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Posted: Tue Jan 01, 2008 8:23 pm Subject: Debt Settlement On my own

I recently inherited $9336.00. All debt is credit card debt

BOA- $2122
Citi- $5400
Discover Card- $8800
Wamu- $2900

I am current never late on any cards, but it is getting to hard to constantly be in debt and never feel like i doing anything to the balances.

I would like to do negotiation on my own, but am scared that I am just going to screw myself even more. Any suggestions out there? In fact I paid Disc $300 and they upped my credit limit 1000 even though I wrote a letter to tell them to stop. I do not have great credit (avg fico 658). I already know I am using the money for debt only, but just would like to get the most bang for my buck.

Posted: Tue Jan 01, 2008 10:34 pm Subject:

I'm not sure I understand, you received $9336 from somewhere and you are trying to determine what best to do with the funds? If this is the case I wouldn't do debt settlement, and your credit is still good and the amount of debt you have if you apply the 9300 to your credit cards, that only leaves you with about 10K in debt. Can you list your interest rates and payments? Then we could see what would be the most beneficial to pay off and what your remaining payments would be.

Usually with Debt settlement you have to stop paying your cards for about 4-6 months to before they will agree to any type of settlement and during this time your credit rating takes major hits. So don't really think this would be the best option.

Posted: Wed Jan 02, 2008 6:39 am Subject: Debt Settlement on My Own

JB2007-
Yes I inherited $9336.00 and would like to take care of some of my debt, but want to stretch as far as possible.

BOA- $2122 -32.9% Min Monthly $80
Citi- $5400 - 10.49 % Min Monthly $94.00
Discover Card- $8800 - 24.9 % Min Monthly $194.00
Wamu- $2900 - 27.9 % Min Monthly $117.00

Posted: Wed Jan 02, 2008 7:14 am Subject:

Like JB said, credit cards are not going to negotiate a lower balance while it is current. Doesn't make much sense, but you would need to stop paying them for a while in order for them to settle - they usually won't settle until it's been charged-off. Which, in the mean time, ruins your credit and subjects you to collection activities. I don't think you want to go that route, especially considering there is still no guarantee that they will settle.

Your best bet is to payoff cards with the highest rate first. Get BOA and WAMU out of the way, and you will still have $4344 to put towards discover.

After that, your discover balance will be half what it was ($4456). Take the minimums you were paying to BOA and WAMU (80+117=197) plus the $194 you were already paying Discover every month == now send them $350-400 every month. At that rate, you will have them paid off in about 13 months.

Then work on Citi after Discover is paid and by the end of next year you will be debt free. You will need to train yourself not purchase everything on credit, or else you will never get out of the boat.

My rule of thumb is "if you can't pay it off when the statement comes at the end of the month, then don't buy it this month." Save up for major purchases by putting money aside in a savings account - let the bank pay you interest on it. Then when you've saved enough, go buy what you were saving for. You'll feel more accomplished that way (at least I do), and to me this helps curb those impulse buys on things you don't really need.

If it is 'convenient' for you to use a credit card because you don't want to carry cash around, my suggestion would be to have one credit card you use, that you pay off every single month -- if you put $300 in charges on it, then send them $300 when the statement comes -- don't carry a balance on it and they won't ever charge you interest.

Posted: Wed Jan 02, 2008 9:26 am Subject: Debt settlement on my own

I agree totally with the advice above.You are still current and even though you have a decent amount of debt, that 9k will help tremendously in paying that down.
Some people choose to pay off the smaller cards because it gives a mental boost paying off more than 1. Others choose to pay off the higher interest cards first. They are both good ideas. If anything,while you try to figure out what you want to pay first, call these cards and see if they can lower your interest rates. That will help out too.Especially BOA and WAMU-those rates are insane!

Posted: Fri Jan 04, 2008 1:06 am Subject:

I have heard many financial experts advising to pay down the highest interest rate first. But the problem with higher interest debt is that people have to gather all the funds available to pay it off....it demoralizes them. So most of the debtors try to knock down the lower balances first.
In my opinion whatever pay down plan you make, it is very important to stick to it. Once you set up a payment plan stick with the payments until it's gone and then move onto pay the balances on another credit card and keep going. Remember that you can not let up on monthly payments when you see that your bills are getting paid off.

Posted: Fri Jan 04, 2008 10:51 am Subject: Question

I am just now started to try to get my husband's and mine credit scores increased. Last year we had a hard time and were barely able to pay our rent and utilities. Due to this, our credit cards got charged off. They are now sending me letters that I can pay a percentage to get them payed off completely. Now for the question. Is it better to just setup a payment plan and pay the full amount due or to pay a percentage? Does this affect my credit scores in different ways?

Posted: Fri Jan 04, 2008 5:20 pm Subject: Debt Settlement on my own

I just thought about a good idea. Read up on the "debt snowball" method. If you are like me and need to mental boost-that might work for you.

Posted: Sat Jan 05, 2008 3:43 pm Subject:

At this point your credit is already affected as these are all late, a paid in full on your credit report will be alittle better than a "settled, Paid" account status. With each option though as long as they are taken care of and report as being taken care of you can then start rebuilding your credit.

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