Does anyone know how much my credit score will drop if I settle my debt?
I I have three cards which I owe a total of 50K on, I cannot pay them anymore, I wanna see if my aunt will give me 20K to settle. I do not want to go on a payment plan, I just wanna get this shit outta of my life. Can anyone please help me and let me know what the repercussions are as detailed as possible if I do this, I greatly appreciate it.
Nick,
I can absolutely help you with the best resource available for getting out from under a mountain of unsecured debt without bankruptcy… it’s called Debt Resolution.
But bdancer2 is correct that it is going to take more than $20K to settle $50K of debt… As a matter of fact, if you go the best route available (Debt Resolution), it will take $23,000. You see, Debt Resolution isn’t just another name for debt settlement or debt negotiation. It is a completely different approach to resolving debt – a different technology, if you will. Debt Resolution is a unique, proprietary legal process developed and perfected over many years by a former Deputy Attorney General of California with over 40 years of legal experience, including more than 15 years specializing in resolving debt.
Instead of depending on the delinquency of a borrower’s account (as debt settlement companies do) in order to negotiate a settlement, Debt Resolution leverages good faith debt laws to both challenge the amount of debt owed and, at the same time, provide legal protections to the borrower that a debt settlement program simply cannot offer.
As a result, there are many benefits to Debt Resolution, including:
- Eliminate 55% of your unsecured debt… GUARANTEED IN THE AGREEMENT with the attorney’s office (try asking a debt settlement company for a guarantee)
- No Negative Tax Consequences (as bdancer2 also pointed out, in debt settlement your creditors will send you a 1099 for the amount of debt that they write off. So if you "settle" $50K in debt for $25K, you’ll have to pay taxes on the $25K written off. This is not the case with Debt Resolution. The reduction is considered a "correction" of the amount owed, rather than forgiveness of the debt. Consequently, it is not taxable).
- Protect your credit. The debt settlement process relies entirely on your level of delinquency to persuade your creditors to negotiate. This requires that you be at least several months behind in your payments, trashing your credit. And when they do settle, your credit report will show a charge off/settled status, which is a negative. Beacuse Debt Resolution does not use delinquency as leverage, but rather uses good faith debt laws, it does not require that you are behind in your payments to begin the process.
The program is very simple and the fee structure is completely transparent. The only costs are a one-time enrollment fee of $500, plus 45% of the current balance (and you can pay the 45% all up front, or stretch the payments over any period you like up to 45 months with no additional cost).
So if you owe $50,000 in credit card debt, your cost to be debt free using Debt Resolution would be $23,000 – a $500 one-time enrollment fee, plus $22,500 (45% of $50,000). That’s it. No monthly program fees, no trust account fees, no other junk fees or costs. And NO TAXES !! Figure out the value of that benefit. And all of this is guaranteed in writing in the contract with the attorney’s office.
These are just a few of the many benefits of the unique Debt Resolution process. For more information on this superior alternative to debt settlement, you can visit:
http://www.BetterThanDebtSettlement.com
Visit the site and download a Free Special Report titled "Why Debt Settlement Is NEVER Your Best Option For Eliminating Credit Card & Other Unsecured Debt." This report sheds a bright light on the problems with debt settlement, and explains how the Debt Resolution process eliminates or significantly reduces the drawbacks associated with traditioinal debt settlement.
July 20th, 2010 at 7:02 pmWill not drop any lower then it is. Not paying or defaulting are worse then settling
July 20th, 2010 at 7:02 pmI would settle. Who cares about your credit score right at this moment? I imagine you are telling yourself you never ever want to get into another mess like the one you are in.
It will be on your credit report for at least 7 years. Settle, then pay your aunt back as quickly as possible. The grow up and start acting like a mature adult and save your money. You can do this and it is not shameful for you to be in this situation. However if you do it again you need your head examined.
July 20th, 2010 at 7:02 pmFor starters, credit card companies are not likely to accept less than the full balance unless you have some permanent change of finances like medical disability. IF you do get a credit card company to accept a settlement, it’s going to take more than $20K to settle $50K of debt.
If you do get the credit card company to accept settlement, it will be reported to the credit bureau as charge off/settled — a negative. You will also receive a 1099 for the forgiven portion which will have to be included in your income tax return.
Instead consider a NFCC credit counseling service: http://www.nfcc.org/. These are legit, non-profit companies that offer debt management programs at a nominal fee. They negotiate lower interest and payments so you can pay off your debt. When you complete the program,you will have decent credit.
July 20th, 2010 at 7:02 pmAsk lenders for agreement to delete this items from your credit report when paying them. I recommend to get such agreement thru credit repair agency, for example this one – buildcredit.ifastnet.com
July 20th, 2010 at 7:02 pm