Expert: Creditwrench - 6/25/2010

Question
I will try to keep this as brief as possible.
Divorced last year. Lost home, got stuck with entire amount of personal credit card debt ($55,000) AND got hit with $400 a week permanent alimony.
Had always maintained a credit score above 700 for almost my entire life. Had currently been making all my minimum credit card payments until about a year ago. Two of the larger credit card debts were with chase. They had previously been requiring 2% of my outstanding balance as my minimum payment, then, one month, I received my 2 chase statements, requiring 5% minimum payments on these 2 accounts. These 2 balances were pretty large. One was around $11,000 and the other was around $9000, originally requiring me to pay $220/month on one and $180/month on the second. Now I had these new statements requiring 5% on these balances, $550/month on one and $450/month on the second. At this point I didn't know what to do. I could not even come close to making these new minimum payments with chase because if I did, then all my other obligations on all my other debts would become delinquent. I continued to make my 2% minimum payments to chase as I had been originally been making. This went on for about three month's, my 2 chase accounts now becoming in arrears on my new minimum payment required. Then the letters and phone calls started from chase...you are behind, please remit minimum, etc...I
then began receiving letters from chase...we have a balance liquidation program...we can help you...call us now...so I called...
The chase rep went through 50 questions and told me I didn't qualify...when I told her my financial situation and mentioned I was doing fine making my 2% minimum payments and really didn't have a problem until they created this financial hardship for me by raising my minimums to 5%, she told me that she was sorry and that there was nothing she could do for me and that "I should thank my President O'Bama for this situation that I was now in".
I really didn't appreciate her snide remark, so I hung up on her.
As month's past...me continuing to make my 2% minimum payments, still getting phone calls and letters about how they could help me, I once again called chase. Same answer...can't help me. As several month's went by again, me now ignoring phone calls and letters, I now receive a different letter from chase. They now have a different program that will forgive up to 50% of my debt. Call before a certain date so that I qualify. So I called. Guess what...that program didn't exist for me anymore....now I am really pissed....I thought I saw a light at the end of the tunnel...chase had tricked me into calling...I hung up and vowed to screw chase as chase had decided to do to me. I now started to make only $100 payments on these 2 accounts, since I was already $1000's of $ behind...what difference would it make now.
Now, several month's ago, I noticed I could not access my chase accounts online to make these payments. They had disappeared from the website. I then made the two $100 payments via check, and noticed that the checks had been cashed. After realizing...these 2 debt's were probably either sold or turned over to a collection agency....then, the onslaught of new phone calls begin. Harassing my parents, harassing employee's at my job....all wanting ME !!!
My parents told these collection agencies they had the wrong number, the wrong person,not to call again...but they persisted to harass. Then I had determined that chase had turned over these 2 accounts to two different agencies.
I have recently received a letter from agency1, stating that they have negotiated with chase, a 25% payoff and to send payment(1900.00) to agency1 by a certain date as a settlement offer.
I was contemplating trying to negotiate a settlement for $1500, as I have a friend who could loan me this amount but don't know if this is wise thing to do at this point.
At this point I do not know how to handle this situation and need some direction and info regarding my rights. I don't think it is fair to "railroad" someone that has had great credit for the last 30 years into totally destroying one's credit into nothing. Chase has now managed to CRUSH my credit. All of my other creditors have lower my available credit lines to virtually nothing. One company has even closed my account because of this history I now have with chase. I called this company that closed this account, and they told me they were sorry but this was part of the credit terms provided to me, even though I am paying them $250 month on an account requiring a $25 monthly minimum, there was nothing they could do...and they could see I had no other issues with any other creditors...it was simply their policy.
I am between a rock and a hard place...pissed at chase for forcing me into this situation...I WANT MY CREDIT BACK...IT"S NOT FAIR !!!

HELP IN FLORIDA

Answer
Knowing the history and how you feel about the whole situation is important but in many ways not really relevant at this point. What you need to do is to realize that keeping current on your mortgage or rent, utilities, car payments (if any), food, clothing and transportation costs, divorce payments, and credit card payments to those with whom you are in good standing are what is important. Quit paying on those who have closed your accounts and turned you over to collection agencies. You are only wasting money by paying them but putting yourself in jeopardy in several other ways. Paying them can only hurt you from now on, not help in any way. Once you have been turned over to debt collectors you need to start your informal bankruptcy process on them instead of attempting to avoid problems by paying them off. While there is nothing you can do to stop phone calls from Chase or any other original creditor you should learn how to handle phone calls from debt collectors. http://www.creditwrench.com/18questions.html will teach you how to handle those phone calls. You need to learn about your rights under the law and how to defend them. The informal bankruptcy process starts with a good debt validation letter. You probably can't find a good debt validation letter on the internet. All of the ones I have ever seen ask many questions and are usually quite silly, quoting a bunch of laws and making other dumb statements. A good debt validation letter is very short, not more than a couple of sentences or so long, asks no questions, quotes no laws and makes no threats of any kind. Keep careful records of any and all phone calls. Get a good digital voice recorder such as one of the better Olympus models available at Wal-mart or Best Buy for about $80. Keep it with you at all times and record any and all phone calls. Also keep a written record of the calls. Time, date, name of the caller and any other information you get by using my 18 questions. Don't throw any letters away. Keep the envelopes they came in too. Send all your correspondence by certified mail return receipt requested. All of the above are important fist steps in your informal bankruptcy process. You can learn much more about informal bankruptcy by visiting http://www.informalbankruptcy.com and you can learn all about what your rights are by visiting http://www.fdcpaexpert.com and studying that closely. You also need to start learning about court procedures by searching for your state and local rules of civil procedure which can be found on line for most states. Start learning now. Visit http://sites.google.com/site/creditwrench and follow the links so you can be really effective in defending your rights under the law. Learning is what is important, not paying debt collectors.