For the most part, the answer is yes, creditors’ actions seem very illogical. It has been my experience that the larger the bank, the less honest and less intelligent the bank’s actions are. I recently had a case where my client owed about $15,000 to one creditor – a bank. This was my client’s largest debt. My client approached me to see if bankruptcy was an option. In this case I figured we could avoid bankruptcy by settling this one, large debt that represented about one year’s income for this particular client.
I call the large creditor and explain the situation. My client has $2,000 to settle this debt. If the creditor will not settle, my client will file Chapter 7 bankruptcy. I was really surprised at the outcome of my call. In no uncertain terms, the company would only settle for 1/2 of the amount due, all payable in one lump sum. I again let the creditor know that my client had $2,000 to settle her account in full, or the money would be spent on a bankruptcy. If my client were to file bankruptcy, the creditor would receive $0 and the entire debt would be discharged. I asked the representative if $2,000 was better than $0; she agreed that it would be, but that they could not accept that amount to settle the debt.
I now have a bankruptcy client, and the big, stupid bank will get nothing. I wanted them to have $2,000. My client wanted them to have $2,000. They agreed that $2,000 was better than nothing, but their policy prohibited them from accepting our offer. No wonder this institution needed to be bailed out with our taxpayer money.