I have to tell you that I was able to settle for 60 percent with one of my credit card companies before my account would have gone out to a collection agency.
This particular credit card company was obviously willing to work with me. I had only had the credit card for about one year.
Unfortunately you have to be behind in your payments by one to two months before the credit card companies will work with you. There was one case where I was behind by three months and I was still able to settle with the credit card company right before it went out to settlement.
(I am not proud of this by any means. I made a lot of stupid mistakes and I acted frivolously, carelessly and most of all irresponsibly. By now my wife really should have left me a long time ago and I really don't deserve any respect from anyone. The worst part is that I have kids that I ... that I have just not been thinking of. At the same time I was laid off for a period of nine months total during the last six years so it's not completely my fault - at least that's what my wife tells me. Anyway, back to my story.)
You just need to tell them the truth about your financial situation and the reason(s) why you are unable to make your payments on time. In my case I had two reasons: one was that I had started a new job where I made 16% less per month than in my old job and the second reason was because my mortgage payments (1st and 2nd) had increased by 57% more per month - no lie.
My mortgage payments increased so much because I made the very bad mistake of refinancing my house during late summer of 2006 - August to be exact - and agreeing to interest-only loans for my first and second mortgages. My 1st was at 7.75% and my second was at 12.5%. They were stated income loans but at the time I did have the cash flow because I was selling stuff on eBay. The story behind those loans deserve a whole other blog. That's for another time. Needless to say but my mortgage broker never should have put me into those loans which are really the cause of my bad financial situation - if only I'd gone full doc. Of course I never should have signed those loans.
What I should have done back in September 2006 was to start negotiating with my credit card companies instead of refinancing into an exorbitant loan with excruciating terms. As it is I applied for a loan modification this year with the lender (1st mortgage) and I was denied because of "insufficient income". Later - September 2007 - that loan servicer sold my loan to another loan servicer and I again applied for a loan modification with my new loan servicer. I was again - for the second time this year - denied a loan modification. This time the loan servicer said that the "investor's" terms for my loan - I suspect mortgage backed security - did not allow them to modify my loan with newer, more friendly payment terms.
However they did allow me to spread out two missed loan payments - they told me to not make the payments to be eligible for a loan modification, then told me the investor's terms didn't allow one after I had already applied and sent over lots and lots of financial documents - over three years.
So that helped me financially during the last two months. I still have nineteen credit cards and lines of credit that I have entered into Balance Liquidation Plans to payoff those creditors. And I have closed all but one credit card account (limit of $300).
Well, more to come in later posts.
One last thought - if you are having financial struggles and you feel like you've let your family down, please seek some help. Please find someone you can talk to about your feelings. I know what it feels like to not think of yourself as a man, to not think of yourself as taking care of your family. It hurts. And you feel that you've hurt your wife and your kids. But there are worse things in life than losing your dignity. Look at the young men and women putting their lives on the line each day overseas for all of us back here in the United States. To give your life is the ultimate sacrifice for loved ones. But don't do it for what you might think are financial reasons. You have to think about the emotional impact on your family. Your family needs you, need your presence in their lives more than they need insurance money. When I watched my daughter graduate high school, when I watched her get ready for prom, when I listened to my son talk about going into the service or going to college, in the back of my mind I thought about how I might have missed those moments and I was glad that I could look at my son's and daughter's and my wife's face. If you are a man reading this remember that it is better for one person to suffer each day than for your whole family to suffer. Just try to continue to make the best of their lives and let that be your satisfaction.