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I am a graduate student who stupidly used my credit card to pay off my tuition. now I have a $13,000 debt that has been racking up interest fees and late payments. Even tho I paid $1000 on it last month, Citicard charged off my account and sent it to a collection agency.

I spoke to the agency today and beyond yelling at me on the phone, he told me that I need to pay $5000 by the 2nd September. I asked if there was a payment plan or anything that I can do to break up these payments but he said there wasnt. I have no idea how I am going to do this and I'm freaking out.

What are my options???




Since you credit has already been affected by charge offs I would consider looking into a debt settlement program. When shopping around make sure to the research settlement company with the BBB to make sure they have a good track record. You can never be too careful now days.

Sub: #1 posted on Wed, 08/20/2008 - 22:41

mobile0311 mobile0311
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(Posts: 1817 | Credits: 104.57)

Thanks, can u recommend a program that I should look into?

Sub: #2 posted on Wed, 08/20/2008 - 22:47

burndeham burndeham

(Posts: 2 | Credits: 1.05)

New Beginnings debt settlement LLC , Oak View Law , Roll Law Office , Century Negotiations , and Superior debt relief are just a few reputable ones. I know I just said this but be sure when shopping around that you check any company out with the BBB to make sure they have a good track record.

Sub: #3 posted on Wed, 08/20/2008 - 23:25

mobile0311 mobile0311
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(Posts: 1817 | Credits: 104.57)

Since this account is already with a collection agency, work out a settlement with them. You can save yourself anywhere fron 40-60% same as with a debt settlement company and avoid the debt settlement fees.

stand firm tell the collector you have no money but that you eill be willing to settle lump sum for 20 cents on the dollar and let them wait, send them a validation letter, it works really nice, if they continue to call you send them a cease and desist letter, this will really get to them.

I believe if you use all the tools available to you you can settle this account on your own.

You have the natural advantage in debt settlement, because you have something the creditor wants. Don't cave in when they first tell you no. Maintain calm. Don't lose it and get angry. It's usually best to correspond with them via letters, so you have a paper trail of all your actions. Keep the attitude at all times that the collection agency will take less money then they say they will.
How much to offer

To give you some background, most bad debt companies pay or receive literally pennies on the dollar for the debts on which they are trying to collect. The amount that companies pay for bad debt depends on the type of account and its age: *

* Debts that have recently been charged off: 6 to 7 cents on the dollar.
* Accounts that are slightly older and on which a collection agency or two has already taken a whack: 1.5 cents to 2 cents on the dollar.
* Years-old, out-of-statute debts: A penny or less.


* Source: Sean McVity, portfolio broker at Keefe, Bruyette & Woods.

With this in mind, you should always start your offer at 25% or less. Let's understand the math here. If your debt is $1000, let's say at the most, the collection agencies has paid or will collect 7 cents on the dollar, or $70. If you offer them $250 (25%), they are still making a profit of $180. Remember, the credit card companies are out of the picture at this point. This money goes directly to the collection agencies.

You can also try the Pay For Delete Method on small collection amounts.
Other things to remember in negotiation:

1. NEVER talk to a collection agency on the phone. Period.

2. Get your terms in writing before you even open your checkbook. Here is a sample of an agreement requesting the reduction of your debt amount. Never expect a creditor to meet an agreement that was made verbally. Everything must be in writing and, even then, you will probably have to fight to make the creditor live up to his end of the bargain.

3. Keep good records. This can be the difference between a good and bad settlement. Don't expect them to remember you or what you agreed upon.

4. Send all correspondence via registered mail, receipt requested(about $3-$4 a letter).

5. Keep a copy of every letter you send.

6. If you call (and why are you calling?), keep a log of when you spoke to the agencies, and who you spoke with. Ask for the name of the supervisor of the person you spoke to, as the turnover rate at collections agencies is high.

7. Follow up all phone correspondence (again, why are you calling?) with a letter (registered, of course).

8. Penalties and extra interest are typically fictious amounts of money added on by the collection agency to pad their profits. I've seen as much as to 50% of the debt or more claimed to be owed by a collection agency consisting of interest and fees. Example: Recently, I talked to a guy who had his $5000 original debts balloon up to $11,000 in less than 3 years. This is illegal, every state has usery laws (which dictate the maximum interests allowed to be charged.) If you consider the junk debt buyer paid 7 cents on the dollar or less, there is no way there is this much interest. Most companies would be thrilled to get you to pay the original debt even without the extra penalties they add on and will usually be more than agreeable in waiving these fees.

9. Time is on your side. As time passes, the creditors will likely stop calling and the debt will be filed away for future attention. The longer the debt remains uncollected, the better your chances will be of getting a good settlement. Eventually, the creditor will consider the bad debt a loss in order to receive a corporate tax write-off. This does not necessarily mean that they won't pursue you for the debt. The corporation may then collect on the debt themselves, sell or assign the debt to a collection agency, press for a judgment and garnishment, or temporarily ignore the debt. The course of action chosen by the creditor will vary widely between corporations and debts.

10. Never look too eager to settle. Take plenty of time to reach an agreement. Never let it slip that you need to settle the debt because you're buying a home, car or anything else. If, for example, you tell a creditor that you really need to get this debt settled to get into your dream home, you can forget any kind of settlement. The creditor will insist on the full balance. Don't accept the first, or even second, settlement offer. Make sure that they are the ones calling you to push the deal forward. You cannot expect to reach an affordable settlement if the creditor thinks he has the upper hand.

If you're contacted by more than one collection agency for the same debt

If you're contacted by more than one collection agency for the same debt, it means that the original creditor has hired a secondary or even tertiary collection agency. This indicates that the original creditor and even the first collection agency has given up on you. This means that the second collection agency has paid even less for the debt than the first one. If the agency hasn't been able to reach you by phone but knows that you are receiving its letters, it may be willing to take even less.
Should I use the threat of bankruptcy?

Use the threat of bankruptcy. It will be in your best interest if the creditor believes that you have very little money and you are teetering on the edge of bankruptcy. You should approach each creditor as though this is their last chance to compromise, and get something out of your debt, before you declare bankruptcy and they get nothing. Be careful when doing this, however. If you accumulate any more debt after stating this to a creditor, (and they record all of your correspondence and phone calls), you may not be able to discharge this debt within bankruptcy.

Sub: #4 posted on Thu, 08/21/2008 - 00:52

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