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  1. #1
    Join Date
    Jan 2010
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    2

    Default Should I Negotiate Lump Sum Settlement

    My question involves collection proceedings in the State of: MA

    Hello. I am $13K in debt with Citi. I am not delinquent - all payments have been made on time. But I lost my job a year ago and have been trying to get hired again and have had no luck. My parents now don't have jobs either, so my financial situation has become pretty bad. I was thinking about letting my account go delinquent for the next three months, attempting to negotiate a full and final settlement with Citi, and then if that was rejected, attempting to negotiate a settlement with whatever collection agency they will sell my account to. But I'm afraid of going about this process. Will I get sued? I would appreciate advice. I wouldn't have resorted to this type of resolution if I had any way of paying back my debt or making future payments. This is the only viable option I have left. NOTE: Please do not suggest that I work with a debt negotiation company. I have already looked into many of them and will not be going that route. I would rather struggle through this on my own then pay the thousands of dollars extra that they ask for in return for their "services."

  2. #2
    Join Date
    Jul 2009
    Posts
    249

    Default Re: Should I Negotiate Lump Sum Settlement

    Quote Quoting k147
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    My question involves collection proceedings in the State of: MA

    Hello. I am $13K in debt with Citi. I am not delinquent - all payments have been made on time. But I lost my job a year ago and have been trying to get hired again and have had no luck. My parents now don't have jobs either, so my financial situation has become pretty bad. I was thinking about letting my account go delinquent for the next three months, attempting to negotiate a full and final settlement with Citi, and then if that was rejected, attempting to negotiate a settlement with whatever collection agency they will sell my account to. But I'm afraid of going about this process. Will I get sued? I would appreciate advice. I wouldn't have resorted to this type of resolution if I had any way of paying back my debt or making future payments. This is the only viable option I have left. NOTE: Please do not suggest that I work with a debt negotiation company. I have already looked into many of them and will not be going that route. I would rather struggle through this on my own then pay the thousands of dollars extra that they ask for in return for their "services."
    What kind of a settlement do you think you're going to reach over a 13k debt? Even if after three months they're willing to settle for %50 of the debt's value (which I think is unlikely), you're still talking about a $6500 lump sum. If you've got $6500 laying around, you're just as well off making the minimum payment until you either find new employment or run out of money.

    If you're truly out of money and have no way of making your credit card payments, then you really don't have any choice but to go delinquent. The CC company can do searches to find out if you have any attachable assets, and they will. If you have any, for that large of a debt, they will probably sue you for the assets. Rather than going through all the hassle of litigation, and the damage to your credit rating, I'd go ahead and liquidate the asset(s) and continue making minimum payments.

    If you don't have any assets, they will probably wait as long as possible before suing you in the hope that you'll get some wages to garnish or some assets to attach. They'll wait until the statute of limitations is about to run on the debt, and then they'll file suit to get a judgment which will be valid for some time.

    Your best option at this point is probably to call the CC company and explain your situation. We are in the middle of the Great Recession, and there are a lot of people out of work, having problems making their payments. There's a good chance they'll work with you in some way. Maybe they'll lower your monthly payments, or maybe they'll give you an extension of time to make them.

  3. #3
    Join Date
    Sep 2005
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    98,846

    Default Re: Should I Negotiate Lump Sum Settlement

    If the circumstances are dire, better than "selling all your stuff", you can consider bankruptcy.

  4. #4
    Join Date
    Jul 2009
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    249

    Default Re: Should I Negotiate Lump Sum Settlement

    Quote Quoting Mr. Knowitall
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    If the circumstances are dire, better than "selling all your stuff", you can consider bankruptcy.
    You have to liquidate non-exempt assets as part of bankruptcy.

  5. #5

    Default Re: Should I Negotiate Lump Sum Settlement

    I think that there is another consideration here too. As you are looking for a job, then your credit will be pulled for most decent jobs (especially financial related ones). You do not want to have any recent lates.

    Credit card companies do not have an incentive to negotiate at all while you are current. If you decide to negotiate then your credit will decrease and may not start recovering for over 2- 3 years. Then you do face the probability of Citibank filing a lawsuit.

    Why risk all this if you have the money to make the minimum monthly for the next 2 years. Surely you will get a job before then.

  6. #6
    Join Date
    Jan 2010
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    2

    Default Re: Should I Negotiate Lump Sum Settlement

    Quote Quoting henleycreditlaw
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    I think that there is another consideration here too. As you are looking for a job, then your credit will be pulled for most decent jobs (especially financial related ones). You do not want to have any recent lates.

    Credit card companies do not have an incentive to negotiate at all while you are current. If you decide to negotiate then your credit will decrease and may not start recovering for over 2- 3 years. Then you do face the probability of Citibank filing a lawsuit.

    Why risk all this if you have the money to make the minimum monthly for the next 2 years. Surely you will get a job before then.

    Ummm...I don't have the money to make the minimum monthly. I'm $13K in debt with a 21% APR. And I don't have a job. And I haven't been able to get one in the last year. I'm also pretty young with an unimpressive resume and now have to go back to school just to get a decent career when I'm in a lot of student loan debt for a B.A. I earned that isn't getting me a job.

    Still suggesting your last answer? As you can see, I wouldn't have chosen this route if I had another choice, but I don't.

  7. #7
    Join Date
    Jan 2010
    Posts
    102

    Default Re: Should I Negotiate Lump Sum Settlement

    very important to have good credit, it helps keep intrest rates down on other loans. It helps keep your car insurance rates down

    & sometimes bad credit can keep you from getting car insurance all together.

    plus deposits on apartments & can keep you from getting a job..etc...

    check your card & see if they enrolled you into some sort of "payment protection plan" all credit cards push these memberships on their clients. & many don't even know they are enrolled..

    the plan will make your min pmts If you get sick or lose your job

  8. #8
    Join Date
    Jul 2009
    Posts
    249

    Default Re: Should I Negotiate Lump Sum Settlement

    Quote Quoting k147
    View Post
    Ummm...I don't have the money to make the minimum monthly. I'm $13K in debt with a 21% APR. And I don't have a job. And I haven't been able to get one in the last year. I'm also pretty young with an unimpressive resume and now have to go back to school just to get a decent career when I'm in a lot of student loan debt for a B.A. I earned that isn't getting me a job.

    Still suggesting your last answer? As you can see, I wouldn't have chosen this route if I had another choice, but I don't.
    Because the debt is so high, and because you have so little money, I don't see settlement as a realistic option for you at this point. That will only become an option after a lot of damage is done to your credit rating, and the debt has been written off as totally uncollectable. Your only hope to preserve your credit is to work something out with the CC company for an extension of time, or lowered payments. Maybe you'll be able to get some kind of work study job when you go back to school, and you can use that money to make your CC payments.

  9. #9

    Default Re: Should I Negotiate Lump Sum Settlement

    I got a little different impression from your first post.

    Have you contacted Citi and asked to be enrolled in their hardship program? In this program they can drop interest rate, close the card, and accept automated payments. The only fault I have found with these type of programs is that they may want more than you can pay monthly to qualify. But it is still worth the chance to find out to say you tried working with your creditor before giving up.

  10. #10

    Default Re: Should I Negotiate Lump Sum Settlement

    This blog offers great advice on how to choose the right debt settlement company

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