credit repair advise given on other boards that advise people how to dispute and remove valid information from their credit reports which is prohibited on this site.

You were 90 days late right and you haven't suggested that any portion of the debt is invalid. It's quite a large balance to go 90 days late on. It's not a crazy decision for BofA to have closed down the account. You have several other balances on several other accounts as well. Not sure if you had those at the same time, but if so, it makes for a more compelling argument for BofA to suspend charging privileges so that the balance didn't increase further.

When I started working again, I had success negotiating interest rate reductions with some of the banks while I was paying. BofA was actually one of the better ones. We negotiated my rate down to 6%. I didn't have success with others. Capital One stuck it to me for a long time. This is one of many reasons I have no interest doing business with Cap One again, and why I moved all of my checking and savings to BofA. That is what you should do. You should pay down your debt and then decide who you want to continue doing business with based on how you were treated. And as far as the interest rate with BofA, you have the $12K. The interest rate is immaterial if you just pay the balance.

As far as reading success stories from people who say the banks won't sue you, I'd be very careful relying on that information. Most people who default on all of their accounts do so because they don't have a choice. Banks don't go after those people because they don't have any money. You're a different case. You have the money. You're a much easier target to get sued.

Re: What if I just stop paying everything and let it go to collections then PFD later?

Anonymous — Thu, 06 Oct 2011 18:04:08 GMT

Well guys I paid off all my other credit card debts and the only thing I have is the BOA card. So what I would like to do is continue to show BOA my committment to paying off the card and sending $1000 each month. I will also continue to send goodwill letters weekly and I hope that they will see me asa loyal customer that deserves their forgiveness. I mean it's a closed account with a high interest rate but I am dedicated to paying it off. I would think there aren't many of their customers doing the same right now.

Re: What if I just stop paying everything and let it go to collections then PFD later?

haulingthescoreup — Fri, 07 Oct 2011 04:30:20 GMT

@Anonymous wrote:
Well guys I paid off all my other credit card debts and the only thing I have is the BOA card. So what I would like to do is continue to show BOA my committment to paying off the card and sending $1000 each month. I will also continue to send goodwill letters weekly and I hope that they will see me asa loyal customer that deserves their forgiveness. I mean it's a closed account with a high interest rate but I am dedicated to paying it off. I would think there aren't many of their customers doing the same right now.

And my fingers are crossed for ya, but BofA has a terrible track record in treating consumers (and taxpayers) the way that they were so generously treated.

Good luck!