need advice

[Anonymous]

My husband and I are in approx $67000.00 of credit card debt.  We have 2 car loans and a lease which is up in June and a student loan and a mortgage.

Several concerns and questions:

We have about 17 creditors that make up the 67000. (husband lost his business, no income from him for 8 months, made up difference on credit cards...)  We are both now gainfully employed and want to pay back our debt.  Many are with collection agencies and a few are not.  I am in the middle of calling each to make payment arrangements.  At the rate we are going now it will probably take about 7-8 yrs to pay off the debt.  We are barely making it as it is trying to catch up.

Several collection agencies and credit card companies are talking to us about settling the debt for about a 60% reduction and we could pay it off in chunks.  I am not sure what the best thing to do it, our credit score is already horrible, (called consumer credit also and they told me it was 432!) 

I am looking for advise on the pros and cons of settling the debt and being debt free sooner than later vs. paying it in full and being debt free later.  It sure would be a relief to settle and be rid of some of the cards by the end of the year and do some more as time goes on.  I am not sure of the consequences of settling and would it even matter since my credit is so horrible already.

I don't know if I provided enough info, if not please let me know and I will respond, I thank you all in advance for your objective opinion and helping me with my my situation!

Jeannie

[Anonymous]

Let me just tell you that if you decide to settle be sure you get it in writing in advance of sending any money.  Do not use your checking account (don't give account numbers out or write a check). Send either bank drafts or Money Orders. And be sure that you keep all documents in a VERY safe place.  And keep them forever. 

Some will probably want you to list each CC , owed, limit, interest rate.  List your income (take home, mthly) list your car payments  and student loan payment and mortgage.  Plus list all other things you pay each month, such as fuel, food, electric ect.  

Do you have cell phones, car insurance, cable, internet.  List all of those.   Best of Luck to you.  Vicki

[Anonymous]

Thanks for the advice Vicki!  I guess I am trying to decide what to do, I figure my credit is already shot, so does it make a difference if I settle?  I don't know the answer to that, that is what I am trying to figure out from people on the boards.

Have a wonderful night!

[Anonymous]

Well Jeannie I was only throwing that out there so if you decided to do something rash (say one of them offered to settle really cheap) then at least you would have that info.  I'm sorry that I'm not able to give you advise on your direct question, as I've never settled so I'm not real sure how that works.

But, there will be people come on (may be tomorrow) and they are going to give you the advice you need.  They will be able to tell you the pros and cons.  Giving you enough info so you can make a decision that is right for you.

I will tell you they will probably want that info that I listed on my other post.  So that might be something to work on, it may seem like a lot of info to give out, but believe me it will help alot.  Plus folks on here will not judge you but they will need the info to make sure they give you the best possible advise. 

Whatever you decide to do just keep all letters, drafts ect like i said earlier , keep them forever.  Never know when some bottom feeding CA will buy a chunk of debt and yours might be in it.  And you will need proof of your settlement. Vicki

[Anonymous]

Thanks again Vicki

I will see what the posters ask and will be more than happy to supply more info if needed.  I want to make the right decision by weighing all the pros and cons etc...have a wonderful night.

Jeannie

[kittygal]

First, I want to commend you for wanting to pay your debts. It is unfortunate that your husband's unemployment led to this situation and congratulations on now being gainfully employed. 

Having $67,000 in CC debt in addition to a student loan and a mortgage is a scary situation and the idea of settling may be very appealing.  Before you make any decisions regarding settlement see if other options are available.  Your credit can recover from this as many other forum members can attest.  It will take hard work and some time, but there is a light at the end of the tunnel (and not necessarily the light of an approaching train!)

Read through the forums and gain some knowledge regarding how to deal with overwhelming debt.  Start with the "Knee deep in debt" topic at the top of this forum.

It will give you some ideas that may assist you in making any decisions of how to proceed.

Have you discussed the possibility of any "hardship" programs with any of your creditors?

There may be a way for you to have interest rates decreased or payments extended over a longer period of time so that you do not find yourselves in another crisis situation should your employment status be threatened again.

Settlement will be indicated on your credit report as "settled for less than owed" and the creditor can send you a 1099 at the end of the year for the remaining amount which is considered income to you and will require taxes to be paid.

Are you dealing with the credit card companies directly or has any of this debt been sent to collections?  If you are dealing with any collection agencies, make sure all of your contacts are written and maintain copies of all documentation sent and/or received.

It is recommended that you do not have any telephone contact with any CA to be certain that any promises made to "settle" are actually adhered to and to preserve your sanity.

If you are certain that all of your basic needs will be covered (shelter, food etc) and are willing to make concessions to handle this debt, you might start by providing a list of each debt with amount owed, interest rate and any additional information such as charge-offs or collection accounts.  Once more information is known regarding these debts, more specific suggestions can be provided.

Good luck!

[Anonymous]

thank you kittygal!

 I will list a breakdown of everything and where I stand with credit card companies and collection agencies etc. 

I have contacted just about everyone, (some are with the credit card Co and some are with collection agencies), to make arrangements to pay back the debt.

I will post the information within the next day or so......look forward to more specific advice!

Have a great night

Jeannie

[AndySoCal]

The credit debit that is already in collection settling those accounts would not hurt score very much if any all. Those that are not in collection or late you might try to pay off without settling.  I agree with the previous posts you need to make good economic/financial sense for you. Good luck !!!

[Anonymous]

I am going to write my credit cards first because they are the ones I have the issue with in deciding whether or not to settle etc.  (not that I even have the money to settle, but I understand they work with you too)  It is very inticing to settle because I will be out of debt sooner, but like I said I am not sure of the consequences. I went to creditkarma.com to get my fico score and it is 534, I don't know it settling will make it worse or not.  Anyway here goes:

Macy's            65.56               made arrangements with macy's and it will be paid mid september  Yeah!  my first pay off!

Macy's            398.00             with a collection agency, made arrangements $10.00 per week

Target             403.                  with a collection agency paying $50.00 every other week s/b paid in November  yeah!

Pay Pay          511     collection agency can only contact during work hrs so haven't spoken to yet thinking of just mailing payment directly to collect ag.

Musician's Friend 1215.        collection agency have not contacted yet

home depot    1213             on a hardship program paying 33 per month for 3 yrs 9.9% interest

ge money       1517            collection agency  have not contacted yet

wells fargo      2777             collection agency just set up payments of 25 per week

chase             3194            set up a plan with chase paying 121 per month no interest

wachovia        3324            set up a plan with wachovia payint 80 a month no interest

home depot    3584            collection agency paying 36 per month no interest

chase             6561           set up a plan with chase paying 139 per month 6% interest

juniper            9406           set up with juniper paying 104 month 6% interest

bank of america  10487      set up plan 220 per month paying 6% interest

amex       16427.             was with coll agency never contacted just received a letter from amex to settle for 60%

chase       4630             this is the only card we are have all the above are closed, we are current with this card but 22% and they won't lower

other loans we have are:

Student loan       8000    pay 105 per month  6% interest    current with payments

ford credit          10000   pay 365 per month  2.9%              current with payments

ford credit        lease      this is up in June, pay 465 month, will be an issue b/c will need to purchase or lease another vehicle come june

car loan (BofA)  6884.      son's car we bought for him, pay 265 per month cant ask him to pay b/c he is in college and paying all his expenses    

Mortgage        242900    just applied for loan modification were behind paying 1230 monthly for 3 months, waiting to hear if approved by end of yr

my take home is about 1481 every other week

husband is about 949 every other week , plus commision 1 time a month about 1200 but varies

I know it is a lot of information, i still need to contact 4 creditors/agencies to set up payments, but i am trying to pay bils month to make it easier and at the end of the week there isn't much left over.

The settling is very appealing, but we don't have much of a saving account (we do have 401k deducted from salary yeah!)  so I am just not sure where to go from here.

Everyone seems to have wonderful insight and valuable info, I really appreciate your input.  If you need additional info please ask and thank you very much for all your help!

[Anonymous]

you are clearing 5K+ a month, but have bills that are pretty close to that

Mortgage and car loans are  Half that

you need to either:

1-Part time job/supplemental income

2-dig down budget hard and deep

Is the income from both your jobs reliable?

Except for the excessive car loans, I would tell you to try a BK attorney for guidance.

BK or Payment plan you will have credit issues for years.

A big issue is when your lease is up you have no car, and you will probably not be able to secure financing for a new one. So between now and June you guys must also pay your existing loans- and save enough for another car as well

the reliability of your income is my concern. I would hate for you two to pay your bills for a year and struggle and end up having to claim BK anyway.