Settling with Collections for Citibank

[justchris]

I had a card with citibank since i was about 17 and you know how that goes when youre younger but i was never late on payments etc. Well i had a limit of 12k on the card and i started a business when i was 23 and used alot of money from the card to get inventory etc (computer store) well about 6 months later someone broke into my office and stole 5 really high end laptops (8k worth) and i was forced to go out of business. I started a new business and im doing well (its a LLC so not in my name), but was late on some payments when i went under on the last business and all of a sudden my debt is up to 17k from the previous 12k it was at and they would not help me out at all so i just stopped paying them. Now its in collections and the collectors call me non stop and i told them there was no way i could pay 17k in a lumpsum and in fact i felt i shouldnt pay 17k anyway. They have told me they would do 4 payments of 3k within 2 months and i still told them theres no way i could do that. The question I am trying to ask is how low will these collectors go as far as payments i mean i have heard from some if you offer 60% they will etc. I can maybe afford to do 1k a month for 8 months but they didnt seem to like that so should i just say that is my final offer on the situation and hold it at that or file BK?

[HHM]

First off, why didn't you have insurance? Live and learn I suppose.

Collectors do not like payment plans, they are generally only interested in a lump sum payment. So, your not really going to have any luck asking for both a reduction in principal and an extended payment plan. (the only time this works is if a law suit has already been filed and as security for the payment plan, you sign a confession of judgment).

That does not mean there are not exceptions to the rule, but look at it from there perspective, if they do a payment plan, what gaurantee do they have that you will continue with the plan--afterall, you already defaulted on the debt already.

[Lightning]

A 17 year-old cannot enter into a contract. You should consult with a lawyer.

Some unsolicited advice:
1. Don't start a business using credit cards. You should have obtained a small business loan after showing the bank your business plan.
2. When you deal with creditors, personally or professionally, it doesn't matter what you think you should pay. You have to pay what you contractually agreed to including any late fees or higher interest rates. Read contracts carefully before entering into them.

[justchris]

i just started the biz so i didnt even think about it. As far as payments from their point of view i would think anything is better than nothing if i file bk

i was just layed off so there was no way id get a loan and i didnt need much to start off with

[HHM]

Well, if he made any payments or used the card after he turned 18, the debt will be considered ratified and therefore, that little tactic won't work.

Anyway, good luck with your new business, but even with an LLC, most of the agreements you will sign will include some sort of personal guarantee anyway.

If you don't want to pay it, don't pay it. The longer the account goes uncollected, the lower the lump sum they will settle for. But there will be consequences, i.e. negative credit reporting and possibly getting sued.