Credit card debt settlement questions

[shelleyd]

Anyone have experience with credit card settlements? I'm wondering how low the company will go to settle. The credit card company offered 65% after I offered 40%. I knew they wouldn't take 40% but I'm wondering how low they will go. 65% was their first offer. I don't want to jump at the first offer because if we're going to do this, I want the best deal possible. I know that it's going to hit our credit pretty hard so I want to come out as best I can out of the deal.

Oh and we're not going through any debt settlement scam or anything. We're negotiating with them on our own. This is on the advice of a non-profit debt management company. We know it's not good for our credit but for us in this situation, it's the best we can do.

Thanks for any advice,
Shelley

[1growingsprout]

I dont have alot of time to answer but 2 things spring to mind. If you settle are they going to sell the remaining balance? and the unpaid amount *may* be taxable as income. Oh were is Velochic?

[jackaroosmom]

I am very interested in this as well. I hope someone has experience with this and can chime in.

[shelleyd]

Originally Posted by 1growingsprout

I dont have alot of time to answer but 2 things spring to mind. If you settle are they going to sell the remaining balance? and the unpaid amount *may* be taxable as income. Oh were is Velochic?

We won't settle unless we get it in writing that they are not going to sell the remaining balance and that it will be considered paid in full. The unpaid amount will be taxable as income but we will still come out ahead. Even with taxes the amount we pay will be less than we owe and we won't be paying 30% interest anymore and incurring fees, et cetera.

[KatWrangler]

Will this reflect negatively on your credit score/file? Your credit score might take a hit on this. Double check with someone other than the cc company.

[shelleyd]

Originally Posted by KatWrangler

Will this reflect negatively on your credit score/file? Your credit score might take a hit on this. Double check with someone other than the cc company.

This will definitely affect our credit score. We met with a credit counselor from a reputable nonprofit credit counseling agency and he suggested that although they rarely recommend it because of the effects on your credit, we should explore this option in our situation. Our credit score is rapidly going down the tubes right now since my dh lost his job and we can't even pay our minimums anymore. We're almost certainly going to foreclose on our house and that will destroy our credit. So since we have the opportunity to settle for a lump sum (with an interest free loan from MIL that we can take our time repaying) now is the time to do it. Our credit is going to be destroyed anyway so we're not real concerned about that at this point. But it is something people should be aware of.

[maciascl]

Originally Posted by shelleyd

Our credit score is rapidly going down the tubes right now since my dh lost his job and we can't even pay our minimums anymore. We're almost certainly going to foreclose on our house and that will destroy our credit. So since we have the opportunity to settle for a lump sum (with an interest free loan from MIL that we can take our time repaying) now is the time to do it.

If this is too personal just ignore me, but I am curious as to why you want to settle versus file bankruptcy. I am going to have to make some decisions of this type soon, that is why I ask.

[Hey Mama!]

We have started paying settlement offers on our credit cards. Most are at about 50% of the original debt. Our credit is in the toilet as it is. My husband cannot file for bankruptcy because of the career field he is in. It would make it impossible for him to get a job if he had a bankruptcy, or so he says.

[shelleyd]

Originally Posted by maciascl

If this is too personal just ignore me, but I am curious as to why you want to settle versus file bankruptcy. I am going to have to make some decisions of this type soon, that is why I ask.

It's not too personal. I've put our financial situation out there so it's okay to ask. A settlement will not be as bad on our credit report as bankruptcy and when my dh gets back to work, we should be able to repay MIL the loan for the settlement pretty quickly when we're not facing 30% interest and fees like crazy.

Our cc debt is about $11k and so if we settle for $6k we can pay that off. If our debt was a lot more, we'd probably do bankruptcy. But if we have to pay a lawyer and everything for bankruptcy, I don't imagine we'd come out that much more ahead and it would be worse on our credit. Although like I said, our credit sucks right now anyway. I do feel like we should pay something though. We incured the debt and I just feel like we should pay something. I don't fault anyone for choosing bankruptcy and I don't mean to sound like I'm judging anyone who does file.

I don't know. I honestly feel pretty lost right now with the whole thing. I never thought I'd be in this position.

Good luck to you.

[1growingsprout]

Originally Posted by Hey Mama!

We have started paying settlement offers on our credit cards. Most are at about 50% of the original debt. Our credit is in the toilet as it is. My husband cannot file for bankruptcy because of the career field he is in. It would make it impossible for him to get a job if he had a bankruptcy, or so he says.

If he is a stock broker licensed rep this is very true

[gonefishin]

we settled a 2800 card for 1200, we also turned down the first settlement offer,
good luck

[maciascl]

Originally Posted by shelleyd

It's not too personal. I've put our financial situation out there so it's okay to ask. A settlement will not be as bad on our credit report as bankruptcy and when my dh gets back to work, we should be able to repay MIL the loan for the settlement pretty quickly when we're not facing 30% interest and fees like crazy.

Our cc debt is about $11k and so if we settle for $6k we can pay that off. If our debt was a lot more, we'd probably do bankruptcy. But if we have to pay a lawyer and everything for bankruptcy, I don't imagine we'd come out that much more ahead and it would be worse on our credit. Although like I said, our credit sucks right now anyway. I do feel like we should pay something though. We incured the debt and I just feel like we should pay something. I don't fault anyone for choosing bankruptcy and I don't mean to sound like I'm judging anyone who does file.

I don't know. I honestly feel pretty lost right now with the whole thing. I never thought I'd be in this position.

Good luck to you.

Oh, that does make sense. We have way more debt than that. This last 1 1/2 years have really been horrible!!! : I feel really lost too. Never thought we'd be here either. Life just seems to have other plans for us than I did. Can't change it now I guess. Good luck!

Oh yeah, as far as the not finding a job after a bankruptcy. That is very true in many fields, but especially anything in finance. You won't even be concidered for a job regardless of your education or experience if you have a bankruptcy.

[Hey Mama!]

Originally Posted by maciascl

Oh, that does make sense. We have way more debt than that. This last 1 1/2 years have really been horrible!!! : I feel really lost too. Never thought we'd be here either. Life just seems to have other plans for us than I did. Can't change it now I guess. Good luck!

Oh yeah, as far as the not finding a job after a bankruptcy. That is very true in many fields, but especially anything in finance. You won't even be concidered for a job regardless of your education or experience if you have a bankruptcy.

His job field is in finance/accounting. It would be best for us to settle so dh could still do the job he loves.