Citi Financial question - Drowning N Debt your input welcome! ;)

[applecake]

I dont' know if I've asked this here before, but here goes. I'm not too worried about any of our creditors, except for Citi Financial for a few reasons:

1. We have 3 accounts with them. One is a 2nd mortgage on our rental house, one is a personal loan, and one is a loan that we had to put the car on it as collateral. Altogether about $35K. We will be surrendering the rental house and the car.

2. 2 of those accounts, the personal loan and the car loan, we just took out this past September. I've made two payments on the personal loan, and only one on the car loan. Honestly, BK wasn't a thought in our minds until mid-October. We really thought we could make all this work. (We took the loans out of desperation; we had a business that failed and we owed a bunch of people their money).

Anyway, is it going to be a problem for us, do you think? I mean, having only made 1 and 2 payments on the loans, I know it doesn't look good. Thoughts, opinions, experiences?

As a PS, the one I don't feel bad about at all is that 2nd mortgage. Over the last 7 years, we have paid a total of $17,000-ish on it (a $15,000 loan). The balance today is $15K and change. Staggering.

[justbroke]

Anyway, is it going to be a problem for us, do you think? I mean, having only made 1 and 2 payments on the loans, I know it doesn't look good. Thoughts, opinions, experiences?

I have CitiFinancial and AIG loans myself. I don't think it's an issue as you are gaining distance from those loans. What did the proceeds go to? If it went to living expenses, you have absolutely nothing to worry about at all.

I will add that surrendering the property which collateralizes the loans, is even better because you had something backing the loan. This is different than unsecured loans where you have nothing to collaterize and back the loan value.

As a PS, the one I don't feel bad about at all is that 2nd mortgage. Over the last 7 years, we have paid a total of $17,000-ish on it (a $15,000 loan). The balance today is $15K and change. Staggering.

Welcome to installment loan companies. They are the ulitmate pay-day loan. What got me in trouble was that I paid off a $15K signature only loan from CitiFinancial when I sold my house. I brought the check in to pay it off, and they offered me a new loan... sound familiar?

Then they keep sending letters offering $1,500 more and skip payments... loan sharking at its best.

Don't feel bad.

[drowningNdebt]

You will have no issues with them.

Sending out invitations on a regular basis is one tactic that they use all the time. They want the customer to get in over their heads! If your behind they will refinance the loan to bring it current but the rates are ridiculous! For a personal, unsecured loan they were starting at 29.99%! This should be considered theft! Even credit cards offer better rates.

As for the collections aspect. I remember those days I would have to sit and dial collections pretty much all day, every day. They refer to the 0-30 day lates as pop 30's, the 30-60 days as pop 60's and the 60-90's as pop 90's. After that the charge the account off if it's unsecured. You may recieve a letter here and there threatening to sue but it's just a scare tactic. As my district manager said, "what can we sue them for." These loans are subprime anyways. They would just take the loss.

Now if you told them you were filing for BK. They automatically mark the account hold for charge off and will stop calling you. I do remember recieveing a few 341 notices in the mail, opening them and questioning what to do with them. He advised me to just shred them as there is absolutely nothing you can object to in a BK.

Take this information from an insider. Now you see why I decided to resign from the company. No morals at all.

[drowningNdebt]

OH and P.S - I remeber one of several clients we had. He had a 12K unsecured loan, 10K secured loan (auto), 450K first mortgage and 40K second mortgage. He was always 90 days late, we would collect on him but just take one payment, refinance all the others and he did this over and over again. The last thing they want to do is foreclose because of all the costs the incur.

[applecake]

Wow. I feel better now! But what I don't understand...if they just charge off the loan after 90 days anyway, why bother filing BK? Well, I guess I could answer my own question...never mind.

Well, no, wait...why is filing ch. 7 better than simply ceasing to pay all of your unsecured debt?

[justbroke]

Wow. I feel better now! But what I don't understand...if they just charge off the loan after 90 days anyway, why bother filing BK? Well, I guess I could answer my own question...never mind.

Because these types of loans are secured, so they have something to hold over you. You can bet that AIG and CitiFinancial will follow in your local court. They retain lawyer just for this purpose.

Well, no, wait...why is filing ch. 7 better than simply ceasing to pay all of your unsecured debt?

I don't understand. Chapter 7 gets rid of the collection of that debt forever, where just waiting for charge-off opens you to lawsuits, judgments, and garnishments.

Judgments are for 10 years and can be renewed for another 10 years in most States. They are just waiting for you to get some property or get a job so they can go after your wages.

[drowningNdebt]

Exactly! Boy do I learn alot from this forum!

I would just CH 7 it and be done with it.

I at one point in time actually advised a client a CH 7 would be in his best interest. One of the reps at Citi financial called him the next month for collections and he advised "I'm filing CH 7" and gave us attorneys name. We marked the account hold for swipe (due to ch 7). And that was that.