Monday, June 25, 2007

BofA Balance Settlement Letter

I have drafted up a letter to send to the Bank of America to settle my $9773 balance with them for $3909.20. They requested on Friday over the phone in the kindest of ways that they want that payment by the following Thursday (6/28) or it will be sent to a lawyer near me to go to court. I of course don't have $4K just sitting around the house and they asked me to borrow it from others. I am sick of debt though and I'm not going to borrow to pay them off, even if I could. Here is the letter I am drafting to them and planning on sending to them on Wednesday. This plan would take out our emergency fund, have us living on bare essentials with no wiggle room. Please provide any feedback on it:

Per our phone conversation, I have been attempting to gather the $3909.20 for the Bank of America balance settlement. Below is our repayment plan of $3909.20 with details regarding all of our expenses and income. The rental income is us renting out 4 bedrooms within our 5 bedroom home, we only have 1 property, with 3 currently rented at the rates of $400, $350, & $300 and one to be rented out at $350.

Savings: $1700
Rent Income in July: $1400 ($400 on 7/1, $350 when we bring in another renter, $350 on 7/10, $100 on 7/6, $100 on 7/13, $100 on 7/20)
Full-Time Job: $2698.70 (Half on 7/2, Half on 7/16).
On-call Job: $100 (Varies, but previous check was for $50 for 2 weeks).

Mortgage: $990
Automobile Gasoline: $300
Utilities: $482
Insurance: $95
Food: $0 (On Food Stamps)

Cash Flow:
+$1700 Starting Balance (6/28)
-$1303 Bank of America Payment #1 (6/28) = $397
+$400 Rental Income (7/1) = $797
+$1349.35 Full-Time Job Paycheck (7/2) = $2146.35
-$150 Automobile Gasoline (7/2) = $1996.35
-$1303 Bank of America Payment #2 (7/5) = $693.35
+$100 Rental Income (7/6) = $793.35
+$350 Rental Income (7/10) = $1143.35
-$990 Mortgage (7/13) = $153.35
+$50 On-call Job Income (7/13) = $203.35
+$100 Rental Income (7/13) = $303.35
+$1349.35 Full-Time Job Paycheck (7/16) = $1652.70
-$1303.20 Bank of America Payment #3 (7/17) = $349.50
-$150 Automobile Gasoline (7/17) = $199.50
+$100 Rental Income (7/20) = $299.50
+$350 Rental Income (When Renter Rents) = $649.50
-$482 Utilities = $167.50
-$95 Insurance = $72.50

Outstanding Debts:

The above plan is the best that we can do and meet all of our other obligations. If this is unacceptable and the Bank of America decides to forward this to the court, our only option will be filing for bankruptcy.

What do you think?


D said...

I like it, but I would call the "cash flow" a "projected budget". Then I would create the same information in a spread sheet so it is easier to understand.

The spreadsheet should have 4 columns:

1. Date
2. Activity Description
3. Amount of Activity
4. Register balance

If you have a color printer, make the withdraws or payments red. Make all withdraws and payments read easily by either placing a - in front of the number or (brackets) around the number.

I don't know if this will work, but it is worth a try.

I would call back and speak with the person I spoke with earlier. Then ask for a fax or email so I could send the letter directly to the one in the know.

Good luck!

MyDebtBlog said...

I've watched your blog for some time now and thought I would comment on this. You have yourself in a bind with Bank of America with about a 10k balance and they're willing to settle for about 40% of that, or 4k. Do you have anything from them that they sent to you in WRITING? Talking to someone over the phone does not mean anything as they want to collect the entire balance. You need to get them back up on the phone and have them send you a settlement offer in writing.

When you get this settlement offer from them, sock away the money you planned to send them in 3 different payments, and go get a money order made in the amount of the settlement. Make copies of everything you send back to them (settlement offer, the MO, etc) and KEEP IT FOREVER!! They could one day years later try and come back after you for the rest of the balance. I think if you have figured out a way to pay 4k to get 10k off your back, it is not a bad trade. It looks like you're good with budgeting and managing the money that you'll be able to get your savings back up in August.

I would not file for BK because you are not bankrupt. If they decide to take this to court and get a judgment on you, and you don't have any money, what are they going to do? Based on your NetworthIQ you only have about 40k of debt that a BK could do something with, which is not worth the effort. Calling creditors and working out payment plans to get back on track is the best thing you can do. Once everything is current, snowball your debt payments and you'll be in the clear in a few years.