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Bouncing back from severe delinquency? Please help with any ideas

gdale6
Moderator

Re: Bouncing back from severe delinquency? Please help with any ideas


@ImTheDevil wrote:
Actually, a friend of mine is declaring BK7 to absolve himself of his house due to incorrect tax assessment (payments ballooned from 955/month tax and mortgage, to 1685/month. He was advised by an attorney that if he allowed it to be foreclosed, he’d be 1099’d for taxes on the loss. Might be a state by state thing though - we are in NY. By filing BK7, he is absolved of the tax burden on the loss...

Actually I was talking federal but upon looking it up Congress would need to renew it to cover 2018 and your state would have to pass legislation to come inline with federal as well. Filing of BK would result in no 1099s being issued.

Message 21 of 47
ImTheDevil
Community Leader
Senior Contributor

Re: Bouncing back from severe delinquency? Please help with any ideas

That’s his whole reason for doing it. He hated to have to but had no choice. The payments were simply not manageable. He owes roughly $105k on the home, and can’t stay current. The upside is that he hasn’t used revolving credit in years, and other than the bank holding the mortgage and his student loans, he has no debt and no one to burn, so his recovery should be fairly painless after discharge.


Platinum NPSL | Rose Gold NPSL | BCP | Delta Gold | Hilton Surpass | Hilton Honors | FNBO Prime Visa | PenFed PCR | Navy Platinum | IT Cash | IT Chrome | GHSFCU Visa Plat | Quicksilver | Target | VS | Home Depot | Lowes | Sams MC | Firestone | Overstock | Kohl’s | Key Bank auto loan (2017 Audi A6 Premium Plus S-Line)





TCL $112,400 | Agg. Util under 10%
Message 22 of 47
concord
Established Member

Re: Bouncing back from severe delinquency? Please help with any ideas

ARGH!! 

 

Had a bit of a setback. Updates: 

 

1. I called ARS National Services on Monday. I accepted their settlement offer to settle for $8k on my $30K in debt . I have to say, as far as collections agencies go, they were a delight to deal with. We agreed on terms and they told me it was a done deal. They were overnighting me a Debt Verification letter, and I was going to pay (via Bank of America bill pay). They said the DV letter wouldn't exactly come exactly overnight, give it 2-3 days. After 3 days (yesterday), I still hadn't gotten a letter. 

 

Tonight, I called ARS National Services again and spoke with the supervisor that had been assisting me. He told me that Chase recalled the debt and there's nothing he can do about it. It's out of his hands. He did tell me he was going to do his best to get the account's back, and he would call me on Monday if he was able to recover them.

 

I really hope he's able to recover them! 

 

So, I called Chase and they told me the accounts had been recalled on Wednesday. If the account stays with Chase and I have a DV letter from the last 30 days they will honor the settlement offer, but it most likely will not stay with Chase. The accounts will be in processing for at least a week more, and I should call back at the earliest next Friday, 12/8. There is no guarantee the accounts will stay with Chase, or go back to ARS (my two options for keeping this 25% settlement offer that I already accepted!). They could go back to a new collection's agency and I'd have to start at square one. Smiley Sad

 

On the positive side: at least this happened before I sent the money.

 

Updates on other accounts: 

 

1. Yesterday, I called United Collections Bureau to settle my Citibank account (owe $2200). They were challenging to deal with: hard to hear person on other line, they "lost" the settlement offer they had sent me. I spent over an hour on the phone. The first representative I spoke with tried to ask me "why I went into debt" and if "I had a job", when I clearly stated I had the money and I just wanted to settle the account. The manager was slightly better and I was able to get a DV letter. I had to agree to a slightly higher settlement offer (only $21 higher, settling for 40% of amount owed). I'm going to pay this off tomorrow. 

 

2. I got a settlement offer in the mail from Radius Global Solutions for my Capital One account.  The offer is $386 to pay off over 9 months for an account that original was $750 credit line, after late fees it's a $986 charge off. I'm going to accept it as a lump sum. I tried calling but they're only open 8am to 5pm Monday-Friday Central Time. It's very tempting to just pay these offers via the debt collector's website when they are difficult to reach, but I'm going to hold off and try contacting them on Monday before work (I work 9am-6pm Mon-Fri).

 

 Next steps:

 

-pay United Collections Bureau tomorrow

-call Radius Global Solutions - on Monday and get DV letter

-call ARS National Services on Monday after work - hopefully they are able to get account back from Chase

 

If anyone is reading this, thanks for letting me vent!

 

Message 23 of 47
concord
Established Member

Re: Bouncing back from severe delinquency? Please help with any ideas

duplicate post

Message 24 of 47
sjt
Senior Contributor

Re: Bouncing back from severe delinquency? Please help with any ideas

Regarding potential tax /1099:

 

I would speak to a tax professional, but how I understand it is if you are deemed insolvent (negative net worth) you would get credit equal to the negative net worth to offset the amount of debt forgiveness. 

 

Example: if you you add up all your assets less your liabilities (including all your debt as of the day before the settlment) and you end up with a negative net worth, that negative net worth amount would be a credit against the debt forgiveness. So if you have a negative net worth of $20K that can offsets the debt forgiveness amount.

 

 

American Express: Platinum Charge, Optima, Business Gold, Delta Business Platinum
Barclays: Arrival+ WEMC
Capital One: Savor WEMC, Venture VS
Chase: Freedom U VS, CSR VI
Citibank: AAdvantage Platinum WEMC
Elan/US Bank: Fidelity VS
Credit Union: Rewards Visa
FICO 08: (2.20.21) EX: 838 / EQ: 846 / TU: 843
Message 25 of 47
concord
Established Member

Re: Bouncing back from severe delinquency? Please help with any ideas

RE: sjt / Lithium5

 

What sjt said is pretty much what my accountant said. She's going to work with me to prove I'm insolvent. Probably won't be able to do it for 100% of the amount forgiven, but enough that I won't be transferring this debt from the collections agency to the IRS. She also mentioned it would be favorable to resolve all these debts within this calendar year (while my finances are still shaky). I'm going to post more about this (in hopes of helping others in similar situations) once I'm able to settle these last 2 huge accounts.

 

Hard lesson learned: I think disputing accounts that were actually mine was a mistake. I planned on taking the settlement offers the whole time, and when I sent dispute letters it caused Citibank and Chase to change the status of the accounts (withdrawing them, at least temporarily). I was able to get the Citibank account in collection back to the collection's agency (at a slightly less favorable settlement amount), but the status of my Chase accounts (which are the lion's share of my current debt) are still in limbo, and it's driving me crazy. I'm really hoping this 25% settlement offer will be honored. 

 

My advice based on my very limited experience. Don't dispute accounts if:

1. They're recent charge offs (last 2 years)

2. They're with a major banking institution that has thorough records

3. You have a settlement offer you want to accept

 

This sounds obvious, but is contrary to all the information I've read online for DIY credit repair. Feel free to correct me if I said something inaccurate, I'll admit my current situation does make me a bit biased. 

 
Message 26 of 47
ImTheDevil
Community Leader
Senior Contributor

Re: Bouncing back from severe delinquency? Please help with any ideas

The larger lesson is not to dispute accounts that are yours and are reporting correctly, no matter how much of a financial bind they present. The dispute process is meant for tradelines that are not yours and are erroneously on your reports, or which are reporting incorrectly. Disputing them when they are yours and are correct results in a simple validation that they’re accurate, gains you no ground, and may actually anger a collector to the point that they withdraw a settlement offer.

Just something to keep in mind going forward.


Platinum NPSL | Rose Gold NPSL | BCP | Delta Gold | Hilton Surpass | Hilton Honors | FNBO Prime Visa | PenFed PCR | Navy Platinum | IT Cash | IT Chrome | GHSFCU Visa Plat | Quicksilver | Target | VS | Home Depot | Lowes | Sams MC | Firestone | Overstock | Kohl’s | Key Bank auto loan (2017 Audi A6 Premium Plus S-Line)





TCL $112,400 | Agg. Util under 10%
Message 27 of 47
concord
Established Member

Re: Bouncing back from severe delinquency? Please help with any ideas

RE: ImTheDevil

 

Agree 100%. If anything, I did anger the collectors. I wasn't thinking about the situation logically. I think I was hoping possibly it would lead to further debt being forgiven (or maybe LOST).

 

I was also just mindlessly following a checklist (first I'll send the dispute letters, then after verifying I'll call and settle, etc.). Not the right move!

Message 28 of 47
sjt
Senior Contributor

Re: Bouncing back from severe delinquency? Please help with any ideas


@concord wrote:

ARGH!! 

 

Had a bit of a setback. Updates: 

 

1. I called ARS National Services on Monday. I accepted their settlement offer to settle for $8k on my $30K in debt . I have to say, as far as collections agencies go, they were a delight to deal with. We agreed on terms and they told me it was a done deal. They were overnighting me a Debt Verification letter, and I was going to pay (via Bank of America bill pay). They said the DV letter wouldn't exactly come exactly overnight, give it 2-3 days. After 3 days (yesterday), I still hadn't gotten a letter. 

 

Tonight, I called ARS National Services again and spoke with the supervisor that had been assisting me. He told me that Chase recalled the debt and there's nothing he can do about it. It's out of his hands. He did tell me he was going to do his best to get the account's back, and he would call me on Monday if he was able to recover them.

 

I really hope he's able to recover them! 

 

So, I called Chase and they told me the accounts had been recalled on Wednesday. If the account stays with Chase and I have a DV letter from the last 30 days they will honor the settlement offer, but it most likely will not stay with Chase. The accounts will be in processing for at least a week more, and I should call back at the earliest next Friday, 12/8. There is no guarantee the accounts will stay with Chase, or go back to ARS (my two options for keeping this 25% settlement offer that I already accepted!). They could go back to a new collection's agency and I'd have to start at square one. Smiley Sad

 

On the positive side: at least this happened before I sent the money.

 

Updates on other accounts: 

 

1. Yesterday, I called United Collections Bureau to settle my Citibank account (owe $2200). They were challenging to deal with: hard to hear person on other line, they "lost" the settlement offer they had sent me. I spent over an hour on the phone. The first representative I spoke with tried to ask me "why I went into debt" and if "I had a job", when I clearly stated I had the money and I just wanted to settle the account. The manager was slightly better and I was able to get a DV letter. I had to agree to a slightly higher settlement offer (only $21 higher, settling for 40% of amount owed). I'm going to pay this off tomorrow. 

 

2. I got a settlement offer in the mail from Radius Global Solutions for my Capital One account.  The offer is $386 to pay off over 9 months for an account that original was $750 credit line, after late fees it's a $986 charge off. I'm going to accept it as a lump sum. I tried calling but they're only open 8am to 5pm Monday-Friday Central Time. It's very tempting to just pay these offers via the debt collector's website when they are difficult to reach, but I'm going to hold off and try contacting them on Monday before work (I work 9am-6pm Mon-Fri).

 

 Next steps:

 

-pay United Collections Bureau tomorrow

-call Radius Global Solutions - on Monday and get DV letter

-call ARS National Services on Monday after work - hopefully they are able to get account back from Chase

 

If anyone is reading this, thanks for letting me vent!

 


Hopefully Chase will honor the agreement you made with ARS. If they do not honor the aggeement you can still negociate with them and probably get payment terms.

 

It really does not matter how they reports it to the credit bureaus as long as it shows a zero balance and either settled or paid. If you settled for less then owed, it will be notated in the memo section, which doesn't have an effect on your score.

American Express: Platinum Charge, Optima, Business Gold, Delta Business Platinum
Barclays: Arrival+ WEMC
Capital One: Savor WEMC, Venture VS
Chase: Freedom U VS, CSR VI
Citibank: AAdvantage Platinum WEMC
Elan/US Bank: Fidelity VS
Credit Union: Rewards Visa
FICO 08: (2.20.21) EX: 838 / EQ: 846 / TU: 843
Message 29 of 47
concord
Established Member

Re: Bouncing back from severe delinquency? Please help with any ideas

UPDATE: Chase agreed to settle directly! $8k lump sum to settle $31k debt. They read me terms that include:

 

-I'm going to get a 1099-C for both accounts sent to the IRS

-both will stay as a charge offs on credit report

-I may be declined from future Chase products due to settling for less than full balance

-If I don't pay by due date, settlement offer will go up, and debt may be sent to collections agency

 

They also said they usually report the accounts as settled to the credit bureaus within 2 billing cycles (60 days). 

 

Question 1: I'm pretty sure these are the best (and only) terms I would be offered. Has anyone had success getting better terms (in terms of clearing credit report with less than full settlement with Chase)? 

 

I didn't pay over the phone, I said I needed a settlement letter in the mail. They are sending one, it could take 7-10 business days

 

I am extremely hesistant to pay these settlements off over the phone. Is this a legitimate concern? I'm worried I will pay the $8k and because I don't have written proof of the settlement, it could cause future issues. 

 

Question 2: Once I receive the settlement offer do you think it's okay to call Chase and pay over the phone? Or I should definitely mail a check to be safe? They said I could also pay at a Chase branch, and I would get a receipt. 

Message 30 of 47
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