"Obama is gonna pay my gas and mortgage!"
Posted on 05/27/2011 8:24:12 AM PDT by kingu
I'm seeking advice from Freepers who have used a debt settlement service. I've just received a financial windfall, and want to settle out over $30,000 in credit card debt (mostly from a family business that failed that ended up on my credit, unfortunately.) I don't want to do it on my own, as I want to make sure that all debt is settled and I don't have anything hanging over me, and it appears part of it went to court without service.
Sorry for the vanity, but couldn't find another recent thread on the topic, and I'm sure that there's at least one other Freeper out there who wants to pay off their debts and can use the information.
There are several non profit organizations that will work with you for free. I read something a while back that the ones you see on TV are going to charge you quite a bit for a service you can probably do on your own.
Good luck and let me know how it goes.
call and make an offer and tell them you can pay them the amount in 30 days.
Use a lawyer. Debt settlement services are there to take your money, not act in your best interest.
Don’t hire a debt service. They charge you outrageous fees and most are not on the up and up.
Do it yourself. Call each creditor, get your exact balance, request all late fees, interest be removed, make agreements, and make sure they send you a written statement. You want to make sure that it recorded as ‘paid off’ on your credit report.
What happens if they take the money and then sell the rest of the debt to another collector in six months?
And then have a lawyer go over it.
You can try one of the credit counsing services. The government has the Hope Now hotline. You can get the number off the Treasury web site. There also others that you can find on the HUD site. They can help you settle debt and might be able to help with any judgements you may have.
If you think that you have no other visable option, sure go ahead. Typically, you’ll end up paying more because, though the payments are lower, it’s for a longer period of time.
The only piece of advice I can give is, for the sake of keeping your costs lower, is to try and handle as much as you can and turn the rest over to the agency.
You could also follow Dave Ramsey’s advice of making minimum payments on all your debt, but one debt. On that one debt, throw everything you can into it, until it is gone. Then pick another debt and do the same thing, until all your debts are gone.
I did use such a company years ago after college, which settled my 3 credit cards plus the insurance from a car accident that I contested but lost years ago. Worst damn years of my life. The plus side was that even though they were including the interest in MY payments, they knew what they were doing and I understood it. Their job was to keep the creditors on a leash, and they did. Plus, they wrote a letter to everyone of them and vouched on my behalf that I responsibly paid off my outstanding, which corrected my credit report.
That experience trained me to carry only 1 credit card and use it..not the other 2 credit cards, and those 2 credit card companies hate me because I almost never use them.
Don’t go there. If you must “settle” debt, bankruptcy is your best bet. If you deal with one of the debt settlement organizations, here’s what will happen (or at least, happened to me): Despite their “estimates” up front, the contract is open-ended. You may think you’ve “settled” your debt at, say, $400 a month for 48 months, saving you about $12,000 on your debt. However, the first 14-16 months of that goes into the pocket of the debt settlement company before you even touch the principle of your debt. And, despite thinking you’ve got 48 months of paying on this puppy, your account will go on until they’re settled that last bill, which could be another 6-12 months. Ah, but that’s not the end of the story! Here’s what happens: The companies with which you’ve settled may then (and likely will) report the bad debt to the IRS, which will deem that as “income” for you and you’ll pay about 30 percent of that $30,000 in taxes. The net result is that you wind up paying about the same as you would have anyway, plus you have to deal with the IRS. Oh, and did I mention that your credit will be wrecked far beyond what it would have been in a bankruptcy? In a bankruptcy, you begin to recover in about 2 years; with this, you don’t even start recovering for at least 4 years!
They are more likely to settle if you haven’t paid for over 90 days.
I second the Dave Ramsey advice. Listen on the radio, buy the books. Common sense money advice. Learn it, love it, do it yourself.
If you’re not concerned with your credit rating, stop paying immediately. They’ll only deal when you are delinquent. If you’re already behind, you can make the deals yourself.
What’s your shovel to hole ratio? If you have enough to pay everyone, then pay them what you owe and be done with it. If you owe more than you have, divide your war chest by the total debt. That’s the percent your going to offer. Keep offering until they accept. Get it in writing and send them a check. No electronic access to the checking account.
Again, do it yourself. Dave Ramsey’s advice is worth learning. Get out of debt and then never go into debt again.
The full intention here is to pay off everything within 30 days. It is either that, or get in a massive cat fight as all try to collect and seize at the same time. I really don't want bank accounts locked up as they all try to grab as big of a piece of the pie as they can.
The lawyer advice is sounding more and more sound as I go along, but finding a specialist who won't just say 'hey, file bankrupcy, then cash the check' is harder than I thought.
Buy something very destructive, then try to completely eliminate the failed Human Race from the galaxy.
“$30,000 in credit card debt”
The first thing a “debt settlement service” will ask you for is credit card info. so they can start billing you.
Find an lawyer who also has trained as an accountant.
I wouldn’t keep any money in the bank at this point, just in case your accounts get frozen.
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