“My wife lost her job last August, I’m in commercial real estate in Arizona and I was hospitalized in November.
After reading a debt settlement book by Mandy Akridge, I formulated a plan to tell “my story” to my creditors, keep individual files noting balances, days late, etc and hope to settle my debt.
As of today, we owe the following:
Citibank (unsecured): $32,000, 72 days late
Bank of America (unsecured) : $7,300, not yet late
Navy Federal (unsecured – now) $28, 511, 40 days late.
Navy Federal is very aggressive. Previously, my credit card debt was secured with a car loan I also had through Navy Federal. Last week, they told me they were going to recommend that the car be repossessed. I was able to obtain a new loan from a different lender (USAA) – now, I’m thinking that Navy Federal cannot repossess the car. However, I received a letter today from Navy Federal stating,
“The amount of $747.50 must be received by close of business on 13 May to prevent possible legal action. Such action could include obtaining a judgment, placing a lien on your personal properties, and/or garnishment of your wages.”
Is this a standard scare tactic?
Finally, we have a HELOC on a second home which we rent. I am 45 days past due on that ($44,500) with Bank of America. What is the likelihood they foreclose? The property is maybe worth $125,000 and we owe $80,000 on the first. When I spoke with the account representative, they suggested I call the Bank of America mortgage assistance line and try to work out something on the first before they would do anything with the HELOC.
Thank you in advance for your help,
If you refinanced the car loan through USAA, they would have paid off the prior note held by Navy Federal. You should call to verify this fact. This would eliminate the concern of vehicle repossession by Navy Fed. Were it to occur due to some clerical error, it would be an illegal taking after the note had been paid. You would have recourse.
The more likely scenario is that Navy Fed is known to be aggressive in their collection efforts. The threat of legal action is not an empty one coming from them. At 40 days late it would be premature were they to place the account with legal, but they do have a reputation for attorney placement.
It is possible to get payment concessions on the first with BofA. You did not mention that you were behind on the first. Because you estimated the value on the home at about what you owe on the first and second combined you meet a profile that would suggest they foreclose. Foreclosures on underwater homes, while still pursued, are easier to navigate negotiations on a second. The suggestion from the HELOC rep you spoke to is not necessarily bad advice if you were behind in payments to the first. Are you?
Jake, what is your plan for settlement? What amount of funds can you accumulate over what period of time in order to succeed with your plan and goals? What state do you live in?
Reading books and internet posts are helpful in providing a foundation and ongoing detail. These sources may not have outlined realistic expectations sufficiently. That concerns me.
Citi Bank & Bank of America are straight forward enough. Navy Fed and the HELOC are nuanced and require finesse.
Ultimately your funding preparedness and timing will be the best arrows in your quiver.
Please answer the above questions by posting your answers in the comments below and I will be able to give a better outline of concerns.
Michael Bovee is an experienced debt expert who helps answer questions on the GetOutOfDebt.org site. He specializes in helping people with debt settlement through education and assistance. He can be reached at the Consumer Recovery Network.