“September, 2007” Archive
Sep
24
Well it looks like I have some good news to report. My lawyer called me today and the collection agency who is handling my larger AMEX account–a balance of just over $12K–has apparently agreed to settle for 50% of the balance. In addition, they have also agreed to remove any negative reporting to the credit agencies once the payment is received.
My lawyer and I both agreed that no payment will be sent until the offer is confirmed in writing along with the agreement. The collection agency indicated they would faxing over the settlement letter tomorrow.
So for a little over 6K, I will eliminate nearly 12K in debt, which will absolutely jumpstart my running totals. We still have some work to do on the other AMEX account, but it will certainly feel good once both of those account are retired and I can focus on managing my monthly budget/finances.
Hopefully I will have a confirmation to report tomorrow. I am also considering posting the letter–details blurred out of course–so folks can see what a proper settlement offer should look like in case you don’t have the resources available to you to use an attorney.
Sep
18
Okay, so here is some more good news on the debt front. I spoke with Bank of America today regarding the unsecured credit account I have with them and they were willing to give me a 5-year payment plan at 4.5% interest. I do of course plan on paying this back sooner than 5 years but overall this is one of the better deals I have gotten from any of the banks.
Nearly all my debt is now at 6% interest or less with nearly 25K of debt with Citicards at 0%. I have done MUCH better than what any of the debt counseling services would have been able to do for me.
So, if you are a reader who finds yourself behind in payments or overwhelmed by the astronomical default rates–I had one as high as 34.99%–here is my ‘playbook’ for you:
- Before calling any creditors in an attempt to negotiate, spend time gathering your financial picture, i.e. your net income and all expenses. If you already have a budget, like I now do, this should be an easy exercise.
- When you call the customer service number, be prepared for the ‘hard sell’ to make a payment today to bring the account current etc. Calmly but assertively explain that you are experiencing and financial hardship and are looking for a long-term solution.
- My experience has been you will then be transferred to a special department that handles these types of situations. Be prepared to share your financial information, i.e. expenses and income. You DO NOT have to tell them your employer, no matter how hard they insist. If the person refuses to proceed without that information, ask for a supervisor.
- If you are indeed in a financial bind, the creditors I have worked with generally offer a 48-60 month repayment program with interest rates as low as 0%; I have 0% 4.5% and 6% programs active with Citicards, BofA and Chase respectively. Make sure you sign up for something you can actually afford as you don’t want to put yourself right back where you are. If the payment truly is too high, even if it MUCH lower than what you pay today, speak up and you might get an even lower rate assuming they are charging you interest.
- Be sure to ask about the fine print. What kind of communication will be sent? How are payments to be made? When are payments to be made? Most importantly, get EVERYTHING in writing.
- Ask whether or not your account is eligible for re-aging. In a nutshell, this process will clear up those past due entries on your credit report after you make 6-12 months of payments ontime, but there are some limitations to this, some of which are federally mandated. Not all creditors will re-age accounts but it certainly doesn’t hurt to ask. Even if a creditor doesn’t agree to re-age initially, you can always write a letter after the fact asking for this. I have been successful with this technique.
Given how much better the deals I secured have turned out in comparison to the rates the credit counseling agencies were offering, my final piece is advice is to always try and negotiate DIRECTLY with the creditors first. Yes, some are more willing to work with you than others, but you need to try and think like a creditor. They DON’T want you going bankrupt or having things written off to collections as that almost always means less money for them. Keep this fact in mind and keep a level head and you can almost always reason with these folks; I did say ALMOST always as AMEX has made quite clear 
Sep
14
I spoke with attorneys yesterday and they have fired off settlement offer letters to the two collection agencies handling my accounts from AMEX. The offer, which both agencies have indicated they would accept is for 40% of the original balance owed, to be paid in two payments.
In addition, my attorneys have asked for any negative credit reporting to be deleted once payment is received. This too, has been verbally agreed to by both collection agencies.
That said, as I am painfully aware, nothing is ever complete and final until it is received in writing so we shall see how things progress. If the settlement was agreed to, this would knock out nearly $21K ($8,400 paid out of pocket) of my debt, so I am hoping things work out for the best.
The collection agencies have been given until the 24th of September to respond so I should have some answers in the very near future as to how this unfolds.
Sep
12
Well I am finally back from Singapore and as promised I am back to posting, including a long awaited update to the Debt-O-Meter. I have now paid off $4,788 of my debt, a good start but not as much as I had hoped for. I only have myself to blame. As some of my critics have pointed out (particular a reader nicknamed JJay) in my last post, taking a vacation was absolutely a sidetrack to my debt repayment. That said, it was a much needed break and has provided me with a lot of personal growth and clarity about my path in life. I’ll talk more about some of the negative reaction to my actions in another post.
Additionally, I have managed to get the nearly $6,500 debt I owe to Chase locked in at a 6% interest rate with very little negotiation. So, I have a very substantial portion of my debt locked in at either 0% interest or 6% interest. I will be re-posting the details of my accounts shortly as I have gotten the okay from my attorneys to do so.
On the AMEX front, the negotiations are continuing but all roads appear to be heading toward a settlement of 40% of the original debt. Getting these two accounts settled, would knock nearly 20K off my debt total, which would be a very substantial kickstart to my debt repayment overall. I hope to have some final news on the AMEX situation before the month is out.
I am still continuing with my plans to go car-free when my lease is up in April of 2008. I have been taking the bus to work more and more and have been making use of Flexcar to run some errands, all to preview what life will be like without the car. The extra $650-$700 per month that car payment, insurance and gas spending that will be “freed up” will ALL go to debt repayment.
I’ll be posting some more thoughtful responses to some of the recent criticisms I have seen in the comments section in separate posts. I want to ensure I give myself a fair chance to look at some of these comments constructively, even if the language and content is a little off.
Thanks to everyone who stuck around during the recent months where I have not been all that engaged with the blog. I assure you it will be worth the wait and some exciting progress and changes will soon follow. For those who have chose to remove me from their favorites, I ask you give me a second look. I think you will find the quality and frequency of the content to be better than ever!
