A VISA Debt Settlement Offer

If you are new to the blog, click HERE to start at the beginning of my story.
POST #29
This is the day!!!!
Famous last words…..well it wasn’t THE day, but it was a BIG step forward.
I got on the phone with my contact in Recovery, let’s call him Billy. I had done my dance of the purgatory fairies the night before. Apparently they heard me because my account was in his system.
Billy was a down home kinda guy. A slow, calm droll to his voice – focused, smart and confident, but no attitude.  Quite frankly, I felt lucky to have found him. He seemed to understand my plight and was willing to work with me. Usually, I don’t believe in bonding with your “salesman” but with Billy it was different.  He was authentic, so I trusted my gut and trusted him.
He reiterated that $7500 was extremely unlikely. He had seen offers of 40% ($11,200), but only in extreme circumstances.  From his experience, my account was likely to be in his department for about a month and it would take that much time to get the supervisor to consider a deal that even came close to my offer of $7500.  That said, he was a man of his word and agreed to send it up the flag pole.
He put me on hold for less than 2 minutes, came back on and said he couldn”™t reach any sups but would try a manager.
In what seemed like 10 seconds, Billy came back on the phone.  He wasn’t the excitable type, but there was a smile in his voice.
Apparently, he had never seen an offer this low and this quick.
$9809.87 or 35%

We were in business!!!!!!

I calmly thanked him, showed my appreciation, but said this was still $2300 over my offer and I had to consult with my credit counselor (CRN coach).

Giant House of Cards
Image by Tjflex2 via Flickr

At this point, it was critical that my story stay consistent. In reality, I had access to about $8600, but our financial story had been a complicated one of borrowing (true), and deferring payments (true). We had allowed ourselves a little bit of wiggle room without telling the bank.  Now that we were going to counter offer above our most recent offer of $7500, we had to mathematically explain how and why it would happen. If there was a hole in the story, it could all fall apart like a house of cards.  The domino effect of which could make my real house fall like a house of cards. Not good.
Luckily, Billy added a little piece of magic to their offer. Unlike so many scoundrels in the collections and recovery departments, he took the pressure OFF of me.
“No one is putting pressure on you to decide today. The offer is good for 2 weeks.”
This is really unheard of!
So close…..but not quite there.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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Debt Settlement is like playing chicken with the bank

If you are new to the blog, click HERE to start at the beginning of my story.
POST #16
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REMINDER:  Today is my interview with YourMoneyMattersRadio. Click on the link to locate an AM station, podcast or iTunes radio station to hear the interview.
———————–
So here I am in the midst of my first debt settlement conversation and the rep is trying to get a payment out of me in order to avoid charge off. This scenario had come up in prior conversations with my CRN counselor.
What CRN explained is that making a payment to avoid charge off is like hitting the reset button on the debt settlement process. I am still in debt for the full amount, but now out 500 bones. Even worse, the bank knows they can stronghold me into making payments again. The whole idea of debt settlement is to explain to the bank that you can’t afford to make payments, but you can afford to borrow money from another source to pay off the debt at a compromised sum.
My CRN rep also explained that the bank is MORE willing to settle for a lower amount once the account goes to charge off.  Yes, there was a risk that the bank will escalate my case and take me to court, but this was a small risk since I had been in such close contact with them.
As such, I decided to roll the dice. I ONCE AGAIN told the rep that since I am in a financial hardship, I can”™t come up with $500.  I won’t ask a family member to borrow $500 to only get current on my debt. The loan from a family member was contingent on eliminating my debt with the bank.  Reluctantly, the rep wished me luck and said they would stay in touch.
I want to acknowledge an important point here.  The tide had shifted. I was more in control. The bank was willing to settle. They couldn’t scare me with bad credit ratings and charge off threats. I knew the longer we both waited, the more likely that I would get a lower settlement offer.

Image by Blondie5000 via Flickr

Yes, I was playing chicken with the bank.
thunderbirds
BUT, I felt very confident and informed due to my personal focus, steady education and CRN’s expert coaching.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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Debt settlement process ripened my debt like a sweet mango

If you are new to the blog, click HERE to start at the beginning of my story.
POST #15
Before I start today, I want to mention that I did a radio interview with Marc Pearlman on YourMoneyMattersRadio. It is set to air on Monday, May 3, 2010 on AM radio, podcasts and iTunes Radio. Marc is a top-notch financial advisor and runs an excellent consulting firm and radio show. Please visit YourMoneyMattersRadio and find out where you can hear the show.
Now back to my story.
After 100 days past due, things started heating up. As they say in the debt settlement business, “The debts are getting ripe.”

Ripe Red Apples - Ready for Picking - Filoli G...
Image by Jill Clardy via Flickr

Essentially, the debt moved to another department whose representatives (salesman!!!) were responsible for cutting settlement deals in the 50%-85% range.
On November 23, 2009 I was 132 days late on one of my accounts.
I called the bank for the 15th time and told them my story. However, since it was over 90 days passed due and the debt had been transferred to a new department, it was time to float the word “settlement”. I took a deep breath before I mentioned that word, thinking it would come at great resistance. I felt like a hospice nurse asking the family if it was okay to “pull the plug” on their dear loving family member. I expected the rep to be outraged by my egregious and forthright suggestion. Instead, the conversation didn’t skip a beat and the rep said we could work something out.
Wow! That was easy…..almost.

Their offer was for 85%.

HUH?

I said that would be impossible but I MIGHT be able to come up with $10K if I can make 3 payments over 3 months. The rep was hesistant and then put me on hold.
I was filled with excitement at the prospect of settling my first account. The fact that they were even considering a debt settlement was amazing!
But……
The rep came back on the line, and instead of addressing my offer, tried to get me to make a payment of $500.  He said if I make a payment of $500, it would prevent my account from going to “charge off” and give us more time to negotiate a deal.
Charge off is when the bank writes off your account as a bad debt and a business loss.  This is seemingly bad for me as a consumer because it hurts my credit rating. However, the ship had sailed on trying to protect my credit rating. I had already come to terms with that reality once I committed to debt settlement. Rebuilding my credit was another task to address once the debt settlement process was complete.  Sorry bank….you can’t lord that over me anymore!  As for making a payment to prevent charge off, that was another story and my CRN rep gave me some advice.

DON’T GIVE IN!!!

CLIFFHANGER!!!!!!
In the next post, I’ll discuss why that is good advice and how it worked out for me.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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Debt Settlement – 90 days of collections calls

If you are new to the blog, click HERE to start at the beginning of my story.

POST #14

waiting in line.
Image by ChrisM70 via Flickr

Nothing much happened here. It was pedantic. Kind of like waiting in line at the DMV before they started making appts. Remember that? You would get there at 7am and wait in line with 200 other poor souls for 4-5 hours. When you get to the desk it takes all of 10 minutes to deal with your DMV issue, but you had to jump through all those hoops. All formality. That was the first 90 days of debt settlement.
At some point the bank knows this is headed for debt settlement, and obviously you do, too. But you have to do the 90 days of dating before the bank will kiss you. That sounds weird, I guess. But actually, Wells Fargo took such pity of my situation that I feel like they both kissed me and hugged me.
Yes I did have to jump through the hoops and do 90 days of dating. But it was worth it. Debt settlement was worth the effort and the wait.
So for about 90 days, Wells left messages on my voicemail 4-5 times a week.  The messages were mostly from an automated system and all basically said the same thing. Certainly the calls from days 30-90 were incrementally escalated in sense of urgency, but nothing scary.  They wanted me to call them and they wanted a payment, but no one threatened me during this time period.
For my part, I called Wells Fargo reps every 2 weeks and told them the same story over and over again. Everytime, they tried to get me to make a payment.  I just kept telling them I was in a financial hardship and was unable to make a payment. There was very little conflict and very little to tell. I was surprised at how uneventlful it was. I kept a detailed log of every call made and updated my CRN rep to make sure I was on track. She assured me things were going as planned.
However, as I alluded to in an earlier post, it did get nasty in one of my negotiations. Surprisingly, this nasty conversation I am referring to was my first debt settlement.
In the next post, I’ll walk you through the debt settlement and my phone calls leading up to it.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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Credit Card Withdrawal

If you are new to the blog, click HERE to start at the beginning of my story.

POST #12
?
At this point I am on the path to becoming debt free.

  • I acknowledged that I needed to make a change.
  • Chose debt settlement.
  • Found the right debt settlement company for my needs.
  • Stopped making payments.
  • Called my bank to let them know I was in a financial hardship.

NOW WHAT?

This next step in the process was probably the biggest shocker of them all. You see, since I had committed my lines of credit and credit card to a settlement program, I could no longer use them.

day 76 - credit cards
Image by JudeanPeoplesFront via Flickr

uh-oh.

I can’t charge anything?

How will I live?

This was a real wake up call. I soon realized that I couldn’t actually afford my lifestyle. The first change I made was to either pay cash or use my debit card for all of my purchases.  This forced me to make hard decisions. If I didn’t have the money in my account, I wouldn’t buy it.
Simple enough………to say that is.  But not that simple to do. I had to undo decades of habitual overspending.
Time to start making choices. So what would I cut out? There were dozens of adjustments I made, but here are a few:

  • No more Starbucks
  • No more impromptu lunches out with friends.
  • Probably don’t need that Netflix subscription.
  • Say goodbye to HBO.
  • Whole Foods is WAY TOO EXPENSIVE and off the hit list.
  • Costco is my friend.
  • Instead of turning on the heat, I put on a sweater.
  • Cancel the cleaning lady and the gardener. Sunday is family cleaning day.
  • Do I really need the extra soft toilet paper?
  • I LOVE generic everything! 🙂

The most interesting by-product of these changes was that I started living more consciously.  Every decision was challenged. A distinction was made between my needs and my wants.
I have a greater appreciation for the thriftiness of my grandparents. I used to make fun of my grandmother for delicately unwrapping presents in hopes of trying to re-use the wrapping paper……well….I still laugh about that one. Some things really are ridiculous!!
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan
P.S. As an aside, I did keep a few low balance, low interest credit cards out of the program for emergency purposes. I have kids, so I do need a safety net. That said, I made a promise to myself, and my family, that these cards were to be used for emergencies only. No frivolous usage.

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Debt Collections Calls – the first 30 days

If you are new to the blog, click HERE to start at the beginning of my story.

POST #11
In mid August, I made my first calls to the bank explaining my situation. Was I nervous?

HECK YEAH!!!

This was the first of many pro-active calls I made.  I had written a cheat sheet to make sure the call went smoothly.  Here’s what was on it:

  1. Stay calm, sincere and friendly.

  2. Keep the call short and direct.

  3. Explain that I am experiencing a financial hardship.

  4. Explain that I am father of 2 and husband, doing my best to take care of my family.

  5. Don’t offer any information regarding my specific place of employment.

  6. Don’t make a payment. Never. Ever. Ever. Ever. JUST DON’T DO IT. This will kill the process and you’ll have to start over again.

  7. Don’t allow the rep to get me angry or defensive.

  8. Don’t mention debt settlement yet!!!!

All of the above was true for me. This is an important aspect of the debt settlement process. You are telling the bank a TRUE story. If you start lying, they will likely catch you and the process will crumble. As a reminder, debt settlement is NOT a way to avoid your debts. It’s a way to recover from financial hardship while attempting to offer your bank a portion of the money owed.

Image by oceandesetoiles via Flickr

During the call, I expected to be scolded by the teacher for being extremely tardy to school.
But really, it was more like, “We understand. Thank you for your call. Let us know when you are back on your feet.”
Keep in mind, this was during the first 30 days – not serious delinquency yet.
I don’t imagine it will be this smooth for everyone, but it was for me.
Good thing I was being coached by my CRN rep, Dayna. She gave me a reality check, “Don’t get too comfortable.  IT WILL GET NASTY!” And she was right, it took another 3 months, but it got there.  And once it got nasty, it got really nasty.
Surprisingly, not all of the reps were nasty, but when you’re dealing with people, you are subject to good and bad moods. When you catch someone in a good mood, you’ll get a better deal. Bad mood, bad deal. Sounds arbitrary, but it makes sense. Sure there are settlement rules for the bank, but there is also leeway. Ask yourself this question:

Who do you think will get a better deal?

The angry indignant customer?

or

The father of 2 who is calling every 2 weeks, telling his story with humility and offering to pay a portion of the debt?

In an upcoming post, I’ll share with you what happened when I got on the phone with a collections rep who was not having a good day. Let’s just say, I used every technique in the book to land that settlement.  🙂
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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