Can you settle debt with a credit card company even in good standing?
I am making minimum payments with a few credit card companies but could have trouble paying these in the future. I don’t want to go through a debt consolidation company or a debt settlement company. Is it possible to call on my own and warn them I will file for bankruptcy and ask to settle before I stop paying for 30-90 days like most experts say? Can someone give me their advice or opinion on this? Thanks
Posted August 11th, 2010 in Debt Settlement. Tagged: bankruptcy, credit card companies, debt consolidation company, Debt Settlement, minimum payments, settlement company.
Have you called and asked them to lower the interest rate? This has worked in the past. You will be asking a favor. If you are a good customer then the odds of getting this go up. maybe you can get a consolidation loan from your bank with a lower rate.
Debt settlement companies are usually a scam. They don’t do anything that you can’t do yourself. They pressure your creditors to settle by not paying the debt. This will rack up a lot of penalties and fees and could possibly land you in court. I have seen many questions on this board from people who used a consolidation/settlement company and ended up being sued. Several take their payment up front so you will pay for 6 months and not a dime will go to your creditors. The money you end up saving (if you don’t get sued) is the fees and interest that THEY ran up.
First call your credit card companies and try to work something out. If that doesn’t work, try a local bank or credit union.
Never threaten bankrupcy unless you are prepared to follow through. This may rush them to take action before you do.
August 11th, 2010 at 7:00 amHi, I work for a collection agency. As far as I’ve noticed, with credit cards there isn’t much you can do until they write off the debt and send the account to a collection agency. Then you can negotiate, just do it within the first 30 days so that it doesn’t go on your credit report as a collection account, though the credit card company will put in your credit as a write off, which is not good.
August 11th, 2010 at 7:00 amIf you are current with payments, it is highly unlikely that they will settle.
Be aware that settlement also hurts your credit – any time you do not pay according to the original contractual terms it hurts your credit. You will also get a 1099 for the "forgiven" debt, which the IRS will treat as taxable income.
August 11th, 2010 at 7:00 amWhy do you need to warn them that you will file for bankruptcy? Is it to convince them to settle or are you seriously considering it?
Bankruptcy should be your very last option and there is one that may work for you. It is called debt management, which is different from debt settlement and debt consolidation.
With debt management, you pay 100% of your debt, but if your creditors agree to be involved with the plan, they will reduce the interest rate and eliminate fees. This all helps to reduce the minimum payment you make so that you can get back on track with a budget. With debt management, you continue making payments while the company convinces your card issuer to be a part of the plan. You’ll have to pay a fee with the payment. Your credit report will not be noted that you’re a part of this plan like with debt settlement. For consideration In this plan, you can be in good standing or not.
I actually had to use a debt management plan when I had over $10,000 in credit card debt several years ago. Within two years of enrolling in the plan, I paid off half of that.
I stopped there because I didn’t include every card I had in the plan. The reason is because when your accounts are in this plan, they are closed, permanently, and I wanted some to stay open. So this is one warning I will give you before you consider debt management. Besides this and the fee, you’ll have to be mindful of the terms of the plan and the monthly payment.
A reputable debt management company will not promise anything but to help you make your payments easier. The company I went with was CareOne Credit.
Good luck.
August 11th, 2010 at 7:00 amMy advice is to quit messing around and stop thinking negative and PAY THEM OFF.
Cut your expenses. Do you have cable television? A cell phone? Internet? None of those are nesesities. Do you have more than one job? Mow lawns on the weekends, deliver pizza at night. Throw newspapers in the mornings. Etc.
In teh future, don’t charge more than you can pay IN FULL when the bill arrives.
August 11th, 2010 at 7:00 amIf you know that far in advance, take action so you don’t have to. Get a second job for a while and knock out the debts.
August 11th, 2010 at 7:00 amhttp://debtreliefreviews.net/top-debt-consolidation-companies/ has several ways to get rid of credit card debt.
August 11th, 2010 at 7:00 am