“Negotiating” Archive
Oct
1
One of the things that has become painfully obvious to me over the past few years is that you should always be prepared for the unexpected. Well, I had hoped to be done with one of my AMEX accounts by the end of last week, and things looked good on that front. In fact, my lawyers and I had received the offer, in writing, from the collection agency. So why the bad news you ask?
The day after we got the offer from the collection agency, I got a call from a law firm who claimed to now be handling my account on behalf of AMEX. I immediately advised them to contact my attorney and as it turns out, these folks are legit. Now it is clearly just another collection agency operating as a law firm designed to scare me and force to make ‘immediate payment arrangements’.
The friendly employee of this law firm did indeed try and get me to tell him what kind of settlement offer I was looking for, but unfortunately for him I’ve been down this road before and told him to get in touch with my attorney.
So, we are back to square one, with this law firm holding the same bogus position as the collection agency, in that they “absolutely cannot accept anything less than 60% of the balance and will only report the account as ’settled’ “. Oddly enough, the collection agency gave me the same exact line, so the negotiations are back in full swing. My guess is this will drag out for another few months.
As a ‘precaution’ I am going through the process of filling out a bankruptcy questionaire, just in case I need to file in order to protect myself legally from these clowns. I am prepared to do so if necessary and am aware of ALL the consequences of doing so. There is another development, which I will post about in a later post that may indeed make this necessary, but hopefully not. Another lesson I am learning is that there are ALWAYS options. 
Hopefully, I will have some GOOD news shortly.
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
Jun
20
Yesterday I received the letters from Citibank detailing my repayment plan for three of my credit cards, representing nearly 33K of my debt (Diners Club is a Citibank product and is also at 0%). As I mentioned in an earlier post, Citibank worked out a great deal with me; 0% interest over 5 years. Obviously I will try and repay this much quicker as I get any additional income from my side businesses, but the payments are very manageable and nearly $125 less, per month, than the DMP suggested payment. With much of my debt either at 0% or in settlement negotiations (AMEX), the question is do I still need a DMP?
The amount of debt that is still ‘out there’ without any concessions is approximately 15K, consisting of apporximately $6,500 with CHASE, $7,000 with Bank of America and the remainder with AMEX on a closed account with a much smaller, manageable balance and interest rate. I have two other cards with limits of $1000 or less than currently have a zero balance. So, the question is do I still need a DMP or can I pay these cards off on my own, protecting my credit score a bit. I have been, and continue to pay all these cards on-time so keeping one or more of these accounts open as I pay them off, could help protect what is left of my credit history/score.
Currently CHASE is at 7% but that was only a temporary relief measure for 3 months so that card will go back to 29.99% next month as I was late a few months back by 2 days; no reporting to the credit bureaus but CHASE put me at the default rate. Bank of America is at 16.24%, AMEX at 18.29%, both of which, while high, are certainly manageable given the balances. So, my plan is to contact Chase directly and hopefully work out the same plan, 7% interest, that the DMP would give me. If I am successful with that, I will keep the Bank of America account and the two other cards with smaller limits, open so I still have some sort of credit history.
If successful with CHASE, I could effectively avoid a DMP. Frankly, thus far, I have been able to secure better deals with all my creditors than the DMP offered, which is somewhat surprising given the credit counseling agencies are funded, in part, by the credit card companies. That said, credit card companies typically return 15% of the money they receive through DMPs back to the agencies, so perhaps this is the incentive for working directly with the creditor.
So, next step is to try and work something out with CHASE. In the past CHASE has been one of the creditors least likely to be flexible, much like AMEX, but given that I have worked out plans with almost all of my other creditors, I may have some leverage with CHASE. Their reluctance has typically been the fact that I have other debtors and they felt they would be at a disadvantage by working directly with me. Well, that clearly is not the case anymore, so hopefully I can work things out with them. Stay tuned. I will be making the call today and hope to update my readers by the end of the day.
Jun
14
My DMP wasn’t supposed to start until mid July so I figured that before then I would try once more to secure a better deal than the credit counseling agency was trying to secure for me. I AM GLAD I DID!
A five minute phone call–a pleasant one amazingly–to Citibank who holds nearly 23K of my credit card debt, resulted in a great deal. As I mentioned in an earlier post, Diners Club agreed many months ago to knock my debt down to 0%, paid over five years; Diners Club is a division on Citibank. Well, I’m happy to say that Citibank agreed to knock down my rates to 0% on two of the cards I have with them. AMAZING!
So, there does appear to be some light at the end of the tunnel. The Diners Club card and these two Citibank cards represent nearly 45% of my debt, so having a 0% interest rate on this much of my debt is a fantastic opportunity. The payments that I will owe to Citibank are more than $100 per month less than what the credit counseling folks were offering me. In addition, Citibank will report my account as ‘Closed by Consumer Request’ and will report my payments as paid as agreed. In addition, they will allow me to keep my Citibank AAdvantage card–it has a $1,000 limit–open for emergencies.
Now, adding in AMEX in with Citibank, which is currently being negotiated with my lawyer and I anticipate will be settled for 45-50% of the original sum, and these banks collectively represent nearly 66% of my debt. AMEX will be settled and paid within two months in my estimation, depending on how much back and forth negotiation. Citibank has given me 30 days before I need to make payments, i.e. no payments until July, so I will have some time to get some cash together for an emergency fund as well as completely paying off all of the smaller limit cards.
After being in such a serious funk over the past week, this was certainly some welcome news. I don’t plan on using the entire five year window to pay Citibank. I plan on using a debt snowball for anything above and beyond my budgeted payments/regular income.
Jun
9
As you all know the debt has had me pretty stressed out the past few weeks but with negotiations underway to settle the AMEX debts and the details of the DMP to be settled on shortly, I do see some light at the end of the tunnel. The good news is that on Friday I officially signed the retainer for my attorney (all covered by my group legal plan) and I no longer have to deal with the clowns at the collection agencies. For now they will remain nameless but I have checked them out on several sites, including My3Cents.com and RipOffReport.comand it looks like my opinion of these firms isn’t far off. My lawyer called both firms while I was in her office and informed them that no contact should be made with me going forward; she also fired off a letter to this effect as well. She seems like a ‘touch cookie’ just like me in terms of her negotiating style, so I am confident things will get resolved to my satisfaction with my credit relatively intact and my payment only amounting to a fraction of the original debt. Again, I cannot help but wonder why AMEX would want to NOT work directly with me and collect all their money, but based on other readers’ response to AMEX, I’m actually kind of glad that in some small way I will stick it to them. I will, of course, keep you all posted on how the negotiations progress and I hope to share the lessons learned from this process with all of you. I realize not everyone in my situation will find themselves fortunate enough to have a group legal benefit at their disposal so I hope to share some tactics, letters and other tidbits that may allow others to deal with a similar situation on their own.
Jun
8
Thank goodness for my legal plan and the fact that in a few days, I will not have to have any further contact, phone calls or otherwise, with the collection agencies that AMEX has assigned to my account. The first firm, is clearly an outsourced operation to India. The folks that call me sound like they are 10,000 miles away and have a clear Indian accent. The thing that most amuses me about this firm is that the representative’s name is Ken Smith; how nice of him to choose such an American name. This company, which will remain nameless for now, absolutely refuses to send me ANYTHING in writing regarding a settlement. They constantly try to pressure me into settling directly with them, without any review of documents by my attorney. Hmmm, I wonder why? Could it be that my attorney is going to abide by the law and also use her negotiating skills and drag this thing out a bit. Of course!
The other firm is equally as slimy but since these folks are located in New Jersey, they choose to take the east coast, no nonsense, rude, in your face approach which frankly carries no weight with me since I too am from the East Coast. I just let these folks read their ‘riot act’ and tell them ‘have a good day’ or ‘ you can speak with my attorney’. These folks claim that in order to be able to offer me a settlement of less than 50%, they require a documentation regarding my hardship. When I say ‘okay, can you send me that in writing’, you get the run around and excuse after excuse why they aren’t going to do that. My favorite line is ‘you are the debtor here, you don’t dictate terms’. That is where they are wrong. If these folks want to get paid, then yes, they will indeed have to negotiate and agree to some of my terms as well. They just try and talk tough and perhaps they think I am bluffing about having an attorney. Oh well, soon it will all be out of my hands and the only thing I will have to respond to is my attorney’s questions and emails. That will be a nice relief. I am a very strong willed, educated person who understands the law and my rights in these matters but I can certainly imagine how these firms try and strong-arm people who don’t know their rights and understand what these clowns can and cannot do. I’d put a collection agency up there with a used car salesman in a strip mall. You can’t trust them as far as you can throw them.
May
23
So I met with the attorney this morning regarding AMEX, who I have now fallen behind with by 60 days given their astronomical rates. She told me something I frankly expected, which is they won’t really want to deal with me until they get close to a charge-off situation. This is essentially what their internal collection folks told me without being explicit. So I have a few options:
- Go directly to Consumer Credit Counseling and enter a DMP
- Wait to see what can be worked out once AMEX feels they truly will not get paid from me. This means a black eye (perhaps a temporary one) on my credit report for sure. The other danger here is that my other cards, all of which are current could evoke a “universal default”, although Citibank and Bank Of America, at least on my accounts, don’t have this clause. Chase does but I have already had that account closed in an effort to keep my interest rate down
- Keep paying the other cards and do everything possible to get back on track with AMEX. This is unlikely given how much money they want from me at this point unless I make a withdrawal from my 401K: a possibility I am looking into. I would pay off one or more of my cards in hope of securing a good balance transfer rate; such a rate may or may not materialize
As I am not a homeowner, nor do I frankly plan or desire to buy anything in the next 3-4 years, the DMP is sounding like the more reasonable option to be honest. It avoids bankruptcy and will certainly get my interest rates down, including those with AMEX. I’m a little torn between waiting it out and playing hardball with AMEX, as they will inevitably try and work something out before charging it off to a collection agency.
On this matter, I’m seeking YOUR feedback. Did my lawyer give me bad advice? I’m really uncertain as to what to do. I’m willing to work hard, taking on extra jobs to get the debt paid off but AMEX is really screwing me up. With my credit already in the tank, I almost feel like it is worth waiting it out with AMEX and seeing what kind of settlement we come to.
UPDATE: Made use of my telephone legal services and have found an attorney who will make a proactive attempt to negotiate with AMEX, using my potential for bankruptcy as a lever. This is what I wanted. The worst AMEX could say is no, at which point I will consider other options, i.e. DMP.
May
23
This morning I will be meeting with my attorney to discuss options to deal with AMEX. I’ve made it clear to my attorney that I don’t want any kind of debt settlement or partial payment of the debt unless she feels this is the best way to go. I would only agree to some sort of partial, “lump-sum” payoff if AMEX agreed to report the account as paid in full and current. I anticipate we will be discussing several options during our meeting so I will try and keep an open mind about things. My meeting is at 11AM Pacific Time, so hopefully before the end of the day for those readers on the East Coast, I will have some news. If nothing else, I will be able to report what the go forward strategy is with AMEX. Look for an update sometime later today.
May
16
Okay, so I had an opportunity to speak with AMEX and they offered me 25.9% interest rather than the 30.24%. An improvement? Yes. That said, it isn’t what will allow me to get this debt paid off and allow me to meet my basic living expenses. So, next stop is the attorney to see what she can do for me. I have fallen behind on AMEX because the interest rates are astronomical and they are getting very impatient about getting paid. I got one of those “14 days or else” letters in the mail yesterday, which is another reason I am seeing an attorney.
I’m also contacting my family members to see if I can get a loan from them in order to pay off AMEX and get rid of these jokers once and for all. The fact that they are completely inflexible really annoys me. They honestly WOULD like to have me go through credit counseling or declare bankruptcy rather than try and work out something reasonable. Oh well, lesson learned. I will have to have credit again, but it won’t be through AMEX that is for sure.
May
16
I got a voicemail message this morning from AMEX regarding my request for a lower interest rate. The message read in part “I’d like to discuss your letter you sent to discuss a lower interest rate and payment arrangements”. Interesting, considering they mailed me a letter saying there was nothing that they could do for me. I’m not too optimistic but from a logical perspective it makes much more sense to work directly with me rather than getting lawyers or potentially a Credit Counseling Agency involved. I will be calling these folks during my lunch hour and will report back on my results. Wish me luck!
