The information about writing letters to creditors I actually found here, at Clark’s website. I just ran across it, though, so I haven’t written the letters yet.
Dave Ramsey also has an explanation.
If you google words like fair credit collection and such, you will probably come up with a variety of articles and sites that will give you that same information I think.
Actually, I do avoid answering unidentified phone numbers and 800 numbers and such – because I get a lot of telemarketers, and also my credit card companies call wanting to sell me other products. But with creditors, my own experience is that they keep calling back even if you don’t pick up …
But hopefully with hard work, and the help of this group which I am so glad to have found, I will be able to get to a place in the near future where I don’t have to anticipate such calls …
I know how to Average my bills and divide them by the amount of pay periods in a year to come up with a weekly amount to put away strictly for home finance but I just cant figure out how to get it started. how to get out of this tornado where a bill comes in the mail and THEN I raise the money to pay it, or where most my utilities are a month behind, etc. I know how to make a budget on paper but how do I get it rolling when I’m behind to begin with. How do I get an entire months worth of bill money saved up so that putting a weekly amount away for bills will give me the next months bill money at the BEGINNING of the month, So that when a bill comes in the mail I can just simply walk over to my desk…. Write the check…. seal the envelope…. and put it out in my mailbox for pick up???????????
I am new to the CZ blog, and have already found reading the posts helpful.
Five years ago I moved from an area where I was earning a good income, to an area that has a much lower pay scale, so could be near my parents, siblings, and other family.
I worked my way to a better income again, and two years ago bought a house on my own.
I was doing ok till that point, but suddenly every bank came out of the woodwork to offer me a credit line. I decided to make a lot of repairs (some, not all, necessary right away) and improvements to the house. Bottom line, I took on too much debt, including charging up new credit cards.
Then the inevitable happened (I think inevitable, anyway) – the house then needed repairs I hadn’t anticipated (flooded basement, leaking siding in winter), and so did my car. Insurance took care of some, but I did pay out of pocket as well.
In Spring of this year, I started falling behind. I considered going to Consumer Credit Counseling Services, but just didn’t want them to close all my accounts. Also, I’m not looking to necessarily settle my debts – I just want to keep up and pay things off.
So I got on the phone and started talking to creditors. I’ve been doing that since this past summer.
My biggest problem right now is high interest and late fees. I’ve been bleeding money in late fees, overlimit fees, and high interest.
I’ve set up my spreadsheet with all my debts, and all the info I need to track them and pay them down. I encourage myself by putting a strikeout line through something when I pay it off, so I can see it and get that feeling of accomplishment, and also by seeing the “amount owed” column go down.
I try my best to meet due dates, but can’t always. It’s a vicious circle – I incur late fees and overlimit fees, have to pay a larger chunk, and then something else gets behind.
I’ve culled every resource I have available – small loan from parents, 401k, refunds, etc. I have very little left at the end of the month for extras (Christmas is particularly difficult this year). I would be happy to work overtime at my job, or get a second job, but haven’t been able to find either opportunity so far.
I guess mostly I need to be informed about what options are available for paying down debt and working with creditors.
For example: I have a $2000 credit card (now closed) that I’ve been paying on for a long time, but can’t get down, because the interest rate is high. This company I do want to call and work out some sort of settlement with, because I think I’ve now paid that original $2000 twice.
Sometimes I feel completely overwhelmed. Then I go back to my spreadsheet and remind myself of what I’ve accomplished so far.
I’ve found that, when you really are in a spot where it’s hard to pay on time, companies will work with you. Even small businesses, like your plummer, will work with you. They would rather have at least small payments coming, and know you will make good on the debt, even if it’s slow and late.
One thing I never knew is that you can write creditors to stop harassing phone calls. It’s things like that I need to learn – strategies having to do with working with creditors, negotiating interest rates … things that will help mitigate my circumstances so I can get my debt down faster.
I guess I just need a place where I can talk about all this, and learn from others’ information and experiences.
Thanks for listening!
Never, Never, Never,Never, Never, Never,Never, Never, Never,Never, Never, Never,Never, Never, Never, EVER give them electronic access to your checking account. Ever. A money order tomorrow is as good as a check today. If they are willing to settle for 20% then trust me you aren’t their highest priority. It’s the collectors JOB to make you think everything hinges on TODAY…but it’s not true.
Tell them exactly this or you’ll regret it: “I’ll accept your offer of a FULL SETTLEMENT for $xxxx . BEFORE (Before, yes before….BEFORE!) I send you any money I will need a written settlement agreement from your company showing that after I make these payments for 6 months (NOT via electronic funds transfer..NEVER, EVER) the account will be settled in full and closed.”
Then don’t accept anything else. This is is ONLY way to successfully handle this situation. I’m trying to be so clear and persistent that you’ll not make the mistake of doing this on their terms so they can clean out your bank account electronically the next time you deposit a paycheck. They will….they will…they will. Then what will you tell the police “Someone I owe $1000 to took $1000 from my checking account!”??
Be firm, be fair, be safe. And watch this video about debt settlement:
Total honesty here.
I stopped paying on my credit card last July. I was borrowing from Peter to pay Paul, had maxed everything out and was up against the wall. I sent them all letters telling them that I was not able to pay them at this time (DR letter from the book). I took DR’s class (just finished) and although I learned a lot on how to go forward, I not sure how to repair the past. I am getting a small income tax check back and called the credit cards last night and offer them 20 cents on the dollar. Several got real ugly, some just flat said no way, others said they would take nothing less than 55 cents on the dollar (Citibank). I am also one month behind on the mortgage. I was two but have made the extra one up. I bring in 2000.00 per month plus 600.00 child support.
Here’s where I’m at. The ‘was’ is what I owed when I stopped paying, the ‘is’ it what I owe now with late fees, over the limit fees etc.
I know I spent the money, I know I owe them. I’m trying to figure out how to make a bad situation better. This is my budget each month.
- Mortgage 786.00 renting is not cheaper, I have checked several times
- electic 100.00
- Gas-car 150.00 I drive -65 miles. Car pooling-I drive every other week
- Walmart 200.00 grocery, soap, clothing etc
- House ins 60.00
- Life ins 36.00
- Car ins 25.00 liability only
- Health ins 287.00 family coverage, high deductable, no maternity
- Phone 30.00
- Tythe 235.00
- Dance 34.00 for my daughter
- Water 50.00
- Daycare 600.00
Please help if you can. I’m about ready to take my tax check and file bankruptcy and go forward from here.
A little background-I went through the DR seminars and sent letters to my creditors telling them that I would be unable to make payments for sometime. Family issues set me behind financially and I couldn’t make any payments on the credit cards. I haven’t paid them since July. I received a small Christmas bonus and sent them all $10.00.
I am a single mom with two little girls. I am in a total screw up I know.
I will get a tax refund. I’d like to call and offer everyone a settlement in full. I have read to start at 30 percent and go from there. Do I take that figure from what I owe now (with all the late fees and over limit fees)or from what I owed in July when I stopped making payment?
Do I just call these companies and talk to them about this? Tell them to put it in writing and mail it to me. Can I give them a future paydate-say Feb 15th?
Any other advice?
Your creditors will be real eager to settle with right before they decide to charge of (usually at the 150 days late mark.)
If you can work a settlement then would be a great opportunity to do so. When you deal with the original creditor you can also negotiate them reporting to the CRAs the way you want them to.
If it does go to charge off then you will be dealing with a collection agency or an attorney’s firm. CAs are easier to deal with than the attorneys in general, but not all the time.
I would not speak to any CA or attorney’s except by letter sent certified letter. At first you may wish to get their call to start the negotiations but after always by letter. DO NOT USE THE PHONE.
Start as low as you can 30% is good, but I have seen creditors settle for 20 cents on the dollar. Right now BoA is settling for that much for most of their settlements. So start very low. Don’t worry if they don’t take it, that is why the are negotiation, right?
Do not settle for more than 50 cents on the dollar.
When you do get an agreement, make sure it is in writing BEFORE you pay them a dime. Then pay only with a cahiers check or money order. If you pay by check they then have your information and they have been known to take the remainder out of the bank account. Don’t take a chance.
After they have gotten your settlement, make sure you get a letter stating that you have settled.
I too am in dire help with creditors. I am divorced with over whelming debt as well as taking care of two little kids. My ex-wife has charged so much on my credit cards, 4 total, which I am a primary holder. I have cancelled all credit cards and am now responsible for all charges made against all 4 credit cards.
May I ask, how and what sort of statements did you write to the creditors? Would it be possible to get a copy of the letter you sent to your creditors? It would be helpful to me and my future debt settlement.
I hope that this helps.
Someone asked what was wrong with giving the account verbally since they can pull the same info off the written check. Here is the difference.
When you write a paper check, you have put in writing that the payee can only get the amount written on the check and this draft can only be made once.
When you give verbal approval, there is nothing in writing, you did not record the conversation and it becomes, as Chad said, someone I owe $1k to took $1k and your word against theirs.
Here is another catch, I know Dave Ramsey is dead set against all credit cards. If you a member of any kind of club, whether it is a gym or an internet Movie rental club and give them permission to automatically draft your account, you are the one at risk. When you go to cancel and they keep taking the money, the bank’s attitude will not make you happy.
One more thing, the settlement’s asterisk comments said something about “provided no additional charges appear on this account after the date of this letter”.
Clarify with them whether any further interest, finance, penalties etc will show up if they will then nullify the agreement.
I can testify to that being true. A company told me I could get a discount if I let them automatically draft my account each month so I said ‘yes’. I agreed to one year, and 1 year only. They took it out every month but the end of the 12 months, when I had cancelled, they still took it out of my account for a total of $100 over & above the agreed amount. I called & left messages & they never returned my calls. I even sent the owner a couple of certified letters thinking he would do the right thing and credit my account especially seeing that I was a loyal customer but I was very wrong! He never responded nor did I get anything back.
I am so happy that I read these threads regarding this subject. A creditor called me this morning and asked for my debit card number so that the amount that I owed could automatically be deducted from my checking account or either given them my checking account number. If it hadn’t been for the group, I probably would have given it to them, which I did not and they were forced to accept a check after my payday. Thank you, thank you, thank you!
When you’re broke you can’t afford the luxuries in life. Especially those that aren’t necessities. I remember those days. Get rid of the cell, get rid of the cable. You can’t afford these things until you get back on your feet. Its amazing how we live in a society that makes us think certain items are necessities when they’re not.
You NEED my cell only because you have no home phone. its your only way to be reached. you only have cable for the internet (modem) so you can look for jobs. maybe you’re right about the cable though because you also have internet at work and you usually look for jobs while you’re at work anyway.
If you received basic phone service (no frills) with the Universal Life Line plan (discounted for those under a certain income), you would be able to log onto netzero (10hrs free per month). That would defeat the cell phone bill and the cable bill. As a last resort you may get a loan online here and pay all your urgent bills and other expenses.
Can your phone still dial out. I know that in CA it is illegal for a person unable to dial 911 from their home, even though they have no direct telephone service. I know from this you can usually access toll free numbers. Have you ever plugged in your phone to see.
I just received a fax letter from BoA for $.20 on the dollar. To be paid over 6 months. They are demanding a check over the phone for the first payment. Should I pay this? Is this settlement a binding agreement? I dont want them to come back and say I owe the full amount.
well .20 cents on the dollar isn’t bad and paid over six months that is good too most people want it paid in 30 days. I think i would do it. tell them to send the agreement in writing.
NEVER, NEVER, NEVER, NEVER, NEVER (get the point?), give a creditor on a cc, mortgage, etc. a check over the telephone. Then you have given them all you checking info and they can and sometimes will tap into your account for more money, whether there is money there or not.
Here is the catch, they take another payment, what do/can you do? Take them to court? You owe them anyway.
Send money order, cashier’s check or regular, but do not give someone that kind of access. It is paramount to danger.
Just my advice.
I agree about your bank account; but also consider this … if you can find a local bank that offers free checking, open an account there and use it for times like this. It works well, that way you only have to put the exact amount needed in at the time it is needed. They can’t get money via wire if the money isn’t in the account; so don’t keep extra there (just enough to keep it open)
They can’t get money via wire if the money isn’t in the account; so don’t keep extra there (just enough to keep it open)
Actually they can. Certain banks offer “courtesy” overdraft on your account. The “courtesy” overdraft amount varies from bank to bank and does not necessarily have to be applied for.
Your account can be overdrafted even if you don’t have the money. Similar to making a purchase at a merchant, some banks will allow you to overdraw your account.
Anytime you give out your checking account info you put yourself at risk. I have done check by phone but before but as Deb suggested, I keep a very minimum amount in there. If a creditor tries to access my account it’s very easy to close that and open a new one. I use one account just for my pro rata plan and all other funds have been moved to an account that is not affiliated with any of my creditors.
Anyway, I never thought of the “free” checking account idea but I really don’t think it’s a necessity. There aren’t any “deals” that are honestly only good for “today”. They will always accept a money order unless their intent WAS to clean out your account electronically and the good deal was just a ruse.
Be wise and remember that all they want is their money…anyway they can get it.
I am about 5-6 months behind and was recently offered .15 on the dollar to settle with BoA and that account exceeded $25,000.00. Does anyone know the settlement percentages of other cards. Their balances are less than $10,000.00, but greater than $5,000.00
Bank of America
Also, BoA tracked me down for a resolution and one of their options was the settlement offer, will these other cards do the same? Is it before or after charge off that they make a settlement offer? Should I send a settlement offer to them in writing to get the ball rolling?
My total debt is overwhelming and I am in a relentless pursuit to extinguish it the cheapest way possible. Thanks for any input, this forum has been a great help!
WOW! .15 cents on the dollar! I’m impressed! I too have an account with BoA that is like $20,000…and would love to settle!
I heard BoA is hard to deal with…but some of the posts on here give me encouragement.
I too am way in over my head, with business debt, that I’m personally liable for, and personal debt, that I think the only way out is to file bankruptcy. I’d love to settle, if I didn’t have the biz debt, I think I could do it.
I’m seriously contemplating bankruptcy, ch. 13. Our service van got repo’d tonight. My husband was recently diagnosed with ADD, and he can’t handle the business anymore…he is like a non-functional person right now. He needs a job where he is expected to be there…not to get the self-motivation to get out the door. STRESS!
I have recently gone thru a bankruptcy, and now about to get a foreclosure on my house it was a new house i tried to rent it or sell it but did not have any luck. i was wondering what happens with the taxes?? They usually send me a bill to the house and then i send it off to the bank to get paid, but what happens now with a foreclosure, the same thing, or am i going to get stuck with a 3,000 tax bill that i cannot pay that the bank says that i owe, the house is in the state of Texas and i lived there over a yr. so it was a homestead too.
I don’t remember what month the tax bills came in, and what office would you contact to get it early,to send in to the bank?? I would call the bank but i would expect that some bozo would just lie to me what are the laws?? i have never had a house before this one, and never a foreclosure either. they should start around the end of this month or two weeks after that i just got a letter from them registered mail. Help??
You should call the Appraisal District for the county you lived in. They can fax you a copy of the bill, then you can fax it to the bank. I worked for an appraisal district years ago and if I remember correctly property taxes are the same as federal taxes, they don’t go away even with a bankruptcy. But the laws may have changed. They should be able to tell you at the tax office.
When a foreclosure occurs; the one foreclosing (the bank in your case) will be responsible for any back taxes and current taxes on the property if they want clear title as back taxes can affect title of the property.
Your monthly payments below almost equal your net income; you have to make some drastic decisions on your expenses and increase your income if you don’t want to file bankruptcy. No choice there. $500 a month just isn’t enough money to cover groceries, gas, repairs, clothes and other unexpected expenses especially if you have a family.
I am not saying you can’t do it, you can; but it will take time and hard work, being dedicated to trimming excess, willing to work another job, etc.
Now, as far as bankruptcy is concerned, Chapter 7 is liquidation and there is no Chapter 14. Chapter 13 is reorganization. You don’t make the “choice” of filing which Chapter anymore; that was changed last fall and the median income of your State is in large part the determiner for which chapter you can file. If your income is below the median income for your state, you can choose to file 7 or 13; however, if it is above, then you will likely be forced into 13. Also, you have to take a finance/credit counseling class within 6 months prior to filing. Keep in mind, student loans are not dischargeable in bankruptcy, no matter which chapter you file.
You can learn more about median income for your state here:
Expense standards for 48 contiguous states:
The first thing you have to deal with, believe it or not, is the depression … depression can make you physically ill and prevent you from working so this is the big thing for you right now. The most important thing in your life is your health and your family … are you married, can you discuss this with a spouse or significant other?
Being honest and upfront with your spouse, and they with you, is extremely important to resolving these issues and supporting each other will go a long way in resolving the depression.
Also this is what dave Ramsey says:
Remember, they (Creditors) can’t hurt you … they cannot physically hurt you … only you can do that to yourself if you let it happen … absolutely refuse to be depressed … there are solutions, from tightening your belt … ok breathing may be a tad hard for a while 😉 but you will breathe … to filing bankruptcy … to just not paying anything but the necessities (meaning no cc’s, no unsecured loans … just keeping a house over your head and related expenses).
Hope this helps some and do post back if you need more questions answered.
I’ve pretty much come to the conclusion that there is NO way I’m ever going to get myself out of this hole that I’ve dug for myself. Well, some of it is just a matter of a bad choice to move to a state where the housing appreciation has gone down the toilet – but I guess it doesn’t matter HOW we got here. PLEASE, I am looking for some advice here. I am growing increasingly more and more depressed over this situation.
I try to make this simple but just laying out the numbers:
- TOTAL DEBT: $258,000
- MONTHLY NET INCOME: (after taxes): $3700
- TOTAL MONTLY PAYMENTS: $3268
- $46,000 in student loans that have been in deferrment for 6 years and keep building interest.
- $196,000 on my home that is now only worth about $175,000 (Mortgage 1 = 185,000 and Mortgage 2 = 11,000)
- $10,000 unsecured loan
- $3,000 overdraft loan
- $1,200 credit card
- $300 credit card
- 1,400 medical bills
- 1450 – Mortgage 1
- 75 – Mortgage 2
- 199 – HOA
- 28 – Water
- 96 – Electric
- 92 – Cable
- 93 – Car Ins
- 60 – Cell
- 305 – Unsecured Loan
- 800 – Daycare
- 25 – overdraft loan (high interest)
- 25 – credit card (high interest)
- 10 – credit card (high interest)
- 10 – medical bills
- 0 – Student Loans that continue to accrue interest
Can someone give me advice – I guess state the obvious here? And I don’t want the file Chapter 7 – I want to get rid of it so I can start SAVING money – I want to file Chapter 14. If I don’t get RID of the debt and start saving money, what happens when my car starts breaking down? Or I need a root canal? Or my son is in an accident that requires hospitalization?
Side note: I’m a single mom and I adopted my son – therefore, I don’t get child support.
I was 50,00 in debt in credit card debt, and just got in under the wire for a chapter 7 bankruptcy. with having a debt thet large on credit cards it accumulates alot of interest so that you never get it paid off. my husband got laid off a good job and then did not find a permanent one for a long time did contract stuff etc. no benefits and when the jobs were done he got laid off again, also we bought a new house when he got a permenant job and then he got sick form the house fiberglass leaking out of the ducts made us all very sick substandard stuff very small, and also the chemicals at his job were toxic, tanning solution with no ventilation, and they would not leave the doors open, so he had to quit, we have moved to another state and are doing much better.
My suggestion is not write all your debt out on paper or on the computer call and find out the current interest rate that they are charging you. quit charging anything, lock them in a drawer, Then if you have any relatives willing to lend you any money call and talk to all them, you would be surprised who will help you sometimes, see if you can borrow some money with a no interest loan,and pay off the smaller cards first, and so on with your pay and his, until you only have a few cards left that could knock out about 20,000 quickly, and remember if you have medical bills lets say that you dont pay them they go on your credit but to go against you when trying to buy a house etc.
at least that is the law in texas, you might what to check the laws in your state. also i am a firm believer in using coupons, and quit going out to eat, it is cheaper to cook at home. If you have any teenagers at home you might encourage them to get a part time job to help and buy them selves things that they want. Also if you get credit card offers if you get good deal for a balance transfer at a lower interest rate you can transfer off a higher rate card to pay it off quicker, just dont use the card tho.
I’m new here, and would like to discuss my story…any advice is well appreciated! Sorry, kinda long.
Our debt story began when my husband got laid off from a good paying Union job in 2003. He never got called back for a FT job. We were in the process of starting our own Heating & A/C business at the time he got laid off…and we started things up and he went FT with our business. I work PT as a nurse, but make FT pay.
Of course, we accumulated a lot of debt to buy stuff for the business, and to provide our living expenses when he didn’t get paychecks…Owners are last to get paid. That landed us to where we are today….
- around $50,000 in credit card debt for our personal finances.
- around $45,000 in business debt, of which we are personally liable for…mostly $ due to our suppliers.
To compound the situation, my husband was diagnosed with Adult ADD (Attention Deficit Disorder)last year. He is a super smart, mechanically inclined man…but lacks motivation to get started and to finish jobs, is disorganized, irresponsible with money and spending habits. Unfortunately, this affects our business. We are trying to find the right medication for him, it’s been rough!
I feel we can negotiate our way our of credit card debt, IF he gets another job making descent money…and avoid bankruptcy.
The business CAN be profitable if managed correctly. I feel I have the skills to be able to take it places, but was held back b/c of my husband who wanted control. I know it can be profitable.
BUT, we are personally liable for the business debt, even though it’s a corporation. SO, we can’t simply fold the business, and file bankruptcy with the business, b/c they will come after us…and the only way to avoid that is to file bankruptcy ourself, after closing the corporation, and include the business debt in with our personal debt in the bankruptcy.
I would like to avoid bankruptcy. It is a possibility to keep the business open on a part-time basis, but nearly all the profit will have to go to debt, and maybe later after my husband is settled, he can start it up FT again…the right way. Or, keep it as a part-time thing, and once all is paid off, it will be all extra money after paying for parts and supplies.
That’s my dilemma! Big one, huh? Any advice, or stories, encouragement is welcomed!
Thanks for ‘listening’