What is a Credit Card Debt Settlement/Bailout?
I must listen to at least 20 to 30 ads everyday on the radio about "secrets that the credit card companies don’t want you to know". I don’t have any debt, but can someone please fill me in?
I must listen to at least 20 to 30 ads everyday on the radio about "secrets that the credit card companies don’t want you to know". I don’t have any debt, but can someone please fill me in?
Technorati Tags: credit card companies, radio
How to go bankrupt: no bull advice on when and how to file, online bankruptcies, alternatives, tips, do-it-yourself with a low-cost attorney review.
Yeah, debt settlement company ads are everywhere. Problem is, most debt settlement companies are pure scam. They take your money and let your debts go 90+ days past due. Not only does this trash your credit, but most credit card companies will immediately sue you when the debt settlement company contacts them.
Despite all the ads and promises of some secret, credit card companies are not likely to settle for less than the full balance. If you do manage to get a settlement, the account would be reported to the credit bureau as charged off/settled — a large negative. You would also get a 1099 and have to include the forgiven portion in your income tax return.
August 7th, 2010 at 2:16 pmSimply put, it’s just as bad as filing for bankruptcy, except you agree to pay back some of what you owe. coming from someone who works in the financial industry, I can tell you some key things.
August 7th, 2010 at 2:16 pm1) It’s viewed just as bad as a bankruptcy. What you are telling the credit card company(s) is: you charged way too much and can never pay them back the full amount.
2)These "debt settlement agencies" receive HUGE commissions for this, and charge you fee’s for doing it.
3)Settling your debt can drop your credit score by as much as 200 points.
4) This will stay on your record for 7 to 10 years, and you would need a co-signer for just about anything.
5)This is in no way a "bailout" This will be on your record for a very long time, and should be your VERY LAST RESORT.
6) Agencies often tell people that they settle a lot of debt at once with carriers, so it may not be on your credit. UNTRUE. This WILL BE ON YOUR CREDIT REPORT.
I went through a company who promised to wipe off debts legally….it’s all to do with whether the credit card or loan company can provide an original copy of your credit agreement and whether there are any loopholes that can be taken advantage of (some have spelling mistakes etc).
August 7th, 2010 at 2:16 pmHOWEVER….this does not mean that you will have the debts cleared completely. I was told by the company processing my claim that the best they could hope for, even if the courts ruled the CCA was invalid, was that I would not have to make repayments….the balance would remain and if I chose not to make repayments, I could still have a default registered against me indefinitely which would effect my credit rating.
Needless to say, I have cancelled the action as I have chosen to do an Individual Voluntary Agreement (IVA) which will reduce my monthly outgoings and mean any remaining debt will be wiped off in 5 years. This still wrecks my rating, but will be over with a lot sooner.
If you are in debt, contact the Consumer Credit Counselling Service http://www.cccs.co.uk to see which is the best solution for you. They are a free service.