Has anyone negotiated with credit card companies?

Has anyone negotiated with credit card companies on their own for a debt settlement? I have an option coming up at the end of March to withdraw money I had put aside for my kids’ college. I hate to do this, but hate even more to be so much in debt that I can no longer make the minimum payments, and if I get out of debt, then I will be in a position to restart college savings. That means that hopefully sometime in April, I will have between $10,000 – $12,000 in cash to try to settle over $20,000 in credit card debt, between three separate companies.

Does this sound doable? Would they settle for perhaps 40% of the balance? I’ve been unable to make minimum payments for the last 3 months or so, so I’ve been paying a smaller amount, to at least show I’m trying to pay something.

Thanks for any advice.

If you look through the archives you’ll find a lot of messages from people settling with creditors. My other half and I are in the process of doing that now and many are willing to take 30% just to get it off the books.

You can really get CC companies to take as little as 30%. Try to start around 25% and then negotiate from there. Give them a story, tell them how your dear old aunt left you just _____ amount of money and you want to send it to them to settle. :-) Either way, once they do agree to a settlement in full here are a few major things to remember.

  1. Don’t ever give them electronic access to your accounts, ever ever!!
  2. Don’t send any money until you get the agreement in writing!!
  3. Once you get the agreement, make a copy, sign and return to them with a check.
  4. Remember that forgiven debt is consider income and the CC company may send you a tax form at the end of the year and you will have to file it with your taxes. But I guess paying taxes on $15,000 is better then paying the $15,000.

One more thing I would add regarding taxability of any debt settlement. Any debt that you are relieved of that you are “insolvent” for is not taxable. See IRS Form 982 and Internal Revenue Code 108. When considering the amount of “insolvency” you can subtract from your assets your state’s exemptions. For example here in New York there is a $50,000 per person homestead exemption. Get some of Nolo’s books at the library on bankruptcy after exploring www.nolo.com and www.legalconsumer.com.

Also watch this video to find out more:

Read More

Debt Settlement

Yes I am behind about 5 or 6 months or more

That is good, (well for you to begin a program). I wasn’t but maybe 1 or 2 months behind. So I had to wait awhile before they would start paying on my bills. IF I had of known that, I would of been saving that money, so I would of had a nest egg for emergencies. As it is now, We have NO savings…. so if my washer were to go out tomorrow, I’d be in trouble. I would recommend this to anyone, and then DO NOT create any more debt. I will pay cash from now on. Putting items on credit cards only adds to the cost of the item.

So far, I have suffered no ill effects of doing this, other than crappy credit, which my company will repair for me at the end of the program, at no cost to me. Having to pay 25% of the savings after it has doubled, in most cases, it just the price I have to pay of having had to live off my cards from having such crappy luck all these years.

Can you explain the myths?/facts? that working with such companies can damage your credt score instead of being a +effort to get out of debt.

ANY time you do not pay a bill or make a LATE payment it is reported to a credit reporting bureaus. Some places report to the THREE major ones (Equifax, Experian, and Trans Union). Some only report to one or two. I heard that there is a FOURTH one, but I do not know the name. YES, at first it has a NEGATIVE effect on your credit. The one I am with enrolls you in a credit repair clinic immediately upon completion of paying off the debts.

I used to worry about that…. but I no longer do, because CREDIT is what got me in this mess in the first place. Once I am out of the hole that I dug for myself, I will use a debit card, and use it sparingly. Anyone that has ever had a credit report pulled on them will notice that everytime you pay for something that was bought where you had to make monthly payments will be on there, even small ones that you may have forgotten about. My neighbor even had some magazine subscriptions on hers that she had forgotten about. If you are not too terribly far behind, and have made timely payments in the past, the creditor will work with you and won’t report the payment as being late, but only IF you call.

I have don’t want to discourage you, but each program has its pros and cons. But eventually the debts come off your credit, after so many years. I can’t say the same about student loans, and debts along that nature…. from what I have heard, you have to pay those back. I found mine by typing in debt negotation companies and debt settlement companies. I knew I didn’t need debt counseling, cause I was way beyond the counseling stage… much like someone who has been a severe abuser of alcohol for years is beyond AA meetings, and needs to be in a treatment center. All I can advise you to do is RESEARCH! Once you find a program you feel comfortable with, keep your nose to the grindstone, and do not take on any more unsecure debt!

Read More