Wow, this is scary stuff to publish online! And it hasn’t gotten any less scary…for the back story, view our previous blog about settling credit card debt with USAA.
But in the spirit of sharing our mistakes as well as our successes, I’ll swallow my reservations and keep going…
We needed to find a way to pay off or settle a credit card debt of $9,100, with Navy Federal Credit Union. After working with a debt settlement advisor to settle another account, we learned a ton – and we also felt that we could take on settling with Navy Federal ourselves (thereby saving the advisor’s fee, 15% of the debt reduction).
In this case, we essentially just kept Navy Federal up to date on our desire to work with them to resolve this debt, and on other financial setbacks (Don’s heart attacks/job loss, etc) that were occurring.
Ultimately, it was just a waiting game; we first received a letter which offered a 50% settlement if paid in full, which after interest and fees came to about $4,650. We didn’t have that amount of money to put towards that card at the time, so we didn’t take any action on the first letter.
Then, we received a second letter, with a settlement offer of about 40%, or around $3,800. We didn’t have that lump sum available, either, but we did have some available to put towards the card. So, I picked up the phone (hated this part!) and called Navy Federal, explaining that their settlement offer was quite reasonable, but we just wouldn’t be able to come up with that much at one time.
After a few back-and-forth negotiations, the rep came back on the line with approval for a settlement of $3,200, or around 34%. We realized this was within our abilities, and agreed to the terms. We actually called back to make the payment the same day, and received a letter confirming the settlement within a week or two.
Now, as much as I was hesitant to pursue settling debts (I’d rather pay in full whenever humanly possible), I feel like a huge weight is lifted off my shoulders. There was definitely an emotional component to this particular debt (it was a remaining tie or remnant from my ex), so that’s a big part of it. Either way, though, I feel like we’re managing to clear the decks so we can move forward with our lives; and doing so in a way that’s collaborative with the banks so that both parties agree.
So, on to the numbers…
We settled for $3,200 on a $9,350 debt (numbers rounded slightly). So our net savings was $6,150 out of $9,350, or 66% of the initial balance! If you compare to paying the balance off slowly over time, with additional interest charges, the savings is much higher.
While we’re at it, we have only TWO more payments on the USAA credit card I wrote about previously; by the end of November, we will have knocked out both credit card debts on our high-priority list.