Debt Settlement - $16k with MBNA - process for settlement? - Canada

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RE: $16k with MBNA - process for settlement?

Postby DebtFighter » Thu Mar 27, 2014 07:44:57 PM

Out of all the creditors, I would say that MBNA is the most friendliest to deal with. I have never heard of an original creditor agreeing to 33% to the dollar, except for MBNA.

A lien is MBNA's best tactic, but a house with next to no equity now makes it an unattractive option. They will have to assume that the value of the house will go up in the future.

Try to negotiate a settlement. I have dealt with them before and they are quite friendly and understanding (believe it or not, well that holds true to the agent that I dealt with). I was given three offers: One of them was a lump sum payment of 35 cents to the dollar. Not bad! Actually that was terrific!!
Fighting debt collection: Knowledge is POWER! Disclaimer: I do not provide legal advice. I am affiliated with former debt collectors and only provide help to consumers who need assistance with debt collections. If you require legal advice, I recommend consulting a lawyer. I do not condone not paying debts on purpose and using strategies I provide to elude payment and responsibility.
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RE: $16k with MBNA - process for settlement?

Postby DanielBl » Tue May 08, 2012 05:35:35 PM

You can always depend on Shabaaz and his incorporarted roommate.

If you think they never try to force the sale of homes over $15K or $20K, read this thread. When the laywers add their fees in, it can amount to a lot more as can be seen from the thread below. From your description, they may not have many options; and transfering ownership may not ultimately solve the problem in the event of one partner's bankruptcy for reasons the trustee will discuss with you..

/threadview/3661.html
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RE: $16k with MBNA - process for settlement?

Postby helpsis » Tue May 08, 2012 01:02:36 PM

Thanks Shabbaz and DanielBl,

They got into a bigger house with a growing family, and yes, it is surprising that they got a mortgage for an amount that was more than they could afford (a move from a smaller house to a larger one by extending to a 35-year amort, but with no apparent questions about income). There may be $30-$40k (7-10%) in equity in the home - worth it for a $15k debt? Since the card is only in one of their names, wouldn't a settlement only affect that party? With 3.5 years left on the mortgage, it may be an issue of needing to transfer title and/or obtaining a guarantor upon or before renewal...
It seems meeting with a trustee to determine the options given how the house is shared etc is the right first step - as for the CC, there is no point in them borrowing against their credit line (which I assume is also unsecured but from their local bank) to make the minimum payment so will advise them to stop payment until they have all the options in front of them.
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RE: $16k with MBNA - process for settlement?

Postby DanielBl » Mon May 07, 2012 05:56:50 PM

It's hard to believe they bought a house, given the desperate state of their finances. What were they thinking of? How did they even get a mortgage? One thing is certain: they should never pay a "counsellor" - a vulture in my opinion - an exhorbitant commission to settle a debt - or any at all because they can do it themselves for nothing. And no, they will not get a bettter deal with a counsellor or debt settler. Many of these characters are simply recycled collection agents wearing a different hat in order to get a bigger slice of the pie after seeing the bonuses their collection agency managers got.

MBNA, was known for being willing to settle debts for less than most other creditors, given their policy of selling bad debts soon after they were written off. I think they still might agree to 30%, 40%, or certainly 50% without much effort. It's been a while and internal policies change, so I'm only guessing. However, if real estate is owned, and there is substantial equity in it, one's negotiating position is far weaker. That's because many mainstream lenders hire legal firms to milk huge legal fees out of judgments and the liens which follow. Seizing and selling real estate to enforce liens is quite expensive, but the lawyers can be certain they will recover the debt along with interest and inflated legal fees.

Your relative should consult a bankruptcy trustee. After providing details of joint income and the ownership/equity of the house, they will be able to judge whether a consumer proposal, outright bankruptcy or debt settlement is best. One thing is for sure: if they can't meet their bills, their credit rating will slip, and it will be difficult to renew the mortgage when the term is up.

Trustees don't make any money from free consultations, so it's important to ensure whatever course of action they push (and they will push) is absolutely necessary. Again, if there's any way the debt can be settled on one's own, it should be done so. There's enough people out there profiting from human misery already. Regardless, even one credit card settlement will seriously impact a credit score for several years. And with a consumer proposal, while the interest will stop, their credit rating will be a miserable R7 for 3 years.
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RE: $16k with MBNA - process for settlement?

Postby Shabaaz » Mon May 07, 2012 04:41:31 PM

When you own a house that gives the creditors much more leverage. They can put a lien on the house, etc.

Unfortunately, most creditors don't make settlements while you are making payments. They normally wait until 180 days have passed without a payment.
But MBNA is one of the best companies to deal with (unlike RBC), so you maybe able to make a deal with them.
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$16k with MBNA - process for settlement?

Postby helpsis » Mon May 07, 2012 03:59:44 PM

Hello all,

Am posting to ask some advice for a family member, who's has been struggling with increasing debt for the past 2 years. The couple have $16k in credit card debt with MBNA and almost $9k on a line of credit (they have been paying the minimums by drawing on the credit line). They owe several thousand $$ to a friend for heavily discounted septic repairs and will need $5k more to pay for dental surgery for one of their children in the coming months. They have made some tough choices to both reduce expenses and bring their income up to be able to cover all the upcoming costs and keep the house that they purchased less than 2 years ago (they have no options for consolidation given mortgage terms, virtually no equity/assets, and maximum amortization). Its going to be tough as it is - they really have no ability to get out from under the $25k debt.

They are going to try and work with the bank on the credit line, and are hoping to borrow enough from family to cover whatever settlement they can reach with MBNA. My feeling was that they should try and do this themselves with MBNA rather than paying an additional 25% to a counsellor, but where should they start? The first thing they need to stop doing is paying the minimum payments, as they have been using the credit line to do so... but what can they expect from there? Is this the right first step? The card is in only one of their names, the one with the lowest income.

thank you!

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