Posted on: 02nd Mar, 2010 03:03 am
Dear forum,
I am a r/e investor that ran into hard luck and had multiple foreclosures and shortsales. Some of 2nds sent us 1099's and those accounts are closed permanently. Some of the accounts the lenders have closed the accounts and are still attempting to collect the full amount of the 2nd. We are doing everything we can to NOT file a BK and resolve the matters with lenders, however I would need to settle on discounted amounts and payoff terms I could manage. If none of my creditors will settle for less than what is owed, then I will have no choice but to do a chapter 7 BK, but that is my last resort. So here is my question and I think the answer will help many people get to a bottom line in their situation who are opting for NON-BK and trying to work it out with their lenders...my credit is already majorly ruined, so credit repair in the short-run is not the issue, just getting settled up with these creditors so I can get on with life, then I can start to re-build my credit again later.
So is it better to try to settle with the lender before or after it goes to the Collection agency (CA)? Or even wait till it goes to an lawyers office and wait till they act and get a judgment? Do I get proactive and contact them or wait for them to come after me? If I go to them first, does that give them upper hand, or is better to hide out and wait to see what moves they take, if any at all?
What is the best way to settle with a lender/collection agency in terms of how much to offer (in terms of cents on the dollar) and will they offer me terms like 0% interest on the settlement amount?
How long do the 2nd mortgages have to get a judgment before they lose the right to come after you?
How much hard ball can I play with these guys, if they will not work with me, I can always just do a chapter 7 BK, however if I can settle for the right amounts and the right terms I could pay this off over the next 3-5 years...but with me owing almost a million in 2nd mortgages and having no equities of any sort, paying off full amounts is not feasible, however 5-20% of that number would be over time, but how can I get them to work with me to get that to happen?
Again I am trying to take as much responsibility as I can for my debts, I feel strongly that these banks are the real causes of this mess and are getting people like me to pay for it. I am willing to pay what I can, but I need help in knowing where to go from here. Thanks to all who give their advise to me and others who are trying to not BK there creditors, but settle for something they can work with.
The Flash
I am a r/e investor that ran into hard luck and had multiple foreclosures and shortsales. Some of 2nds sent us 1099's and those accounts are closed permanently. Some of the accounts the lenders have closed the accounts and are still attempting to collect the full amount of the 2nd. We are doing everything we can to NOT file a BK and resolve the matters with lenders, however I would need to settle on discounted amounts and payoff terms I could manage. If none of my creditors will settle for less than what is owed, then I will have no choice but to do a chapter 7 BK, but that is my last resort. So here is my question and I think the answer will help many people get to a bottom line in their situation who are opting for NON-BK and trying to work it out with their lenders...my credit is already majorly ruined, so credit repair in the short-run is not the issue, just getting settled up with these creditors so I can get on with life, then I can start to re-build my credit again later.
So is it better to try to settle with the lender before or after it goes to the Collection agency (CA)? Or even wait till it goes to an lawyers office and wait till they act and get a judgment? Do I get proactive and contact them or wait for them to come after me? If I go to them first, does that give them upper hand, or is better to hide out and wait to see what moves they take, if any at all?
What is the best way to settle with a lender/collection agency in terms of how much to offer (in terms of cents on the dollar) and will they offer me terms like 0% interest on the settlement amount?
How long do the 2nd mortgages have to get a judgment before they lose the right to come after you?
How much hard ball can I play with these guys, if they will not work with me, I can always just do a chapter 7 BK, however if I can settle for the right amounts and the right terms I could pay this off over the next 3-5 years...but with me owing almost a million in 2nd mortgages and having no equities of any sort, paying off full amounts is not feasible, however 5-20% of that number would be over time, but how can I get them to work with me to get that to happen?
Again I am trying to take as much responsibility as I can for my debts, I feel strongly that these banks are the real causes of this mess and are getting people like me to pay for it. I am willing to pay what I can, but I need help in knowing where to go from here. Thanks to all who give their advise to me and others who are trying to not BK there creditors, but settle for something they can work with.
The Flash
In my opinion, it would be a better option to settle your debts with your lender rather than letting the lender charge off the accounts. If your accounts go to the collection agency, then it will further lower your credit score. You can be pro-active in order to settle the dues with your lenders. This may help you in negotiating for a better deal with them.
You should contact the lenders and let them know about your financial situation. You should inform them about the amount that you would be able to pay them off. If the lender is convinced about your financial situation, he may be ready to negotiate with you and accept as much as you would be able to pay.
You should contact the lenders and let them know about your financial situation. You should inform them about the amount that you would be able to pay them off. If the lender is convinced about your financial situation, he may be ready to negotiate with you and accept as much as you would be able to pay.
I have called all the lenders that sent the loan to "recovery", and boy are they willing to settle right now...5-15% on the dollar seems to be the going rate with them offering 10% within a minute on the phone. It does not seem to matter much whether it is with a collection agency or with the loan servicer/bank...the credit cards and business lines seem to be much more firm at 25-35%...who new that 150K of business and personal creditcards/lines would cost more to settle than 1.5 million of bad 1st mortgages and 800K of bad 2nd mortgages combined.
It seems that the 2nds tend to go after "recovery (vs 1099-c)"owner occupied property more than rentals, foreclosures more often than shortsales and A paper more than Alt A and subprime. But I have seem execptions to all these, but these seem to be the trend...ie...the worse of a borrower you were (in terms of risk), the less they want to come after you...I guess they think they have a better chance at recovery on A paper homeowners than subprime rentals...
I could write a book about my last year or two...
The Flash...
It seems that the 2nds tend to go after "recovery (vs 1099-c)"owner occupied property more than rentals, foreclosures more often than shortsales and A paper more than Alt A and subprime. But I have seem execptions to all these, but these seem to be the trend...ie...the worse of a borrower you were (in terms of risk), the less they want to come after you...I guess they think they have a better chance at recovery on A paper homeowners than subprime rentals...
I could write a book about my last year or two...
The Flash...
HI Forum,
I have $65K worth of debts consisting of credit cards and LOC. I went to a credit service and they informed me that they could negotiate with my lender and bring my debts down to approx $40k, I would take out a 2nd mortage for the $40k with someone they would provide this would include their fees. Then after 1 year I go to the bank and get a LOC and payoff the 2nd mortage. It seems like a good plan, I would not have to pay the total $65k with this option vs going to the bank and taking a LOC against the home for the $65K. I am a little skeptical however. Any suggestions?
I have $65K worth of debts consisting of credit cards and LOC. I went to a credit service and they informed me that they could negotiate with my lender and bring my debts down to approx $40k, I would take out a 2nd mortage for the $40k with someone they would provide this would include their fees. Then after 1 year I go to the bank and get a LOC and payoff the 2nd mortage. It seems like a good plan, I would not have to pay the total $65k with this option vs going to the bank and taking a LOC against the home for the $65K. I am a little skeptical however. Any suggestions?
Jacks...I would not hire one of the consolidating services if you feel that you can ask for the same thing yourself to your creditors. Most of those companies that offer these services are scams, b/c they offer you a service for a cut of the amount owed and only make the same 20 min phone call to a settlement agent with the creditor that you can. They know NO secrets that you don't about how to settle, trust me...try it yourself first...If you don't like the deal, then reject it and you are still where you are now. Plus you should be aware that settling your debts will ruin your credit for 2+ years (with or without the credit service). So if you are late and already in major default, and your credit is already messed up, then I would first try and settle with the banks right now...read my results above...I think you could settle for 30% of original balance if you can come up with the cash, if not I have been quoted 40-50% on payments...but both of these options will really hurt your credit...
If you are still on time with your payments and credit in good standing...I would really ask yourself some tough questions about the personal value you put on your credit score...to save 25K (65 down to 40)...is that worth losing your credit for 2+ years?
Also remember that anything settled down, the creditor will 1099-c the loss to you as income...and you need to check with your CPA on what that will mean...but in a nutshell...they would the add the 25K to your income (using your example) and then you would have that added to your current income and it could have you still owing 15-35% of the 25K to the IRS unless you qualify as "insolvent" (like me-see above...go to IRS for qualifications)...
One last thing on all these settlement companies...which includes loan mod companies...many times they try and get you to pay up front with no guarantee resultsor will bill your by the hour, they tell you a game plan like we can get 65 down to 40, but what if they can't deliver, they will say that it is not their fault that the creditor did not take the deal...many times the same lawyers that are hired to work for you now become one of your new creditors, and one that knows all your strenghts and weaknesses because you gave them all your info...BE CAREFUL!!! And again if they can get you 30% off the total, so can you!!!
Good luck...my advise start really low on settlements right now if you have the cash...10-20%...have them counter from there...see where it goes...then counter their counter... ALSO WHY TURN UNSECURED DEBT INTO SECURED DEBT!!!! As of now the creditors can get a judgment on you and lien up your home and other such things to get repaid, but they cannot foreclose on your home most likely due to your states "homestead laws", however if you switch the debt to a 2nd on your home and ever default, they can foreclose you out of your home...if it were me, I would take the home out of the picture...just negotiate new terms that stay unsecured.
If you are still on time with your payments and credit in good standing...I would really ask yourself some tough questions about the personal value you put on your credit score...to save 25K (65 down to 40)...is that worth losing your credit for 2+ years?
Also remember that anything settled down, the creditor will 1099-c the loss to you as income...and you need to check with your CPA on what that will mean...but in a nutshell...they would the add the 25K to your income (using your example) and then you would have that added to your current income and it could have you still owing 15-35% of the 25K to the IRS unless you qualify as "insolvent" (like me-see above...go to IRS for qualifications)...
One last thing on all these settlement companies...which includes loan mod companies...many times they try and get you to pay up front with no guarantee resultsor will bill your by the hour, they tell you a game plan like we can get 65 down to 40, but what if they can't deliver, they will say that it is not their fault that the creditor did not take the deal...many times the same lawyers that are hired to work for you now become one of your new creditors, and one that knows all your strenghts and weaknesses because you gave them all your info...BE CAREFUL!!! And again if they can get you 30% off the total, so can you!!!
Good luck...my advise start really low on settlements right now if you have the cash...10-20%...have them counter from there...see where it goes...then counter their counter... ALSO WHY TURN UNSECURED DEBT INTO SECURED DEBT!!!! As of now the creditors can get a judgment on you and lien up your home and other such things to get repaid, but they cannot foreclose on your home most likely due to your states "homestead laws", however if you switch the debt to a 2nd on your home and ever default, they can foreclose you out of your home...if it were me, I would take the home out of the picture...just negotiate new terms that stay unsecured.
THANKS so much Flash for the detailed info, and for sharing your experience. Even though i didn't directly ask the question, i gained a lot from your reply.