i need to settle my credit card debt?
i have 60k in credit card debt. i am unemployed, and have to move back in with my parents. i have 9 different credit cards, all with significant balances. at this point in my life i realize i am screwed credit wise, filing bankruptcy was an option for me, but i would rather settle my debt and only have my credit screwed for a few years instead of 10 – 15 years as would be the case if i filed bankruptcy. i haven’t been paying on my credit cards for the past 4 months or so because i couldn’t afford paying them, and i knew that i was going to settle, so instead of signing up for a debt settlement company and letting them wait for my delinquencies, i’ve decided to let them fall behind on my own. i couldn’t afford the monthly payment for the settlement at the time because i’ve lived on my own, but now, i’m moving in with my parents and will not have to pay rent, and can focus all my unemployment funds to getting out of debt. i do not want to negotiate with 9 different credit card companies on settling. i’d rather pay the 15% or so for a debt settlement company to do all that type of work, where i then can have all 9 credit cards settled with the same company, and only have ONE monthly payment where it could be paid off in 3 or 4 years. can anyone tell me a good, reliable, cheap debt settlement company, in which i can consolidate all 9 of my credit cards into one monthly payment in which i can afford? i know i’ll have to pay a little more for using a settlement company, but to me it would be worth it instead of dealing with 9 different entities, making 9 seperate payments. i just want to use a settlement company that i can trust, which will be able to bring my total debt down from 60k to around 30k (most advertise can lower your debt to 50%), where i can make one monthly payment. i realize there are fee’s and i also would have to pay back some money on my income tax, i’m looking for a company that would be the least expensive, and also one that is reliable and will not screw me over. please, if anyone can lead me in the right direction with a decent settlement company it would be greatly appreciated, thank you so much in advance for your help, thanks again.
I know of a specific company which is good to use, but let me just warn you on a couple of things (from personal experience). If you use a debt settlement company, you will no longer have access to any credit cards. They will not tell you about this until its too late. Also, you must must must check out the company you will use, (if you go through with this). I have heard of too many horror stories about these debt settlement companies that take your money as agreed upon, but they don’t pay your credit card companies as they agreed to. This will put you in a bigger bind
October 13th, 2009 at 10:09 amWhy don’t you think about doing a bankruptcy. You can get a totally free consulatation from a local lawyer who specialize in bk. It will cost you about $1200, and you will be able to keep your own money. The government gave us this option for people like us who need help. If you have any further questions, feel free to send me an email at hansjill228@optonline.net.
Good luck with whatever you decide on.
Before you do anything, read this page from the Federal Trade Commission very carefully.
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm
Note that both state’s Attorney General offices and the FTC have debt negotiation companies under scrutiny for the promises they make and their business practices. Also note that debt negotiation can screw up your credit report and score just as bad as bankruptcy.
October 13th, 2009 at 10:09 amIf you’ve already defaulted on your cards you don’t need to hire a debt settlement firm. You can negotiate directly with your creditors for settlements yourself….like 25-50%. Debt settlement firms take people who have not yet defaulted and have them stop paying on their cards so they default. This has already happened in your case and you’d just be wasting your money hiring such a company. No debt settlement firm can force your creditors to accept settlements. People get sued all the time from failed attempts with debt settlement companies.
- Bankruptcy stays on your credit report for 10 years….not 15 years
- Defaulted/charged-off credit card debt stays on your credit report more than just a few years…it stays for 7 years and your credit will be greatly damaged, almost as if you had filed bankruptcy
- Even if you get all this debt settled at 50%, settled/Forgiven debt is treated like earned income with the IRS…any debt that is forgiven must be added to your next year’s income and you’ll have to pay whatever additional taxes…so that’s like $30,000 in income that you’ll have to report next year….This in of itself could create a tax bill of $ 7,000 for you.
Don’t rule out Chapter 7…it may be the best thing for you. Strangely enough, your credit rating can bounce back faster if you file for Chapter 7 rather than having multiple charge-off/settlements. Don’t let anyone smear you for making this decision if you have to….The US financial and banking sector is amoral and predatory….Do what’s best for you. FYI: You can only file for Chapter 7 once every eight years…
Lastly, with nine different creditors, I can almost guarantee you that at least one is going to serve you a summons and take you to court over this debt. From what you’ve written, Chapter 7 might be the way to go.
October 13th, 2009 at 10:09 amThere is no rule of thumb that the 9 credit card companies you owe money to have to settle or accept any terms a credit repair company puts out there. You could end up worse off!
If I were you, I wouldn’t bother with a company that is going to promise you the moon, take your money and then leave you on the side of the highway while you get sued.
60k? Unemployed? You are the prime candidate for bankruptcy.
You will not be stigmatized for 10 or 15 years. You can start building your credit again in as soon as 5 years after your bankruptcy is discharged.
If you want to pay it off, use the services of a non profit credit counseling service. They will talk to your creditors, set up a payment plan and budget for you to get this debt paid off in a decent amount of time.
Please don’t use a credit repair/consolidation company. They will leave you in a bigger mess than you are now.
October 13th, 2009 at 10:09 amhttp://www.consolidatedcredit.org/contact_us.aspx
http://www.consumercredit.com/
http://www.nodebttoday.com/
http://www.creditinfocenter.com/debt/DebtConsolCompanies.shtml
These are some organizations that may be able to help you out with your problem.
October 13th, 2009 at 10:09 amForget about debt settlement companies, debt elimination companies, debt consolidation companies, and bankruptcy. They’re not the answer for getting out of debt and they’re a waste of time and money. I would rather you read Debt Cures "They" Don’t Want You to Know About by Kevin Trudeau before you think about using any of those methods that I just mentioned. I don’t know where you’re from, but your local library should have this book.
You stated that you don’t want to settle the debts by yourself, but guess how much money you would save up by not using a debt settlement company if only you did settle the debts by yourself. You would save a lot of money, including monthly payments. I understand that you’re probably afraid to negotiate the debts by yourself, but remember that the people who work for the credit card companies and debt collection agencies are all salespeople. It’s just like buying a car. You don’t take the first offer that the salesman gives you. You always negotiate.
In order to settle the debts by yourself, all you have to do is call up your credit card companies and debt collectors (if your debt has been sold to a debt collection agency) and have them negotiate your debt down with them. It may not work on the first try, but it takes a few more phone calls in order to negotiate your debt down. You can also negotiate your interest rate as well as your debts.
Another alternative to settle your debts by yourself is to write your financial statements, type up a letter stating that you can’t pay any of your debts since you’re insolvent (Google search "debt negotiation letter samples"), and mail them to your credit card companies and debt collectors. Just state that according to your financial statements, your expenses exceed your income and that your liabilities exceed your assets. You can also have a CPA who does your tax returns help do it for you. Credit card companies and debt collectors don’t care about your stories. They only care about getting their money and the numbers in your financial statements.
Also, if your credit cards have been in collections, there’s a way to eliminate the debt immediately without paying it. Check with your state’s statute of limitations on debt. Just Google search "statute of limitations on credit card debt" and you will find many sites that will state the statute of limitations on credit card debt. You should look under "Open Accounts". For example, if you live in Alabama, the statute of limitations is 3 years. That means if you haven’t made a payment on a credit card account for at least 3 years, the debt collector cannot sue you or take anything from you. But if you made a payment recently on that account, you’re screwed because the statute of limitations has already been reset and you would have to wait another 3 more years to try to eliminate that debt. Plus, your credit score would be ruined if you made a recent payment on that account. The debt that you didn’t pay for 3 years (if you’re from Alabama, for example) will remain on your credit report for 7 years from the last time you made a payment on that account. After the 7 years, the negative credit report of the debt that you didn’t pay will be removed from your credit report.
As I said, I would recommend that you read Debt Cures "They" Don’t Want You to Know About by Kevin Trudeau. His book is much more informative than any other debt book out there. The first 2 methods that I mentioned above should help you settle your debts way more than just having a company do it for you. There’s a reason why companies charge you to settle your debts, but you can do it for free by using any of the first 2 methods above. All it takes is patience and overcoming shyness. That’s how you become a good negotiator.
October 13th, 2009 at 10:09 amThe debt settlement companies are licking their chops right now. If anyone suggests one here it’s probably because they work for that company. This is way too time consuming and too important to delegate! Settle and/or make payment arrangements on your own… just talk to them when they call and figure out how much you have to work with and divide it up. If you don’t get the results you want save $1500 to $3000 and visit your local bankruptcy attorney. Remember you can wait till the first card company sues you before filing for bankruptcy… meaning you have plenty of time to work out deals. It sucks I know, but some day this will just be a bad memory! Good luck!
October 13th, 2009 at 10:09 am