I have one credit card that has been sent to collection for 19k. Since I have made some small payments $50.00/month to them and talked to them on the phone, (not knowing that this is the worst thing to do) will I be unable to have the account settled? I would like to find a negotiator to settle this debt and if I do, will I have to pay the whole negotiated balance at once? I am considering bk because between this cc and my student loans I don't see how I'll ever get this taken care of.
you can't file bk on student loans. so I suggest just to take a financial hardship on student loans and not pay them for a period of 1-2 years and focus on this credit card.
Now with the credit card, will they not lock in your payments and lock your interest for a period of at least a year to allow you to try to pay it down a little bit? who is the card with?
If you use a debt settlement company, they will take monthly payments from you and ignore the credit card company until you have say 10k in the debt settlement company and then they will offer it to the credit card and settle the account... but making $300 payments or something it's going to take several years to build up the 10k in the account and your credit will be trashed.
you can accomplish the same thing on your own.
well if they are not willing to stop billing further charges then I would not be willing to make payments to them. it's with a collection agency already, how can they continue billing. Once it leaves providian, finance charges should stop and late and over limit fees should stop (someone chime in if I'm wrong). The collection agency might add some fees but they should not continue to increase after that. and now that it's with a collection agency they should be offering a settlement.
Did Providian charge the card off or did they hire this collection agency?
Depending on the verbage in the original contract, many CC's continue to accumulate interest and late fees after they are charged off an sold to a CA. That doesn't mean they collect them, but they do add to the balance due. I suppose state law might apply, as well.
BK seems like a solution, but it will also mean several years before you really can get going again.
1. Debt negotiators don't do anything you can't do for yourself, and they charge you a fee to do it. Debt negotiation is just like credit repair....time and pain staking, pain in the butt, but worth it.
2. $50 per month will not get you anywhere on $19k if they are continueing to charge default interest rates and late fees.
3. Hardship deferral on student loan is a good idea at this point.
4. Get a budget and plan. Write down and figure out where your money is going. Determine what is necessary and what can be cut. You are going to have to tough it for a while.
5. Sell something. Have a garage sale, list on ebay all the old stuff or junk, unnecessary, unused or luxury items you can live without.
6. Get a part time, second, job, if possible. This is that tough it thing.
7. Contact the creditor and request a freeze on fees and reduced APR and talk about payment plans.
8. If the account is with a CA, do a debt validation. Not to attempt to eliminate, but to make sure you understand what your balance represents in principal, interest, fees and accruing charges. So your debt validation should not be a "dispute" of debt, but a request of written validation of the debt to include line item amounts, principal, interest, other fees/charges.
9. Once you understand the bottom line, you can make an offer of accord & satisfaction. An accord & satisfaction is where you offer to pay a lesser amount in agreement for settlement in full. This can be a payment plan or lump, depending on your circumstances and ability. Don't commit to anything you cannot live up to.
10. As part of the offer of accord, it should freeze or eliminate accrued interest and fees. You can also include a reduction in principal. If you pay in lump, you get a better discount. If you pay on a plan, the shorter the term and larger the monthly's the better the discount. Don't accept any verbal "we don't do that." Submit and communicate only in writing.
11. If you would like it negotiated professionally, I can refer you to an excellent law firm which specializes in this. It would cost you $400 to $1000 dollars, but they are worth their fees in my opinion and save you much more and have better deal and impact on credit than a credit counselor, which are really just middlemen making a percentage.
Of course, personal willingness to hang tough on this type of plan is an individual choice. Good luck.
Thanks for the advice. I'm sure there are many people like myself who feel like they're financially flailing around trying not to drown. I keep a very strict budget so know exactly where my money goes. I have one other cc besides the one we've been discussing and they have just increased the interest rate 110% because I made one late payment last year. I really don't think these cc companies want anyone to be able to pay off their debt and are gouging all they can before the 2010 laws change or people file bankruptcy - whichever comes first.
One thing that I am also looking at is the time it will take to pay off these debts. Right now, as things stand, I estimate 7-10yrs. I am 52 and consequently don't have as much working years as younger people and I wonder if I can actually afford to pay off the debt. I need those years to prepare for the future. I don't own a home or anything of value. Do you have any idea exactly what the consequences would be for bankruptcy?
While speaking to an attorney about this debt would be helpful, I would not be able to pay any lump sum amount. Do you have any idea of what attys are typically able to negotiate off the balance?
As you suggested I am going to start looking for a parttime job and request the debt validation letter.