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BIG Navy Federal charge-off, which way to go?


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I had a NFCU cc of $25,xxx (25k) charged off in Dec. 2018.   During my small business startup and struggles I tried my best to stay afloat.  I managed to keep my  NFCU auto loan ($31k, balance $5,000, never miss/late payment) and NFCU cc ( $3000 never miss/late payment) current.  
 

My Equifax lists:
12/2018 Charged off account
Date of Last Payment Aug 01, 2020 (I made NO PAYMENTS or arrangements since CO.  I keep little money (under $100 in my checking savings.  Low and behold In August 2020 I see a 'DR Adjustment' of $1000 from my checking.  After investigating I learned that a commercial account deposit I had in 2016 was credited back to me and the acct they had on file was NFCU and they snatched the grand and sent me a letter 'thanking me' for my payment of $1000.  
My state is NC, does this now effect my SOL?   Is this legal for NFCU to take money from your checking account and update the CRA as you've made a payment when I did not initiate it?

 

After this eye-opening moment, I did some research and it's my guess that NFCU loan terms have 'cross-collateralization' verbiage.  
When my NFCU auto loan is paid in full, will they send me the title or 'hold' it until the CO is paid off or settled for agreed amount?  If I settle at a percentage of CO before auto loan is paid, will I get the title once auto loan is zero balance?

 

I reached out to NFCU collections and got an offer to settle the co acct for $4000, so including the $1000 they already debited, that 20% of the charged off amount to stop the collection process.  I'm assuming even with all the lawsuits NFCU has been a part of since 2016 to present, PFD is not an option on the table as a counter offer.  I have the means to pay $4,000 to them within 10 days, besides my CRA showing 'paid, settled for less', how will this effect my credit and score?

I know the general opinion on CB is that NFCU is GREAT and one should try to stay in their good graces, but it seems things there have changed for the downhill since 2017 and with a recent whistleblower lawsuit concerning their mortgage underwriting practices... their home loans advantage could also suffer in the near future.  Personally at this stage, I'm not '$25k-in-love' with NFCU, but if you can offer reasons to sway my judgment, it will be enlightening.   
All in all, I'm seeking advice to get my title once the vehicle is paid off and maintaining the 'most amicable' relationship with NFCU going forward holding a single credit card, checking, and saving accts.  
 

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Sounds like cross-collateralization.  If you still owe on the vehicle, it may be worth your while to explore getting it moved elsewhere...and quickly. 

 

ANY agreement to settle necessarily needs to have language that sees them hold harmless other accounts you have with them while also addressing that there will be no sale or other adverse action associated with the remaining balance on the charge-off amount. 

 

It will also be worth your while to buy an hour of time with someone in your jurisdiction who practices in the consumer finance arena...

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11 hours ago, CreditCurious20 said:

Will NFCU even release the lien to allow a refinance at this point? 

 

Difficult to say...especially now that the flags have been raised.  I also don't know the specific language in their auto Agreement, but you can guess there is something about this sort of a scenario.

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On 10/20/2020 at 9:19 AM, centex said:

Difficult to say...especially now that the flags have been raised.  I also don't know the specific language in their auto Agreement, but you can guess there is something about this sort of a scenario.

I guess calling and getting some answers would be in order, but I also want everything in writing.   
The letter I received for the lump sum settlement says, "Upon receipt of your payment, NFCU will send you a letter confirming the settlement of the account for your records and no further collection activities will occur."  I think I need some language also stating how this payment can have adverse effect my other NFCU accounts.  

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2 hours ago, hegemony said:

IIRC Navy is one of those CUs that once you cost them money, put you on the shpit list forever. I would plan to move any banking products asap.

This fits with what I've read about Navy. They are a very generous lender, but once you cross their line in the sand (well, it's Navy, so once you pass the buoy in the channel??), you are out to sea and out of luck.

 

The snapback clause is a weapon of mass destruction.

 

I second the advice to activate your backup plan and finish moving your banking transactions to a different institution. Your future with Navy is very clouded.

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On 10/21/2020 at 10:33 AM, hegemony said:

IIRC Navy is one of those CUs that once you cost them money, put you on the shpit list forever. I would plan to move any banking products asap.

That's correct.  Any loan or CLI app will generate a 'You caused NFCU a loss' denial.  I have already moved my personal and main business banking accounts to a local institution.  For banking I still have less than $10 in saving and checking... plus I have a NFCU business checking account (Type LLC) with a small amount of funds.   As stated, credit/loan products are Auto Loan, Credit Card (in good standing), along with this CO.  

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On 10/21/2020 at 11:38 AM, swimmingwithsharks said:

 

Your future with Navy is very clouded.

... and no chance of meatballs. 
I'm well aware of this and accept the consequences.  For what it's worth, my wife has individual bank accounts with Navy and sizeable limit credit card.  It's my understanding reading the forum that her accounts will not be adversely effected my mine.  Right?

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On 10/19/2020 at 1:06 PM, centex said:

Sounds like cross-collateralization.  If you still owe on the vehicle, it may be worth your while to explore getting it moved elsewhere...and quickly. 

 

ANY agreement to settle necessarily needs to have language that sees them hold harmless other accounts you have with them while also addressing that there will be no sale or other adverse action associated with the remaining balance on the charge-off amount. 

 

It will also be worth your while to buy an hour of time with someone in your jurisdiction who practices in the consumer finance arena...

I did buy some time with a local BK atty.  I told him about the settlement offer and he felt it's a very good settlement and said I should get the auto loan title verbiage in writing.  I then called NFCU number at the bottom of the settlement letter and the agent said, 'no, we don't do that (hold title when co acct settled for less)'.  Basically summarized, If I pay as agreed the settlement and make my auto loan payments as agreed I'll get the title once the auto loan is paid off.  I asked to get this in writing via a letter by mail and he said 'we don't have a letter like that to send.'   I have a hard time taking a rep's word over the phone.    The BK atty said, 'get it in writing as you don't know if that rep will be employed their in a month or two'.   
Any way to get this in writing from NFCU?  Try to reach a higher-up?

Edited by ON-MY_way
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2 hours ago, ON-MY_way said:

 
Any way to get this in writing from NFCU?  Try to reach a higher-up?

Best way to get that in writing is to engage the attorney you spoke with...most institutions reply very quickly to letters from counsel, especially when counsel is known for BK filings.

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3 hours ago, centex said:

Best way to get that in writing is to engage the attorney you spoke with...most institutions reply very quickly to letters from counsel, especially when counsel is known for BK filings.

You may not want to pay the attorney, but an investment in the attorney's fee may help you keep the car. Since you've already move away your financial activities (very smart move, good job), I don't see much danger in tipping your hand that Enn Eff See You might suspect you'll file bk. But I don't know. I'd be sure to ask your atty what is the possible downside if the atty sends a letter. Could the CU repo the car now? 

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5 hours ago, ON-MY_way said:

... and no chance of meatballs. 
I'm well aware of this and accept the consequences.  For what it's worth, my wife has individual bank accounts with Navy and sizeable limit credit card.  It's my understanding reading the forum that her accounts will not be adversely effected my mine.  Right?

This is murky, too. There are some old CB threads (2015-2017 time frame) where relatives who got brought into Navy were caught in the crossfire when the initial member (sponsor? I think in Navy terms) got into financial trouble, and had their accounts closed. But it sounded like that might have been check fraud/ kiting, although the posts were never entirely clear to me what for sure the offense was. Hopefully a Navy expert can answer this about your spouse's Navy future. Is your spouse involved/ responsible/ a signer on any of the CO accounts? 

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5 hours ago, swimmingwithsharks said:

This is murky, too. There are some old CB threads (2015-2017 time frame) where relatives who got brought into Navy were caught in the crossfire when the initial member (sponsor? I think in Navy terms) got into financial trouble, and had their accounts closed. But it sounded like that might have been check fraud/ kiting, although the posts were never entirely clear to me what for sure the offense was. Hopefully a Navy expert can answer this about your spouse's Navy future. Is your spouse involved/ responsible/ a signer on any of the CO accounts? 

No to your question... no joint acct with them and no connection with the CO account.    

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5 hours ago, swimmingwithsharks said:

You may not want to pay the attorney, but an investment in the attorney's fee may help you keep the car. Since you've already move away your financial activities (very smart move, good job), I don't see much danger in tipping your hand that Enn Eff See You might suspect you'll file bk. But I don't know. I'd be sure to ask your atty what is the possible downside if the atty sends a letter. Could the CU repo the car now? 

Definitely something to think about.  I wouldn't want getting an atty involved with sending letter to sound any alarm or flags.  Wouldn't that get Navy legal consel involved?  Rescind the favorable settlement offer?   The statement by the collections guy saying they don't hold the title when CO is settled for less than owed, but can't provide a letter with that in writing just makes me wonder what else can happen when you settle for less...besides the 1099 tax thing.  #Bewildered  

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On 10/28/2020 at 3:02 AM, ON-MY_way said:

... and no chance of meatballs. 
I'm well aware of this and accept the consequences.  For what it's worth, my wife has individual bank accounts with Navy and sizeable limit credit card.  It's my understanding reading the forum that her accounts will not be adversely effected my mine.  Right?

 

As long as the accounts are not joint, should be fine. 

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12 hours ago, ON-MY_way said:

Yes that's been the case.  She opened and was approved AFTER my charge-off. 

 

Something to consider ...

 

Navy has been sued previously more than once for confiscating funds from a family member's account even though it was not a joint account with the debtor.  While they eventually get the money back, it takes a while.  Plan accordingly.   

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  • 2 weeks later...

After several calls it's a no-go on receiving in writing what they say on the phone.  "All accounts are separate."  "If you settle as agreed, then no outstanding debt for this account."  "NFCU does not cross collateralize."

On 10/31/2020 at 6:37 AM, legaleagle2012 said:

Something to look at ..... 31K car loan, 5K balance. That adds up to 26K in equity minus some depreciation. You owe them 25K from another loan.  Absent a contract to read, we can only guess as to what they can do about that situation.  Knowing how banks protect themselves with contracts, it doesn't look good.

If I settle for less then the balance will be 0 , no more collection efforts and I get a big fat $20,000 1099.  Thats my understanding.   I have the settlement amount to pay them, just want to make sure it's done and finalized where I can payoff the auto loan and receive title.  I'll sock drawer the other NFCU CC I still have.

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4 hours ago, ON-MY_way said:

After several calls it's a no-go on receiving in writing what they say on the phone.  "All accounts are separate."  "If you settle as agreed, then no outstanding debt for this account."  "NFCU does not cross collateralize."

If I settle for less then the balance will be 0 , no more collection efforts and I get a big fat $20,000 1099.  Thats my understanding.   I have the settlement amount to pay them, just want to make sure it's done and finalized where I can payoff the auto loan and receive title.  I'll sock drawer the other NFCU CC I still have.

 

If you accept their offer to settle the charge-off, I doubt they will attack the title on your car.  Once you pay the settlement agreement, you owe them nothing.  If you owe them nothing, they have no reason to go after your car.

 

If they won't put it in writing, get it on tape.  You know where at the beginning of all your calls they say "This call may be recorded and monitored"?  I take that as them giving me permission to record the call. ;)

 

One thing about your situation has me wondering ... you owe them $25k on a defaulted credit card from 2018 and you still have a credit card with them in good standing??  That seems strange.  

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I'm in the same pickle with NFCU, except the balance is $5800-ish.

 

Problem is, they were IIB.

 

From what I have read in various places online, you will never get an NFCU card, CLOC or personal loan unless they are PIF.

 

If there is evidence to the contrary (like offering to settle in exchange for erasure of debt), please do tell me.

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