How to Settle CC's with perfect payment history

ficobuddy · ‎01-13-2017

Hello Everyone,

I'll try and keep this as simple as possible. If I'm in the wrong section of the forum, I do apologize, and please feel free to direct me to the right area!

My story is one heard many times over. I recently went through a divorce. Since I'm self employed and own my own business, my business was considered an asset. Even though I had no idea of the CC's of my wife and the balances that were running up, I had a choice: Keep my asset (my business) in exchange take on all the debt of those cards. I kept my business, and took on the debt.

Most of these cards don't even have my name on them. 2 of them are mine, which I used for legal fees (CapOne and Barclay). Scores dropped, and I understand why.

I don't want to take the next 10 years paying down $42,680 of CC debt, and lord knows how much interest. I'd like to try and settle these out and move on. As stated in court, all cards are on time and current.

I need a game plan, tips, resources, just some genuine help on how to get out of this debt load that was dropped on me.

Will credit card companies settle with accounts in perfect standing, and how would I go about even having access to these accounts since they are not under my name. I am legally responsible for the pay down. POA from the Ex? Would that put me on those accounts? I do NOT want to be tied to her accounts on my credit.

Discover $14,476.66

Chase $4,724.80

Capital One $4,114.82

US Bank $3,514.43

Bank of America (Alaska Air) $6,518.51

Barclay $9,986.76

My Scores are 718, 733, and 700. The score simulator tells me I could get to 820 if I paid down my debt on the two accounts that are mine. I'd like to be back up to 780 again. 820, would be amazing.

Thanks in advance for any help, direction or resources.

Anonymous · ‎01-13-2017

Sorry that you are in this situation. I'm no legal expert, and I've never been in the situation you describe, but do have a few thoughts just off the top of my head:

1) I don't think banks are going to be eager to 'settle" as you describe.The amount of debt you describe is substantive. From what I have seen happen on the board to members, they may most likely sue or attempt to obtain judgments.

2) If the credit card companies sue, they will sue your wife, not you. Credit card companies had a legal agreement with your wife and the divorce settlement is not part of that legal agreement. I have seen on the board where people confuse divorce settlements and original legal agreements with the credit card company, and those two are distinct and different.

3) If you're legally obligated in the divorce settlement to pay the accounts and you don't pay them, you are in violation of the divorce settlement and your wife could take you to court for not following through as you legally agreed to do.

4) If you do get any of the aforementioned financial institutions to settle, it will be a huge black mark against your wife's credit if she is the one listed on those accounts. It will ruin her credit extensively. That may well prompt her to take you back into court, since you promised to pay these accounts.

Again, this is not legal advice in any way, but merely my first thoughts based on observation and consideration.

I'd think carefully before pursuing the path you are considering as it is not as cut and dried as you may believe. There are many potentially negative ramifications to you. I'd seriously consider hiring legal counsel if I were you prior to proceeding. The last thing you should be concerned about is getting to 780 FICO scores at this time - you have a lot of other serious issues that need to be dealt with.

Anonymous · ‎01-13-2017

I don't know if you are allowed to settle. If you were given the responsibility of the debt, it would seem you have to pay it all. If you settle, it would cause your wife's credit to suffer due to not paying the entire amount. I don't know that the court would allow you to do that. Frankly, that would be unfair to her, especially since they are currently in good standing. I think you probably need to talk to a legal professional.

ficobuddy · ‎01-13-2017

I was thinking maybe the bump in the scores would allow me other avenues to consolidate the debts, avoiding settlement. If anyone knows how this might work, feel free to chime in.

I do have a mortgage that is paid on time and current, with a little wiggle room (about 20K).

Revelate · ‎01-13-2017

Hrm, courts can and will reassign debt: that makes you responsible humuhumu, I wouldn't bet on being able to flake legally, the creditors will sue everyone they can including you in this case.

OP: Two big questions:

1) How much is your income?

2) Is your business a LLC or other legal entity or SP?

In general you need to take a hard look at the debt vs. income on a realistic budget, but if it's really going to take you 10 years to have any possible hope of paying it, you may want to look into a CH 13 or some similar debt management plan as that's the way to settle it if you can't pay, or an outright CH 7 if your income is sufficiently low. 40K in CC debt isn't a death sentence necessarily if your income is reasonable anyway.

Be aware any settlment for less than what you owe may be a negative mark on your credit anyway.

DeeBee78 · ‎01-13-2017

I would obtain end of year statements from each company, since the date of account opening, so you know how much you've paid in interest vs the outstanding balances. Having that information tells you how much the company has made off of you, and might help you negotiate down your balances.

Maybe if they're not negative on their balance sheets, they might be willing to negotiate.

Anonymous · ‎01-13-2017

I would talk with your lawyer on the wording in the divorce settlement. Does it state to pay the debt and some verbiage about how? IE - pay per the card holder agreement, in full by X date, with no negative impact on your Ex's credit or any words that indicate HOW its to be paid? Reason I ask is settling the debt is one way to pay the debt. I also can not imagine any lawyer on either side of the settlement would not have specified how this would be accomplished. If I was your EX's lawyer, I would have added that the debt needed to be transferred in some fashion to your credit/possession. If I was your lawyer, I would have wanted how this was to be accomplished with as vague wording, direction as available. I get that in spirit of the agreement, you would pay 100%, but this is now a business matter and how it effects you is most important.

Anonymous · ‎01-13-2017

@Revelate wrote:
Hrm, courts can and will reassign debt: that makes you responsible

Perhaps; I have just seen too many situations where someone mistakenly thought that a divorce decree superceded the original legal agreement with the original credit card holder, and that is incorrect.

longtimelurker · ‎01-13-2017

@Anonymous wrote:
I don't know if you are allowed to settle. If you were given the responsibility of the debt, it would seem you have to pay it all. If you settle, it would cause your wife's credit to suffer due to not paying the entire amount. I don't know that the court would allow you to do that. Frankly, that would be unfair to her, especially since they are currently in good standing. I think you probably need to talk to a legal professional.

Yes, there are times when it's worth posting to an anonymous internet forum, and times it really isn't! You need proper legal advice from someone you know is a lawyer, who can see the wording of the divorce documents, see the creditors involved and give real legal advice.

ficobuddy · ‎01-13-2017

I have already had one company speak of this. They would negotiate down the back interest paid to help me in this situation avoiding settlement. It's probably the route I'm going to take (or attempt with each creditor). Hopefully that will take a chunk out of the debt, and I can go from there.

My apologies to all that feel uncomfortable about toeing the line of advice and legal advice. I was just seeing what, if any, other optiosn were out there. Thank you!