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

[Anonymous]

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?

[GB44]

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.

[RobertEG]

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....

[Anonymous]

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?

[pizzadude]

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.

[Anonymous]

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.

[Lel]

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@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.

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+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.

[Anonymous]

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.

[cdtotten]

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.

[Anonymous]

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-)