At Loggerheads with Bank Charge-Off Situation, Any Advice?
August 20, 2020 1:50 PM Subscribe
We defaulted on a credit card balance repayment plan through our bank. Their collections arm said they would reduce the overall amount owed, but I'm unemployed and it's still too much to repay. Do I have any other options?
Today I got a letter in the mail from JP Morgan Chase Bank's credit arm, called Credit Control, LLC. The woman on the phone told me that our debt wasn't sold to them--they basically are Chase. This is another department or something.
We owe the bank a little under 14 thousand dollars. We were on an installment agreement/payment plan with Chase, and I was making payments on time, and all was well. About a year ago I got laid off from my job. The Hubster has a job but his income is committed to our other expenses (and we're supporting another family member as well), so my paycheck was essentially to going to repayments on this past-due credit card account.
For a while I was able to keep making payments. I received State benefits along with the pandemic benefit. Now, though, the federal money has expired, and my regular State bennies are also due to go away in the next couple of weeks. I fell behind on my repayment schedule, and the next thing I knew Chase had closed the account.
I understand that they have to be hardasses now, since I screwed up the original payment plan. But I don't have the cash amount they're demanding. Looking for work is required to receive benefits, and I've sent out hundreds of queries over the course of the past year. I know how this works because I've been laid off before, and it was tough then. Now with the pandemic and the economy being decimated, it's going to be that much harder for me to find a job. I don't ever give up hope, and I've had a couple lucky breaks over my career. But I'm a bit freaked out because there's nothing on the horizon for me at the moment. I'm just really hoping my husband stays employed.
So I'm explaining this to the rep. I tell her we've banked with Chase for 20 years, is there any way they can cut us a break? She said we could do a settlement for a lesser amount, which they calculated as being just over 8 thousand dollars. That sounded excellent, except we don't have that much money. We were more liquid before we bought our house a couple of years ago, but we put all our available cash into our down payment. I see now that was a mistake, but there you go.
So I tell her I can afford to pay, say $200 a month. She said that won't work. Basically we're being wrist-slapped because this was their second attempt to collect on the debt. She's telling porkies there, because when I got the first letter I tried to contact them. I wrote them a letter asking for an installment plan, I called them (no answer after an hour on hold), and I filled out a form on their web site. I heard precisely nothing back, even after repeated attempts.
When I called the number on this new letter, they answered this time--so that's progress. But the upshot is that the only installment agreement they can offer us is $1500 a month for six months. That doesn't work, because I have no income and we don't have extra cash at at the moment. She stopped short of telling me I should sell our house, but that's the only way we could scare up this money. She said she was giving me brownie points for contacting them and making noises like I wanted to resolve the balance. I'm not sure what difference that made to anything. The tone is so fucking condescending with these people! Anyway, since we couldn't agree I just hung up without having any arrangement in place.
What steps can I take now? Should I call again and ask for their manager this time? Would it make sense to write to them again? I never received a response to my previous letter. I do have a contact name on the letter--not the woman I spoke with, so maybe I should try this person instead.
I'm just flummoxed right now. Any suggestions would help.
Today I got a letter in the mail from JP Morgan Chase Bank's credit arm, called Credit Control, LLC. The woman on the phone told me that our debt wasn't sold to them--they basically are Chase. This is another department or something.
We owe the bank a little under 14 thousand dollars. We were on an installment agreement/payment plan with Chase, and I was making payments on time, and all was well. About a year ago I got laid off from my job. The Hubster has a job but his income is committed to our other expenses (and we're supporting another family member as well), so my paycheck was essentially to going to repayments on this past-due credit card account.
For a while I was able to keep making payments. I received State benefits along with the pandemic benefit. Now, though, the federal money has expired, and my regular State bennies are also due to go away in the next couple of weeks. I fell behind on my repayment schedule, and the next thing I knew Chase had closed the account.
I understand that they have to be hardasses now, since I screwed up the original payment plan. But I don't have the cash amount they're demanding. Looking for work is required to receive benefits, and I've sent out hundreds of queries over the course of the past year. I know how this works because I've been laid off before, and it was tough then. Now with the pandemic and the economy being decimated, it's going to be that much harder for me to find a job. I don't ever give up hope, and I've had a couple lucky breaks over my career. But I'm a bit freaked out because there's nothing on the horizon for me at the moment. I'm just really hoping my husband stays employed.
So I'm explaining this to the rep. I tell her we've banked with Chase for 20 years, is there any way they can cut us a break? She said we could do a settlement for a lesser amount, which they calculated as being just over 8 thousand dollars. That sounded excellent, except we don't have that much money. We were more liquid before we bought our house a couple of years ago, but we put all our available cash into our down payment. I see now that was a mistake, but there you go.
So I tell her I can afford to pay, say $200 a month. She said that won't work. Basically we're being wrist-slapped because this was their second attempt to collect on the debt. She's telling porkies there, because when I got the first letter I tried to contact them. I wrote them a letter asking for an installment plan, I called them (no answer after an hour on hold), and I filled out a form on their web site. I heard precisely nothing back, even after repeated attempts.
When I called the number on this new letter, they answered this time--so that's progress. But the upshot is that the only installment agreement they can offer us is $1500 a month for six months. That doesn't work, because I have no income and we don't have extra cash at at the moment. She stopped short of telling me I should sell our house, but that's the only way we could scare up this money. She said she was giving me brownie points for contacting them and making noises like I wanted to resolve the balance. I'm not sure what difference that made to anything. The tone is so fucking condescending with these people! Anyway, since we couldn't agree I just hung up without having any arrangement in place.
What steps can I take now? Should I call again and ask for their manager this time? Would it make sense to write to them again? I never received a response to my previous letter. I do have a contact name on the letter--not the woman I spoke with, so maybe I should try this person instead.
I'm just flummoxed right now. Any suggestions would help.
I would first suggest putting everything in writing. Email at the very least. Nothing told to you over the phone by anyone, including a bank, is guaranteed. What if this woman quit tomorrow or didn't have the authority to make the promises she made? You need a papertrail.
I know you said you bought your house a couple of years ago. Have you kept current on the mortgage? People are swarming to refinance now because interest rates are incredibly low. Is it possible you could manage the $8000 payoff by refinancing? However you proceed, get it in writing!
It might also be a good idea to explore bankruptcy. Most lawyers will allow some sort of session at very reduced rates or free for a first consultation. Best of luck with this horribly stressful situation.
posted by citygirl at 3:08 PM on August 20, 2020 [3 favorites]
I know you said you bought your house a couple of years ago. Have you kept current on the mortgage? People are swarming to refinance now because interest rates are incredibly low. Is it possible you could manage the $8000 payoff by refinancing? However you proceed, get it in writing!
It might also be a good idea to explore bankruptcy. Most lawyers will allow some sort of session at very reduced rates or free for a first consultation. Best of luck with this horribly stressful situation.
posted by citygirl at 3:08 PM on August 20, 2020 [3 favorites]
I’m just guessing so others can say if this isn’t helpful, but what if you reached out proactively to another unit of Chase, perhaps one you’ve worked with before, or even the regular customer service number? Sometimes threatening to cancel something else with them can help. Put on your most confident, firm, and slightly friendly self when you call.
I do think looking into a refinance of your mortgage might be a good idea.
posted by bluedaisy at 3:51 PM on August 20, 2020 [2 favorites]
I do think looking into a refinance of your mortgage might be a good idea.
posted by bluedaisy at 3:51 PM on August 20, 2020 [2 favorites]
I second what the other commenters are saying above. I too recommend first trying to refinance with cash out, and use the cash to settle the debt. Interest are really low - lower than when you bought two years ago. My only caveat about this approach is that you may have trouble qualifying for a refi for a few reasons: (1) it sounds like your household income has dropped since you initially bought your house, (2) your credit scores may have dropped because you haven't been making the agreed payments with Chase, and (3) if you haven't kept current on your mortgage payment, that will hurt a refi app. But if you are able to refinance and walk away with enough cash in hand out to pay off the debt (sounds like $8000 would do it), I think that would likely be your cleanest and least painful option - assuming that you think, after this particular debt is settled, that you can keep afloat on your husband's income indefinitely (including supporting your family member).
If you are unable to refinance or you think your financial obligations are too hefty going forward to be sustainable, I wonder whether it might make sense to consider selling the house. You say in your post that you guys may have overextended yourselves putting all your cash towards the downpayment, and it sounds like you're even more overextended now than you were when you bought. Whether or not selling your house is a good idea really depends on what your local housing market is like, what your plans are in terms of staying in the area, what typical rents are relative to your current monthly mortgage/insurance/property tax payment etc. But housing prices are really high right now in many areas of the country, so you might be able to do well off of the sale. It might be worth thinking about selling the house, paying off the debt, and renting something cheap until your household income goes up or your financial burdens lessen. The ideal situation would be to sell for a price that would (a) cover your closing costs (realtor fees, prep to get the house ready for market, any repairs, etc. - 8-9% or so of the sale price?), (b) pay off your mortgage, (c) pay off your Chase debt, and (c) if possible have enough left to give you a bit of financial wiggle room over the next months. I guess since you only bought two years ago, there's some doubt about whether the sale of your house would be able to accomplish these things, so I'd talk to a few realtors about what they think your house would likely sell for in the current market. If you couldn't get enough from the sale of your house to do at least (a)-(c), that would give me pause if I were in your shoes.
If you can't refinance and a house sale wouldn't do (a)-(c), I would look into bankruptcy. I don't know much about it. With the stakes so high, I would have at least an initial consult with a lawyer.
Other perhaps obvious caveats are that before you start paying anyone off, I would get someone official to clarify in writing the relationship between Credit Control, LLC, and Chase. I would want this from Chase itself, not just Credit Control. I would also want to get in writing the settlement deal for $8k (i.e. that an $8k payment from you satisfies the debt in full), so they can't claim later, after you've paid that $8k, that you actually owe the full sum.
This sounds like a very stressful situation and I wish you all the best as you navigate it. Do post and update us on what you find out and what you decide, as I'm sure it would help others reading this post, especially considering what devastation coronavirus has done to the economy.
posted by ClaireBear at 7:48 PM on August 20, 2020
If you are unable to refinance or you think your financial obligations are too hefty going forward to be sustainable, I wonder whether it might make sense to consider selling the house. You say in your post that you guys may have overextended yourselves putting all your cash towards the downpayment, and it sounds like you're even more overextended now than you were when you bought. Whether or not selling your house is a good idea really depends on what your local housing market is like, what your plans are in terms of staying in the area, what typical rents are relative to your current monthly mortgage/insurance/property tax payment etc. But housing prices are really high right now in many areas of the country, so you might be able to do well off of the sale. It might be worth thinking about selling the house, paying off the debt, and renting something cheap until your household income goes up or your financial burdens lessen. The ideal situation would be to sell for a price that would (a) cover your closing costs (realtor fees, prep to get the house ready for market, any repairs, etc. - 8-9% or so of the sale price?), (b) pay off your mortgage, (c) pay off your Chase debt, and (c) if possible have enough left to give you a bit of financial wiggle room over the next months. I guess since you only bought two years ago, there's some doubt about whether the sale of your house would be able to accomplish these things, so I'd talk to a few realtors about what they think your house would likely sell for in the current market. If you couldn't get enough from the sale of your house to do at least (a)-(c), that would give me pause if I were in your shoes.
If you can't refinance and a house sale wouldn't do (a)-(c), I would look into bankruptcy. I don't know much about it. With the stakes so high, I would have at least an initial consult with a lawyer.
Other perhaps obvious caveats are that before you start paying anyone off, I would get someone official to clarify in writing the relationship between Credit Control, LLC, and Chase. I would want this from Chase itself, not just Credit Control. I would also want to get in writing the settlement deal for $8k (i.e. that an $8k payment from you satisfies the debt in full), so they can't claim later, after you've paid that $8k, that you actually owe the full sum.
This sounds like a very stressful situation and I wish you all the best as you navigate it. Do post and update us on what you find out and what you decide, as I'm sure it would help others reading this post, especially considering what devastation coronavirus has done to the economy.
posted by ClaireBear at 7:48 PM on August 20, 2020
As a minor clarification, a consultation with a bankruptcy attorney first could help determine whether you can immediately stop the debt collection attempts, save your home, and restart fresh - it can be a game changer and it is designed to help individuals, families, and the economy. An overview of bankruptcy basics from a legal aid in Ohio is tailored to their laws, but it offers a general sense of options that may apply to your situation.
If bankruptcy doesn't seem like a good option for your situation, then you may benefit from additional help dealing with the debt collection agency, so you can get the best settlement possible from a company that likely bought your charged-off debt for cheap and now has an incentive to use guilt and shame to manipulate you into paying as much money as possible, so they can avoid the costs of bringing you to court and risking either a) you declare bankruptcy and they get nothing, or b) you show up with an attorney who raises fair debt collection practice or other claims against them. Bad actors like shady debt collectors tend to crumple when actually faced with the possibility of accountability, but you would need to talk to a lawyer in your jurisdiction to confirm whether you have potential claims and how best to proceed.
Ultimately, it seems like your answer depends on specific facts and details that aren't and likely shouldn't be disclosed in your question, because you are entitled to privacy and confidentiality, but there are experts with experience working with people in similar situations, and I hope that you can find help with navigating this understandably stressful situation.
posted by katra at 8:41 PM on August 20, 2020 [1 favorite]
If bankruptcy doesn't seem like a good option for your situation, then you may benefit from additional help dealing with the debt collection agency, so you can get the best settlement possible from a company that likely bought your charged-off debt for cheap and now has an incentive to use guilt and shame to manipulate you into paying as much money as possible, so they can avoid the costs of bringing you to court and risking either a) you declare bankruptcy and they get nothing, or b) you show up with an attorney who raises fair debt collection practice or other claims against them. Bad actors like shady debt collectors tend to crumple when actually faced with the possibility of accountability, but you would need to talk to a lawyer in your jurisdiction to confirm whether you have potential claims and how best to proceed.
Ultimately, it seems like your answer depends on specific facts and details that aren't and likely shouldn't be disclosed in your question, because you are entitled to privacy and confidentiality, but there are experts with experience working with people in similar situations, and I hope that you can find help with navigating this understandably stressful situation.
posted by katra at 8:41 PM on August 20, 2020 [1 favorite]
If they claimed to be "part of" Chase and the information posted by others is correct, they are definitely the scummy kind that will almost inevitably rack up enough statutory damages for FDCPA violations that you or your attorney would have significant leverage against them in any negotiation. They likely already broke the law once, after all.
Either record (if legal in your state) or make contemporaneous notes of any call you have with them going forward and seriously consider contacting an attorney as katra advised.
posted by wierdo at 1:07 AM on August 21, 2020 [1 favorite]
Either record (if legal in your state) or make contemporaneous notes of any call you have with them going forward and seriously consider contacting an attorney as katra advised.
posted by wierdo at 1:07 AM on August 21, 2020 [1 favorite]
This thread is closed to new comments.
I think it may be helpful to consult with attorneys (MeFi Wiki) in your jurisdiction, e.g. The National Association of Consumer Bankruptcy Attorneys offers a lawyer directory on its website, and that may be a place to start generally for an orientation on options for the multi-faceted expense/debt/asset issues you describe in your question, and e.g. The National Association of Consumer Advocates, which also offers an attorney directory on its website, as well as debt collection defense videos and general information about your rights.
I'm also not sure about how a cash-out refinance (Zillow) might work for your situation, but maybe that or other options related to using your house equity as an asset (SFGate) could be other options to consider.
posted by katra at 2:54 PM on August 20, 2020 [4 favorites]