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Deep in Debt: Considering Debt Settlement Agencies

FireMedic1
Super Contributor

Re: Deep in Debt: Considering Debt Settlement Agencies


@SteelerNYC wrote:

@FireMedic1 wrote:

@SteelerNYC wrote:

Typically you would stop making payments and after a few months (and save EVERY dollar you can in the meantime) you offer a fraction of the balance owed as a settlement.

 

My Mom settled my Dad's CC debts after he passed for 30-50% of the balances owed, just before things were sent to outside collection agencies.  (She wouldn't have paid them at all, but he had an inheritance pending that my Mom was the beneficiary of and apparently the proceeds would have first settled any outstanding debts in his name.) 

 

Another option is to stop paying (again save EVERY dollar you can) and see who comes knocking (meaning who seeks judgments/lawsuits against you) and if that happens you have some cash on hand to settle. Those that don't come knocking will charge off and eventually fall off of your credit reports. The downside is this keeps the situation hanging over your head and in limbo and your credit trashed for a good while to come.

 

Not knowing your income or expenses or what you can feasibly put towards these debts limits the advice anyone here can give, but you may want to at least consult with a BK attorney or two so you know how the process works and can weigh it in your options. I will say that I think you can rebuild from a BK just as fast if not faster than going the settlement route. 


Why wait that long and not pay. We dont even know if there are any late payments yet. And then public records will be created for the judgements from the lawyers offices and future UW's can see those later down the road. Not a good idea. The OP's credit has already been hit by being "closed by grantor". Settlement payments are in effect. The util is hurting also.  Why add to the injury already created by playing chicken with the creditors?

 

We do agree almost on 1 thing. Get it over with and get a fresh start. Less headaches, no creditor lawyers, judgements, less stress, and as a med professonal. All this stress causes a lot of medical problems. Rebuild will take less time filing rather than paying all this off and starting another rebuild process which will take a whole lot longer to do. You dont want court dates, getting lawyers to fight for you, or hoping some thing falls off. Too risky and it will cost more to hire lawyers to defend yourself cause they do file a judement because they waited to save and then settle. Not great advice.


I was only pointing it out as a strategy I've seen used by some, and not recommending that it be the one used. It is in fact a HUGE roll of the dice, but I've seen cases where no creditors sought legal action, everything fell of the CR in time, and the debtor had good credit again. It is in fact quite the scary YMMV as you've pointed out.


Agreed





My posts are JMHO. My siggy is not to brag at all. Just sharing my experiences after learning here from rebuild to recovery after BK DC 540's. And to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 11 of 26
Oyiwaa
Regular Contributor

Re: Deep in Debt: Considering Debt Settlement Agencies

Net Income (Job + Uber) = $6,100/month

 

Major Expenses:

  • Mortgage = $2,500
  • Car Loan =  $700
  • Insurance (Auto & Car) = $500
  • Food/Meals =  $500
  • Gas/Utilities = $300
  • Phones = $200
  • Car Fuel for Uber/Work = $400

 

  • Total Necessary Expenses:  $5,100

 

This leaves me with about 1,000 for debt payments.

 

Hope this helps - thanks - Oy

Message 12 of 26
FireMedic1
Super Contributor

Re: Deep in Debt: Considering Debt Settlement Agencies

I had another responce loaded and backed out. Do you have any equity in the house?





My posts are JMHO. My siggy is not to brag at all. Just sharing my experiences after learning here from rebuild to recovery after BK DC 540's. And to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 13 of 26
RehabbingANDBlabbing
Frequent Contributor

Re: Deep in Debt: Considering Debt Settlement Agencies

Looking at your expenses, I think it would take a VERY long time to pay off $40k in debt making minimum payments, even if your creditors all offered you 0%. You are a great candidate for settlement. Based on your income, you would likely only qualify for a chapter 13 bankrupcy, which I advise most people to avoid unless you have no other choice. Even if you had to file it down the road, if you settle as many debts as possible before you had to file, it would save you tons of money and ease the stresss of a fixed payment each month going towards debts that wopuld be included in the chapter 13. In chapter 13, you pay all of your disposable income towards debt. That means they set your budget for you, with very little money leftover each month (if any). And your bankruptcy can get dismissed if you miss even a single payment. It can save your house and other assets if you are facing wage garnishment, bank levies, or other serious collection activity, however, so it can benefit some people in very specific circumstances.

 

First, no one wanted to settle my account until it was nearly charged-off or completely charged-off. FireMedic is wrong. They won't want to settle with you unless they think you can't pay. In fact, it took me a while to get back on my feet enough to even start saving for settlements. I didn't start settling any of my accounts until about 1 year and 6 months after I stopped making payments. Yes, it will trash your credit. But as it is, you have no way out of debt other than bankruptcy. One emergency can throw your entire financial life into ruins because you are operating with basically no extra income. To me, getting to a place where I don't owe anyone anything is much more important than credit. And considering you already have a house AND a car that costs $700 a month, your major credit situations seems to be taken care of for a while. Your best bet is to stay in one place, keep your current job, and ride out this situation while you settle the debts.

 

As for my settlement process, I have nearly finished. So far, I have settled $35,066 in debt for $9,335. I did end up with 2 lawsuits, which occured about 2 years into the process. One was from a Citi card that was bought by a debt buyer. I ultimately beat that case in court. The second lawsuit was from Bank of America, which I settled with their attorney in a lump sum (50% of the balance). I am in Texas, so the SOL is 4 years and creditors cannot garnish wages. You may have a greater risk if you live in another state. But you do need to keep in mind that you can settle debts at any time (even after a judgment) and you always have the option to file bankruptcy to stop wage garnishment. A highly useful resource on the topic is Consumer Recovery Network. The guy who runs the site has lots of information on settling debt and what to expect, so I highly recommend checking out his website. You don't need to pay anyone in order to settle your debts. It just takes patience, hard work, and some good negotiation skills.

Message 14 of 26
SteelerNYC
Valued Contributor

Re: Deep in Debt: Considering Debt Settlement Agencies

Your major expenses are way out of whack in relation to your Income, even without the CC debt your carrying.

The housing and transportation expenses are taking up over 50% of your income and could benefit from some major changes.
Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU More Rewards Amex/NFCU Platinum/PenFed Power Cash Rewards/PenFed Pathfinder Visa/Citi Costco Visa/CapitalOne SavorOne/Apple Card - $139,100 total revolving, 21% utilization
3.25% mortgage July 2020, $20k used Auto Loan October 2020, $20k PenFed Personal Loan Dec 2020
687/683/673 EX/EQ/TU w/ 5/6/6 INQs as of Jan 2021
Spending 2021 in the Garden
Message 15 of 26
Oyiwaa
Regular Contributor

Re: Deep in Debt: Considering Debt Settlement Agencies


@FireMedic1 wrote:

I had another responce loaded and backed out. Do you have any equity in the house?


unfortunately  not much - bought the house about 4 years ago.

Message 16 of 26
FireMedic1
Super Contributor

Re: Deep in Debt: Considering Debt Settlement Agencies


@RehabbingANDBlabbing wrote:

Looking at your expenses, I think it would take a VERY long time to pay off $40k in debt making minimum payments, even if your creditors all offered you 0%. You are a great candidate for settlement. Based on your income, you would likely only qualify for a chapter 13 bankrupcy, which I advise most people to avoid unless you have no other choice. Even if you had to file it down the road, if you settle as many debts as possible before you had to file, it would save you tons of money and ease the stresss of a fixed payment each month going towards debts that wopuld be included in the chapter 13. In chapter 13, you pay all of your disposable income towards debt. That means they set your budget for you, with very little money leftover each month (if any). And your bankruptcy can get dismissed if you miss even a single payment. It can save your house and other assets if you are facing wage garnishment, bank levies, or other serious collection activity, however, so it can benefit some people in very specific circumstances.

 

First, no one wanted to settle my account until it was nearly charged-off or completely charged-off. FireMedic is wrong. They won't want to settle with you unless they think you can't pay. In fact, it took me a while to get back on my feet enough to even start saving for settlements. I didn't start settling any of my accounts until about 1 year and 6 months after I stopped making payments. Yes, it will trash your credit. But as it is, you have no way out of debt other than bankruptcy. One emergency can throw your entire financial life into ruins because you are operating with basically no extra income. To me, getting to a place where I don't owe anyone anything is much more important than credit. And considering you already have a house AND a car that costs $700 a month, your major credit situations seems to be taken care of for a while. Your best bet is to stay in one place, keep your current job, and ride out this situation while you settle the debts.

 

As for my settlement process, I have nearly finished. So far, I have settled $35,066 in debt for $9,335. I did end up with 2 lawsuits, which occured about 2 years into the process. One was from a Citi card that was bought by a debt buyer. I ultimately beat that case in court. The second lawsuit was from Bank of America, which I settled with their attorney in a lump sum (50% of the balance). I am in Texas, so the SOL is 4 years and creditors cannot garnish wages. You may have a greater risk if you live in another state. But you do need to keep in mind that you can settle debts at any time (even after a judgment) and you always have the option to file bankruptcy to stop wage garnishment. A highly useful resource on the topic is Consumer Recovery Network. The guy who runs the site has lots of information on settling debt and what to expect, so I highly recommend checking out his website. You don't need to pay anyone in order to settle your debts. It just takes patience, hard work, and some good negotiation skills.


Excuse me?. I'm in here everyday for years. I work a process and ask many questions to figure a way out. If it takes multiple posts to get all thats needed to help a poster. So be it. Each situation is different. What worked for you. May not work for someone else. No one poster matches another. If your dying I may have to change my protocols to save your life. I do the same here. You can say you disagree with me. But calling me out as wrong? Dont see getting everything needed to get a plan in place is not wrong.





My posts are JMHO. My siggy is not to brag at all. Just sharing my experiences after learning here from rebuild to recovery after BK DC 540's. And to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 17 of 26
RehabbingANDBlabbing
Frequent Contributor

Re: Deep in Debt: Considering Debt Settlement Agencies

FireMedic, you seemed to have missed the point I referenced you being wrong about.

 

"Why wait that long and not pay. We dont even know if there are any late payments yet. And then public records will be created for the judgements from the lawyers offices and future UW's can see those later down the road. Not a good idea. The OP's credit has already been hit by being "closed by grantor". Settlement payments are in effect. The util is hurting also.  Why add to the injury already created by playing chicken with the creditors?"

 

This paragraph is so focused on seeking credit in the future, that it fails to acknowledge the real financial circumstances the OP is facing at this time and his path out of it. You mention utlization and "closed by credit grantor." Are you serious right now? This person can't even pay their bills.

 

Second, you are wrong. They wil not settle balances until he is behind on payments. The OP is in dire straits and cannot make the minimum payments. Even at 0% interest, it would take 40 months for them to pay down this debt, assuming no emergencies or financial hardships arise during that time. I have seen these types of programs firsthand and they are rarely at 0%.

 

In addition, a debt management program is not the same as "settlement payments." If I setup a plan with AmEx to pay my card off over 5 years at 7.9% interest with fixed payments, that is a debt management or hardship plan. These types of plans are generally setup directly through the bank or through a credit counseling agency. This is what the OP is enrolled in right now.

 

In contrast, a settlement plan would be paying the balance off in one lump sum or a couple of months for a significantly discounted price. A debt settlement company might also require "settlement payments" that are monthly, but I would not trust them at all. They often leave people uninformed abojut what is really going on with their debts and leave them in worse situations than they started in, including lawsuits. Don't confuse the OP by mixing up the terminology.

Message 18 of 26
FireMedic1
Super Contributor

Re: Deep in Debt: Considering Debt Settlement Agencies


@RehabbingANDBlabbing wrote:

FireMedic, you seemed to have missed the point I referenced you being wrong about.

 

"Why wait that long and not pay. We dont even know if there are any late payments yet. And then public records will be created for the judgements from the lawyers offices and future UW's can see those later down the road. Not a good idea. The OP's credit has already been hit by being "closed by grantor". Settlement payments are in effect. The util is hurting also.  Why add to the injury already created by playing chicken with the creditors?"

I was addressing Steelers about stop paying the creditors. Save money. Wait for judgments and papers and then settle, Nowhere did it say anything about getting more credit. Go back and read it. The accounts are closed the OP said which can be settled. Go back and read it.

 

This paragraph is so focused on seeking credit in the future, that it fails to acknowledge the real financial circumstances the OP is facing at this time and his path out of it. You mention utlization and "closed by credit grantor." Are you serious right now? This person can't even pay their bills.

 

Second, you are wrong. They wil not settle balances until he is behind on payments. The accounts are indeed closed not open.The OP is in dire straits and cannot make the minimum payments. Even at 0% interest, it would take 40 months for them to pay down this debt, assuming no emergencies or financial hardships arise during that time. I have seen these types of programs firsthand and they are rarely at 0%.

 

In addition, a debt management program is not the same as "settlement payments." If I setup a plan with AmEx to pay my card off over 5 years at 7.9% interest with fixed payments, that is a debt management or hardship plan. These types of plans are generally setup directly through the bank or through a credit counseling agency. This is what the OP is enrolled in right now.

 

In contrast, a settlement plan would be paying the balance off in one lump sum or a couple of months for a significantly discounted price. A debt settlement company might also require "settlement payments" that are monthly, but I would not trust them at all. They often leave people uninformed abojut what is really going on with their debts and leave them in worse situations than they started in, including lawsuits. Don't confuse the OP by mixing up the terminology.


I'm outa here so I dont get a FSR warning. Closed accounts can be settled which I suggested before collection agencies get invovled. Once the OP listed as I asked what their bills/income were by asking many questions as I do. Then a mortgage showed up and that is the game changer. So much for Chapter 7.

First post quote. "Most of the credit card companies (CapOne, AmExpress, BestBuy, Chase, etc) have already closed my account and I've arrangment some sort of fixed payments with them - which I am having diffulty paying. All other credit cards are at their maximums."

I've said enough. Later.





My posts are JMHO. My siggy is not to brag at all. Just sharing my experiences after learning here from rebuild to recovery after BK DC 540's. And to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 19 of 26
FireMedic1
Super Contributor

Re: Deep in Debt: Considering Debt Settlement Agencies

@OyiwaaYou came here for help and some advice. I apologize for the banter earlier. I thank you for posting your income and what you have left over to try and climb out of debt. Since there is a home invovled then it becomes a little more complicated if you decide to go the BK route. With the stats the you provided. You may want to seek a BK lawyer and see what options you have. Presently its going to be difficult to keep on going the way it is now as you know. Thats why you came here. I wish you the best of luck in your decision. We all make mistakes and life throws hard balls at us. I feel its time for a fresh start honestly. Disclaimer below. Good Luck!





My posts are JMHO. My siggy is not to brag at all. Just sharing my experiences after learning here from rebuild to recovery after BK DC 540's. And to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 20 of 26
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