Progress is Made: Settling Credit Card Debt with USAA
November 22, 2016
Wow, this is scary stuff to publish online! After all, who wants to air their dirty laundry, particularly when it comes to finances? But, in order for us to achieve our goals, we need to take a good long look at reality, and make some forward progress.
Toward that end, we started working with a debt settlement advisor. We realized that we could either be stuck underneath mountains of debt for a very long time to come, or we could make efforts to settle some of it and get out from under it.
Also, after Don’s last heart attack and subsequent job loss, we legitimately weren’t able to keep up with all of the medical bills in addition to other expenses. So, we made the decision to pursue settling two credit card bills:
- USAA Credit Card, $13,400
- Navy Federal Credit Union Credit Card, $9,100
We do have a couple of other credit card accounts, but they’re very small and still manageable. The cards we’re looking to settle are both leftover from my prior relationship, and we’ve made very little progress on them in the six-plus years since that relationship ended. We’ve been making payments, don’t misunderstand, but the balances are decreasing achingly slowly.
So, with having been unable to keep up with payments, we just received word that USAA has charged-off this debt. This is actually good news, apparently, as it means that they’re more likely to consider accepting a settlement. So, one more step down the road to reducing debt and letting go of stuff, as the advisor heads into negotiations on our behalf.
Update 12/7/2016: The advisor was back in touch last week with an offer: 40% in one full lump-sum payment, or 50% in 12 equal monthly payments. We can’t swing the 40% in one payment right now, but 50% in 12 equal payments (approximately $550 a month) seemed a little out of reach as well.
So, we asked the advisor to try for 45% in 12 equal payments, or a $6,000 settlement on a $13,400 debt (numbers rounded slightly). And this week, we found out our offer was accepted! View the Alltran USAA settlement letter. So, we’ve officially knocked out $7,400 in debt (less the 15% of savings fee charged by the advisor, which came out to just over $1,100). So, our net savings was $6,300 out of $13,400, or 47% of the initial balance! If you look at comparisons to paying the balance off over, say, 3 years, while continuing to accrue 12% or more in interest, the savings is closer to $14,500!
The first payment, as well as the advisor’s fee, is due at the end of the month. Progress, baby, progress!