I Have the Money But Discover Doesn’t Want to Settle. – Michele

“Dear Steve,

Ten years ago, my husband and I decided to consolidate our remaining debts onto a low-interest credit card. I applied for the Discover card, and transferred about $55,000 of debt over to the card (car payments, student loan, another credit card, etc).

I have made at least the minimum payment, usually more, on that card every single month from the day I was issued it. The card was only used for two purchases during the duration I’ve had it. The card is in my name…at the time I had a well paying full time job so qualified on my own.

Since then, I have had 2 children (now both toddlers), am a stay-home mom to them, and I started a small photography business which I run myself. But my husband has always made a good income so paying the card was not an issue. About 9 months ago my husband abruptly and unexpectedly lost his job when his company folded. We had just bought a new house and put quite a bit of money into renovations.

I continued to pay all of our obligations, including Discover. After a few months and little savings left, I had to be more selective on whom to pay. Mortgage and utilities and food came first. I reduced my payments to Discover to below the minimum.

I drafted them a certified letter explaining my situation. They phoned me many times, harassing me and making offers once I was 3 months behind in my full monthly payment (ie: lowered interest rate if I can pay $2,500 that day, etc). I just wasn’t in the position to do it.

I ended up agreeing on a payment plan verbally , but the only way they would agree is if I gave them permission to draft my bank account every month for the amount we agreed upon and I did not agree to turn over complete control of my money to them.

I continued to pay what I could every month on that card. Some months were very little, but I always showed an effort to pay and never ignored the debt or Discovers phone calls/letters.

After about 5 – 6 m onths, they sent me a letter offering to accept 40% of the debt I owed up front. I discussed the situation with my husband and we decided to liquidate my 401K to satisfy the debt, so I responded to their letter with my own certified letter stating that, I will have $10,000 in my 401K withdrawal, after I am taxed, and I offered that up to pay the debt. The remaining balance on my Discover, when it was in good standing, and just prior to delinquency, was $32,000 (again, mostly all balance transfers).

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They racked me up nearly $6K more in fees and interest over the course of 5 months that I was paying below the minimum, bringing my balance to nearly $38K. I counter-offered to pay them $10K on my original $32K, just less than 35% to satisfy the debt.

I told them I would very much like to satisfy this, I thanked them for their offer and hoped they would accept mine. It was all we had left. I just wanted this gone. They ignored my second letter as well, and kept sending me letters and statements demanding my balance be paid in FULL and they no longer wanted monthly payments.

I once again contacted them after my husband regained employment (2 months ago), and told them I can pick up where I left off with payments, paying my minimum of $700/month but requested they work with me on all the additional interest/late charges. They ignored my communication and kept sending me “BALANCE DUE IN FULL” letters.

Last week I received a letter and calls from an attorneys office whom is now handling the debt for Discover. The letter did state that my “case” was not yet issued to an attorney, just the office. Scare tactic? I called them back.

I explained to them everything I explained to you in the above paragraph. I told them I have 2 certified, signature receipts for letters I have sent them, and every bit of proof they would want to see that shows I have paid *something* on this card every month. Discover has ignored me. The woman I spoke to was cordial, but she requested from me:

All of my financial information, including income (my husband finally started working again 2 months ago, where we both work, how much our mortgage and all debts are, along with whom we pay the debts to, etc. I told her I was happy to work out a payment plan with her that she can present to her client (Discover), but I would not give her such personal information. She told me unless i give her all this information, she will not work with me on resolving this debt and will have to let Discover know I am not cooperating.

So what do I do now? I do not want this to escalate. All I want to do is get them paid, however long it takes, or whatever offer they will accept, I just want to get this resolved. I’ve made every effort to resolve this with Discover, but they brought in a third party. I am completely uncomfortable disclosing all of my financial information to a stranger, and one who is representng someone else. How do I handle this now?? She is expecting me to call her back with said personal information. Should I draft a letter to the attorney’s office making them an offer/payment plan?? What could happen if I dont comply and give them what they ask for?

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I’m so desperate for proper advice. I appreciate your advice and anxiously await.
Thank you.


Dear Michele,

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

Well it sounds like they have not yet sold the debt and have just sent it out for collections.

I would suggest you click here for credit counseling information and see if the credit counselors can get you back onto a minimum monthly repayment plan at a reduced interest rate before it gets sold off.

Since you indicate you can now afford that minimum payment that would be the easiest way to deal with it.

But also keep in mind that since the debt is in your name alone, you may have other options, including bankruptcy for just yourself and debt settlement, with additional negotiations, since you appear to have already taken your 401k withdrawal or have access to money to settle if they agree.

Use the free How to Get Out of Debt Calculator to review your options.

Please post your responses and follow-up messages to me on this in the comments section below.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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