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hangloose

Should I tell creditors I'll file bankruptcy if we can't reach a settlement?

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Owe NFCU ~$21.5k ($16.5k credit card, $5k unsecured loan) , DOFD December 2018, received offers of 40% in mail (if PIF), received offer of 30% over the phone ~4 months ago, just very recently received settlement offer of 40% in the mail. Last updated on credit report late Dec 2019

Owe Chase ~$7k (over two credit cards), DOFD, Jan 2019, have received offers of 50% from various CA (if PIF) but I've never responded. Last updated on credit report May 2019

 

I'm essentially "judgement proof" currently, and my state has 6-year SOL

 

Should I try to negotiate and if that fails tell them I'm going to file Ch 7 bankruptcy? I fear this will lead to them calling my "bluff" or filing to sue me right away. I'd like to work out a deal for as low as possible obviously so I hope someone can share some insight.

 

I'd REALLY prefer not to file BK

Edited by hangloose

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30-40% are excellent offers. I'm not sure how much better you are hoping for. You have no leverage. Threatening to file BK is unlikely to yield good results.

 

Sure you can mention you're trying to avoid BK, but you should be contrite and honest about your goal to settle your debts and move on with your life and hope that you can get an individual who will work with you.

 

But at the end of the day if you don't have the money to settle for any reasonable amount, they're never going to come down to pennies on the dollar. You're looking at probably 9-10k to make it all go away. 

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12 hours ago, hangloose said:

I'm essentially "judgement proof" currently, and my state has 6-year SOL

Are you planning to remain "judgement proof" for the rest of your life? 6 year SoL means they have 6 years to sue you. A judgement is generally collectible for life (with renewals etc)

Edited by IndyPoolPlayer

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I’ve seen posts where other folks got Chase to settle for 10-20%

as far as what I was hoping for, well just less I suppose. 

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2 hours ago, hegemony said:

If you even mention BK there is a good chance they'll stop talking to you.

Okay thank you for that info! By stopping talking to me negotiations would stop there? What other ramifications or changes could I expect to happen?

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55 minutes ago, hangloose said:

Okay thank you for that info! By stopping talking to me negotiations would stop there? What other ramifications or changes could I expect to happen?

some creditors will assume you are filing and start to treat the account as if you have so that they avoid any potential problems with the stay.

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1 hour ago, hegemony said:

some creditors will assume you are filing and start to treat the account as if you have so that they avoid any potential problems with the stay.

Thanks Hegemony, can you elaborate on the last part? What potential problems would they try to avoid? Would they be likely to try and sue before I could try and file bk? Again, I’d really like to avoid a bk but I don’t want them to know that 

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No why would they waste money to sue you if you're about to file BK? The problems they would try to avoid is attempting to collect a debt from a debtor in BK. Big fines. 

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What about an approach like this, I tell them I want to work something out but that if we can’t reach a settlement then I’ll be forced to file for bk? 
 

That I want to work with them but if they’re unwilling to accept a figure I can pay then I’ll simply file?

 

I hope that makes sense the way I wrote it 

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How is that any different than what you originally proposed in your OP and we already said was a bad idea?

 

You hold no leverage. Read my original response again. 

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25 minutes ago, shifter said:

How is that any different than what you originally proposed in your OP and we already said was a bad idea?

 

You hold no leverage. Read my original response again. 

Thanks for the reply. I’ve had other members tell me that I’d never be able to get NFCU to lower to 30% either and had I taken them at their opinion I wouldn’t have the gumption to try and negotiate with them either, so I am looking for opinions since there is no “my way is the only way” you understand 

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Also, I’m hoping for opinions from people that might’ve tried the idea I’m proposing, or had experience similar to that 

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Negotiate away. Get them down as low as possible. But threatening BK is not advised. 

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25 minutes ago, hangloose said:

Also, I’m hoping for opinions from people that might’ve tried the idea I’m proposing, or had experience similar to that 

I have tried the idea you're proposing and it was useless. But it sounds like you've already decided what to do and are just looking for someone to agree. Best of luck. 

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41 minutes ago, shifter said:

I have tried the idea you're proposing and it was useless. But it sounds like you've already decided what to do and are just looking for someone to agree. Best of luck. 

Nope just trying to get as many opinions as I can. As with medical advice, house appraisals, and car repair, it’s good to get at least several opinions before determining a course of action. Thanks again for your time and advice

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I would hole the BK option silent and in the pocket, only to be used if the OC or any entity to whom they sell the paper actually filed suit. 

 

By avoiding form letters and disputing in a manner tailored to a situation, one can sometimes play whack-a-mole and successfully keep the third-party purchasers from reporting.  The report will still have the stain from the defaulted account, but if they sell the paper, it should report with a zero balance. 

 

Those who get the low percentage offers are generally those who are at the cusp of the limitations window for litigation being closed to the holder of the paper.  You still have a relatively fresh walking of the accounts.  They have ZERO incentive to settle for pennies on the dollar. 

 

The judgment proof element is something that people mistakenly cling too, expecting that they will NEVER have any manner of funds.  As noted, a judgment can linger for many decades, with the interest clock running the entire time.  Even though post-judgment interest may only be single-digit rates, it adds up after a decade (or more).  And if you ever wanted to buy a home, you WILL be in the position of resolving the matter at that juncture...

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@centex thank you for your informative reply! 
 

When I was on the phone with NFCU months ago and they’re the one that offered to settle at 30%, when I can have enough in one lump sum should I offer them an amount equivalent to 20-25% and see if they go for it? At first glance it doesn’t seem like it would hurt to try

 

something like “well I have X amount and that’s all. There won’t be any more than this so you can take it or I’ll call back and offer it to a different person at a later date” (or something along those lines)

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Creditors hear that shtick all the time and don't GAFF.  They know 95% of the people that threaten bankruptcy while negotiating a settlement are bluffing.  If you don't pay them, they are still going to write the debt off and get a tax credit.  

 

@Marv would have access to the CRA reporting manuals and can offer guidance, but I distinctly remember several years ago people threatening BK and the creditor had a remark added to their tradeline stating something like "Debtor contemplating bankruptcy."  If they can and will do something like that, kiss any open accounts in good standing sayonara.  And don't hold your breath waiting for any new applications to be approved -- even secured cards.  

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Thanks @PotO! I figured they had heard it ALL before... luckily (actually unfortunately) I’ve read all about NFCU blacklisting if you owe them any money and being forever blacklisted if filing BK. I really don’t want to file BK as I can settle all my debts for under $10k I’m just trying to get that number lower is all... live and learn. I appreciate your reply and time 

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37 minutes ago, hangloose said:

Thanks @PotO! I figured they had heard it ALL before... luckily (actually unfortunately) I’ve read all about NFCU blacklisting if you owe them any money and being forever blacklisted if filing BK. I really don’t want to file BK as I can settle all my debts for under $10k I’m just trying to get that number lower is all... live and learn. I appreciate your reply and time 

 

Nothing wrong with trying to negotiate an attractive settlement that fits into your budget.  I just wouldn't use the B-word.  

 

You are right about Navy's blacklisting.  They (and a few notable others such as AmEx and USAA) are very vindictive.  I'm not sure what their policy is on continued membership with them if you've reached a settlement.  Personally, if I ran into difficulties and had to default on all my debts, if I could pay anybody off it would be Navy, USAA and AmEx.  While they aren't ones that offer the best rewards, I still value those relationships most.  YMMV.

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Long time lurker, but this is my first day posting on this site.

 

I have used the creditpulls database extensively over the years to the benefit of myself and MANY others, BUT, now I thought it was time to contribute,

 

The settlement percentages you're talking about are not all that bad . . . if you can afford to pay them.

 

Lump sum is better for the lower settlement percentage.

 

As your debt ages it continues to become worth less and less, making lower settlement percentages easier for you to get.

 

In 2015 one of the folks that I worked with settled Chase at 15% once the debt reached a little over 18 months after DOFD. Much further back either 2008 or 2009 I had one person I was working with complete a Chase settlement at 8%, but it was a hefty dollar amount, they'd maxed a card with a $25K or $26K CL and they were beyond 36 months after DOFD and our state's credit card debt SOL is 4 years.

 

I have never dealt with NFCU regarding a settlement for myself nor someone else, so I cannot speak to their acceptable settlement percentages.

 

Telling them you're going to BK is probably NOT your best move. It's like a customer walking out of the car dealership after talking to the salesman for 15 minutes with a take it or leave it offer . . . they've seen it before (you're not the first one who has thought about trying it).

 

As a rookie many years ago I tried this with AMEX and they meant to put me on hold, but I could hear their conversation. It was the "manager" talking to his boss (or maybe they were scamming me???) and this was after MANY PHONE CALLS back and forth, where BOTH they and I had time invested. You can't get these done with the best rate a 1 phone call (at least I haven't been able to). But, their discussion went something like this . . . If he's going to file bankruptcy $1K one way or the other is not going to make a difference on his BK decision . . . so, let's ask him for a HIGHER settlement amount. We ended up about $1000.00 higher than I was offering, but still got a great settlement. Oh, how I would have handled it different with the knowledge I have today AND NO I WOULD NOT MENTION THE BK while negotiating a settlement.

 

@Centex is right save the BK if they file suit.

 

If you want a story to run with, you might be better off stating that your family is "giving" you the money to settle your debts. It's not your money and you only have X amount they're willing to give you to settle ALL your debts. If you can't settle ALL your debts with that amount of $, then there's no sense in getting the money from your family in the first place.

 

The other thing is invest some time with ONE contact person, they won't want you to go away without any payment after they have time invested in you, BUT again that is NOT a one-phone-call-to-get-it-done thing.

Edited by CreditGuy100
typo

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I have an ex-Navy (0-3) friend who included Navy in BK, they told him in no uncertain terms that he will NEVER have another credit product with them ever again, however I was surprised they let him retain his membership and he still uses them as his primary checking, YMMV!

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32 minutes ago, Rogue said:

I have an ex-Navy (0-3) friend who included Navy in BK, they told him in no uncertain terms that he will NEVER have another credit product with them ever again, however I was surprised they let him retain his membership and he still uses them as his primary checking, YMMV!

 

Yup, that's Navy!  Vindictive SOBs.

 

There was a point when they'd let you keep your deposit accounts, but refuse you online access.  USAA did that, too.  Not sure if they still do.  I can't even imagine having an account without online access.  

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@Rogue @PotO Just to be clear, I still have online access with them, I can use checking and savings, and I understand I won’t have credit with them again unless I fully pay them off. Then again I’ve had another member impart the wisdom “ that’s a lot of money to pay just to use a bank”

 

I have a current CU I’m a member of that I’m very satisfied with, they seem to offer better rates as well. This isn’t to say that I’m proud to be in debt to NFCU or Chase, but I screwed up and I’m trying to settle it. I do not wish to pay the equivalent of a lower end new car just to MAYBE get credit with them again, especially since they (NFCU) took advantage of so many military members for years until they finally got their hand slapped (~$23MM settlement for their bad actions) 

 

I’ve read other people’s sentiments that one should pay back ALL debts owed. Sure, I believe that, if it’s to someone personally (which I don’t owe any person any money whatsoever). Other people’s opinions of me and my opinion are of no concern, the vast majority are all on this board because we’ve financially biffed it. 
 

like I’ve mentioned, just trying to live and learn. I’m proud of where I’ve come from a year ago and I’m never getting into financial trouble like this ever again. I do appreciate all actual advice offered

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