Where do I go from here?

I fell behind on a credit card through HSBC and have been turned over for collection I had a loss of income and I was 24 hours late with my payment so my rate went to the default of 30.99% and the minimum payment doubled I have paid $250.00 per month every month even though that does not cover the interest that is accruing. I am not sure if I have been sold or if this collector is working on behalf of the bank.

The debt collector called me and left a message after my first conversation with her that the creditor is "reaching a max out on settlements" and I do not what my unwillingness to return her call to be interpreted as a refusal to pay. I returned her call and she offered me a settlement on the debt which is now at $13,760.00 including accrued interest for $6,700.00 but I have to pay now. I do not have the means to pay now she said she could not stop or lower the interest rate or take installments.

I received another message from her today (it’s been a week since my last contact) she said she received an email from the creditor stating that “I had been redlined”. I’m not sure what that means but she needs a return call right away. I have figured out what I can pay in a lump sum and I will have to make installments for the rest.

Can they stop the interest accrual and the late fee and over the limit fees? What does red lined mean? Do they have max outs on settlements or is this just a scare tactic? I’ve never been through anything like this and I’m mortified. This has impacted my career as well as my credit score I feel like I’m fighting a losing battle. By the way I reside in Virginia.

Comments for Where do I go from here?

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Mar 18, 2010
 credit card debt settlement
by: Mary and Gerri

Thanks for submitting your debt collection question on our Q&A page.

We asked Michael Bovee, founder of the Consumer Recovery Network, to weigh in on your question. His firm works with credit card companies and collection agencies day in and day out to settle debt. Here's what he had to say:

An all-too-frequent phrase used by collectors is "I will note your account as refuses to pay." The implication of this phrase is that there is some penalty or consequence were they to do so. The only real consequence of the inability to make a payment is that you could later be sued, but that possibility exists regardless of whether they note your account or not. Using phrases like this have been shown to be effective in reaching their desired outcome, which is to get you to pay money (money you may not be able to afford).

Reaching a "max out" on settlements is similarly a ploy to get you to act on the offer that is on the table.

Referring to your account as having been "redlined" means what? That the rpm's on this account are running too high and it will throw a rod if you do not return the call? This phrase is designed to get you to respond, nothing more.

The good news here is that the account can be settled for less than the balance. Your ability to fund the agreed upon offer is what will put this behind you.

My suggestion would be to let them know that you cannot come up with 6700.00 but may be able to come up with xxxx.xx. The amount you counter with should be something you can definitely come up with either immediately, or over a 90 day period. Current trends suggest you may be able to negotiate an amount lower than what has been offered by another thousand dollars or so. Do not agree to any amount that you are not confident you can do.

Do not provide any payment until they have sent you a letter confirming the arrangement via fax or mail.

We will add to Michael's comments that you should be taking careful notes of each conversation with this collector using our Free Debt Collection Worksheet. It is possible that the collectors threats to "redline" your account or note that you "refuse to pay" when that's not true, could be illegal, depending on the context in which they are used. You've purchased Debt Collection Answers, so read it carefully, keep notes and if you think the debt collector has stepped over the line We would strongly recommend you talk with a consumer law attorney with experience in debt collection cases. Find out how to get a FREE consultation with a consumer law attorney here.

Hang in there and please let us know how this works out for you.

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