Join me in negotiating w/ a cc company to cut my balance in half! - Page 2

[frugalmama]

Originally Posted by Leta

Yes, you have to pay taxes on any "forgiven" loan, even if it's all interest and late fees, even if you take a credit hit. If memory serves, it's like a 20% tax bracket. So if you negotiate a 50% settlement on $25K, be prepared to pay $2500 in taxes (if it is, in fact 20%).

does that 20% bracket apply even if you are very low income {say $15k yearly?}

Or would being so low income off-set it?

[SleeplessMommy]

One unknown here - the credit card company has no interest in settling IF it thinks you are able to pay the full amount now or in the future. For example, if you use the $10,000 tax refund + "inheritance" to pay off half of CITI, your new monthly payments will be smaller. If you have been making your existing monthly payments, why would they settle for a 50% payoff?

Some possible consequences for *asking*:
* lowered credit limits
* raised interest rates
* damage to credit rating IF they do accept a pay-off.

Read this:
http://money.cnn.com/galleries/2009/...ngs/index.html

[p1gg1e]

Most often the only way to get your CC to settle is to not pay for a month or two. You don't have to cut your budget to do the Dave Ramsey plan though sounds like your already working something close to it. Its all about having a plan and paying off debt with what you do have.

Also you can use your Debit card online just fine and your protected the same way as long as you have a Visa or Mastercard logo. OR you can get a prepaid one...we haven't used a CC in over a year and have booked hotels , rented a car and bought online. Any issues were fine and we were refunded the money...actually our card number was used and stolen from a gas station of all places..

[UrbanSimplicity]

I have not called them yet because I need to wait until the new year when i file my tax refund. Also, i would not just randomly ask my dad for a loan so I dont really have that money unless they offer me a reduced amount, I feel more comfortable asking under those circumstances.

According to the article I linked to in my op, creditors seem to be cutting deals because of the crappy economy - without you having to default on your payments.