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Am I getting a good deal with chase for settlement

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Am I getting a good deal with chase for settlement

Hi, I havent been paying my chase credit card since two year already. For a little more than a year I was jobless. Six months ago I recently found work working minumin wage in NYC at $15 an hour.

 

Chase last week sent me a letter saying the following

"We want to work with you to settle your charged-off credit card account. You can save $1,500."

"Your Current account balance is $1,900, but we will accept $400 to settle the account and stop further collection activities.

 

My options was to make one payment of $400 or two payment each month for $200.

 

Is this a good deal. I will be making less than $15,000 by the end of the year. So i assume something will go to irs and will either place me in the same tax bracket or higher.

 

Will it some how also affect my credit score which is already horrbile at 560.I am trying to figure out if I will be able to open a card in the future more sooner than latter to rebuild.

 

Message 1 of 5
4 REPLIES 4
Regular Contributor

Re: Am I getting a good deal with chase for settlement

$400 settlement in my opinion is more than fair. You would end up with them sending something to the IRS (1099-C is supposed to be filed for forgiven debt over $600).

Depending on your income and overall debt you may be able to exclude all or a portion of the 1099-C income (talk to your tax person before accepting any offers so you have a better idea of possible liabilities).
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Message 2 of 5
Senior Contributor

Re: Am I getting a good deal with chase for settlement

Jump on it so it quits updating, no court dates, can start aging, and worry about the IRS later. You can file the 1099c at the same time you file your imcome taxes.





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Message 3 of 5
Established Member

Re: Am I getting a good deal with chase for settlement

 

Go ahead and do it.  This is a really deep discount, and I wouldn't imagine that holding out for a better deal would really benefit you that much - better to ahead and get it over with, take the hit, and start rebuilding your score.  It will show as a settlement, so your score might dip briefly, but it will over and gone and won't come back.

 

If you were to engage a debt settlement agency they would settle your debts for around 50% and add in another 20%-25% as their cut for managing it all.  Or at least that is for bigger debts that take longer to pay off.  So it is good that you are working directly with the OC.

 

Message 4 of 5
Regular Contributor

Re: Am I getting a good deal with chase for settlement


@Dougmaster wrote:

Hi, I havent been paying my chase credit card since two year already. For a little more than a year I was jobless. Six months ago I recently found work working minumin wage in NYC at $15 an hour.

 

Chase last week sent me a letter saying the following

"We want to work with you to settle your charged-off credit card account. You can save $1,500."

"Your Current account balance is $1,900, but we will accept $400 to settle the account and stop further collection activities.

 

My options was to make one payment of $400 or two payment each month for $200.

 

Is this a good deal. I will be making less than $15,000 by the end of the year. So i assume something will go to irs and will either place me in the same tax bracket or higher.

 

Will it some how also affect my credit score which is already horrbile at 560.I am trying to figure out if I will be able to open a card in the future more sooner than latter to rebuild.

 


$400 on a smaller balance like this is a pretty good deal. I don't think you will see one lower. As for the 1099-C, you will likely not have to pay anything because the IRS allows people to avoid paying taxes on cancelled debt if you are techincally insolvent. Essentially, you have more debt than you do assets (cash, houses, cars, bonds, etc). Most people settling debt are broke, so most people don't have to pay. If you need more infomation, google the IRS 1099-C insolvency worksheet.

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