Credit card delinquency?

Discussion in 'After Hours Lounge (Off Topic)' started by Norris, Mar 22, 2004.

  1. Norris

    Norris Stunt Coordinator

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    My cousin is in a hole financially and was pointed to this service by his coworkers. He's been contacted by collectors daily. I don't understand their reasoning or method. Do you guys?
    www.drsmdebtfree.com

    Disclaimer: my cousin got himself in this mess and have been asking me for advice as well as to loan him some $. I said no. A divorce and a lawsuit got him blindsided thus leading to his delinquent accounts. Disregarding the ethics aspect of his situation (yeah he should pay back his credit card debt), what is your opinion on this service?

    Thanks!
     
  2. Malcolm R

    Malcolm R Executive Producer

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    There is no magic bullet for solving credit card debt. And I'd be very careful about getting involved with any third-party agencies that claim otherwise.

    Check out some of the credit counseling advice at Bankrate.com .
     
  3. Chris

    Chris Lead Actor

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    However, here is something that you can legally do, you can have an attorney draft a letter to your CC agency for about $50 which says that you will consider no correspondence with them outside of written correspondence.

    It doesn't solve any of his problems, but it ends the phone calls..
     
  4. Bill Williams

    Bill Williams Screenwriter

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    Credit counseling is something he may need to seriously look into. It's not easy, it's quite difficult, but he should look at reputable, legitimate credit counselors through BankRate.com or even through the Better Business Bureau. The most reputable ones will be listed with the BBB.

    True, it doesn't solve the problems right away, and it takes a bit of time to get through it, but in the end he'll come through breathing easier in the long run.
     
  5. Eric_L

    Eric_L Screenwriter

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    Avoid that provider. It is not exactly a scam, but nor is it really very ethical. Sorta like multi-level marketing is not really a pyramid scheme.

    I am a former collector. I can tell you that most have a desire to help. A bankrupt customer is not a good collection prospect.

    Simply be honest and share whatever they ask to know. Be reasonable and honest. The customers who were got interest rate cuts and principal settlements (paid in full for less than the amount borrowed) Their credit suffered, but then, what is credit other than a record of their ability to pay?? Of course it suffered, but time heals all wounds.

    The customers I went after with a vengeance were the ones who lied, decieved, or I found out were still buying luxuries without honoring their bills!

    One kid came to bankruptcy court in designer clothes, a $100 haircut, designer sunglasses and a cell phone! (over a decade ago - before they were cheap and common) I was merciless!

    Remember one of the truths in life, honest is the best policy. Tell him to come clean.

    And don't you dare open your checkbook.
     
  6. Norris

    Norris Stunt Coordinator

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    The collector agency, which is a law firm btw, has been offering him no less than 80% paid within 30 days, or alternatively, $2500 immediately, and the rest spread out over 2 years at 7% interest. He cannot do the 80% deal, so I suggested he take the payment plan.

    Thanks for the input.
     
  7. Chris

    Chris Lead Actor

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  8. Ryan Wishton

    Ryan Wishton Screenwriter

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    Bankruptcy should be the absolute last resort... It's not something to take lightly...

    This is only if you have tried everything you possibly could, but there is simply no way out no matter how much you try and no matter what you do...

    Last resort...

    I hear people who bankrupt for $500... Thats just dumb IMO...
     
  9. Prentice Cotham

    Prentice Cotham Supporting Actor

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    He should not be talking with the collection agency over the phone making negotiations. He should have them validate the debt which means they will have to prove that he owes the debt. Most likely, they don't have the ability to do so and will send you back to the original creditor. It happens all the time. He doesn't want any collection agency crap on his credit report.

    Most credit card companies will give you a reduced rate for 6 months or so to help you get back on your feet. Credit counseling is also an option, but most people will tell you that it is bankruptcy except you pay for it. I feel that if you owe the debt, you should pay it. So, if he uses credit counseling, once everything is paid off on your cards, the credit counseling notation goes away from your credit report.

    I suggest your cousin check out the various credit boards on the internet for help. They are an invaluable resource.

    Start at creditboards.com
     
  10. BryanZ

    BryanZ Screenwriter

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    1. What is your cousin doing now for a job? Perhaps he may need to get a different one or get a second or third one (eBay perhaps?) and use that money soley for getting out of debt.

    2. A credit company can only take back the items he put on his credit card. After that they have no real power other than to continue to ask he do the right thing (and he should).

    3. He should try and work with the companies to see what sort of arrangments he can make. He can ask for a year deferment on student loans due to hardship. Perhaps he can get a similar arrangement.

    4. What does he use/have that isn't essential? Cable? Have it turned off. Cell phone? Go for the prepaid plans or use a phone line without long distance or any of the extras. Food? Start shopping the generics. Mac and cheese. Don't eat out all the time. AOL? NetZero has both free and $9.95 a month plans. BlockBuster charges $3 or more a night for rentals. Albertson's has $1 rentals on Monday's and Thursdays. Turn up the A/C and turn the heat down. Get a roommate. Stop using the dishwasher. Use Purex rather than Tide. Smoking? Quit. That $2 a pack adds up quickly.

    5. Vehicle. Stop driving everywhere. May need start using the bus, riding the bike, or walking.

    6. Go to church but don't tithe? That contributes to the problem. Start tithing, even if it is minimal. You'll be amazed at the result.

    7. Stick to the budget. 'Nuff said.

    Getting out of debt involves changing the lifestyle but is possible. My lifestyle has changed. I'm no longer eating out all the time. I took on a second job and am using almost all that money for debts. (Note: I am able to survive and pay the bills of my main income.) Money is now starting to go into savings, even if it is a little at a time. Adjust the lifestyle makes the biggest difference.
     
  11. Eric_L

    Eric_L Screenwriter

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    I suggest he tell them that offer is not acceptable and they will have to try again.

    What kind of debt is it? Sounds medical. How much is the total?

    $2500 is a ridiculous lump sum to expect, especially if it were an installment or revolving loan.

    I would suggest he carefully consider what he can pay up front and ongoing, then offer slightly less than that. Sounds like they want to haggle. To help tilt the balance more in his favor some scary words he can use are things like 'credit counseling' and 'my frinend's bankruptcy attorney'. Never outright threaten. Just plant the words carefully. It will strike FEAR into the hear of collectors. Mwuhahaha

    Make sure he gets 0% interest. They need to count themselves lucky to get anything...
     
  12. Norris

    Norris Stunt Coordinator

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    Thanks for all the input. My cousin is staying at my place and he reads every single response you guys posted. A divorce is being finalized, and he's involved with a civil lawsuit. He is working, but the wages are going to the attorney for his defense. The creditor in question is MBNA. He had 3 other credit cards, those creditors all agreed for lump sum payment of 40-50% of balance, and he paid them off. It's just MBNA that is hard-headed and has not budged from 80% lump sum, and $2500 asap, with balance spread out over 2 years at 7% interest. MBNA has retained a law firm for collecting this debt, and the para-legals have been calling my cousin daily. He asked for interest rate and balance reduction but was told "No", and yesterday just received a letter from www.arbitration-forum.com notifying him that the law firm will take this case to arbitration.

    Thanks!
     
  13. Eric_L

    Eric_L Screenwriter

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    civil lawsuit? That sheds new light on things.

    Depending on the nature of the award, should he lose, BK may be in his future.

    I presume he is the defendant, since otherwise the attorney would be no-charge unless won.

    I'd share that little tid-bit with MBNA. If he files BK all bets are off, even their arbitration.

    BTW - Arbitration is often consumer friendly. Have him send MBNA several written settlement requests, of increasing generosity. Be sugar-sweet and plead. Keep copies of letters (registered is good) and records of phone calls (both received and made, date, time and name) then share them with the arbiters. Make it clear who was unwilling to work towards an agreement. Show settlements from competitors too.

    Since the paralegals are calling YOUR number, you have the right to tell them to stop. If they continue register a complaint with the police and with the do-not-call people (assuming you are on the do-not-call list)
    www.donotcall.org

    Usually only medical creditors are this dogmatic.
     
  14. Chris Derby

    Chris Derby Second Unit

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    browse on over to creditnet.com and ask the pros. these guys really know the ins and outs of the system.

    lots of great advice.
     
  15. Chris

    Chris Lead Actor

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    One other thing.. paying off the other creditors and leaving one unpaid is called unbalanced, and if he does that, he needs to wait at least 6 months after he did that to file a BK if he does, otherwise he will regret it [​IMG] MBNA can claim that they received nothing while other creditors were paid, and if he knew a BK was coming.. anyway, it gets sticky.

    I'd agree, dependant on the civil lawsuit, I'd make continuing offers to MBNA. Silently, BTW, I'd send them envelopes with checks of $50/$100/$200 .. it's an old trick, and it may not always work (and some credit agencies hate it, and will tell you it's bad for you.. as you can get tagged with slow pay) but if they accept any smaller ammount, ie, if they actually cash that damn check and put it against your account, it makes it a hell of a lot harder to do anything about it.. I learned that the other way (as a creditor) Many companies are smart enough to avoid this, but bigger companies can still f*** it up.
     
  16. Scott L

    Scott L Producer

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    Amen brothah! [​IMG]

    Just get a waiter or pizza delivery job on the weekends and pay that sob off little by little.
     
  17. Malcolm R

    Malcolm R Executive Producer

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    I'd love to hear this reasoning....
     
  18. Ryan Wishton

    Ryan Wishton Screenwriter

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    It doesnt sound like your cousin was being irresponsible from the original post... It just sounds like life gave him a kick in the arse... Still, it's not the end of the world... Just make changes to get out of it... It's possible...

    It's best just to never get into debt to begin with... Life can take a turn for the worst at any given time... I know what it's like to live with money and without... Living with it is 100 times better... Living poor for awhile did teach me some good lessons even though it sucked... I dont buy things I wont use... I never use credit cards for luxery items... I always use cash... If I dont have enough in cash to buy a luxery item, it waits until I do...

    Malcolm... I have to agree...

    The sad part is in many instances it's true... How do I really know the money is going to a good cause??? I dont... Sort of like the time I saw the worker at Amvets putting some of the nicer items people dropped off in his car...
     
  19. Malcolm R

    Malcolm R Executive Producer

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    I think the biggest thing is to realize it's all going to take time...lots of time. You don't get out of debt overnight. It's sort of like losing weight, lots of people look for a magic cure-all that doesn't exist.

    I had significant credit card debts and lots of student loans when I graduated from college 10 years ago. I just paid off the last of both in February and it feels wonderful not to "owe" anyone anything. All my money is now mine to do with what I choose. [​IMG]

    Now to start losing that weight....[​IMG]
     
  20. Chris

    Chris Lead Actor

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    Titheing to any religious organization is actually a good way to teach money management. By setting aside a set amount of money on a weekly or monthly basis, you learn a good budgetting skill about saving. It's not so much about giving money to a faith, he can just as easily "tithe" the money to his favorite charity.

    But setting aside a small amount of money for any purpose that you discount from your income can become an invaluable lesson, as in order to make it happen with regularity, most people - conciously or subconciously have to develop a budget of how they get to a point where that is available.

    I've actually had economics professors (Nobel nominated) explain this theory better on why setting up a schedule of outside contributions - small - tends to do great things for teaching self budget.
     

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