Now I'm concerned...

I've gotten two emails from different debt settlement companies and niether has been very "to the point". I just don't see how a credit card company will wait months and months to finally get a settlement. I got dinged for being late to Chase and now I'm paying 28%...most likely the same with B of A. I've closed both accounts. I'm sooo skeptical that a debt settlement company will end up really using me and then I'll be worse off than I am. I'm thinking a BK will be a better choice. After my divorce my credit got ruined anyway.

I am not sure what the names of the companies you were speaking with are so perhaps they were not necessary strait forward about the debt settlement process. Creditors and/or collectors will settle on a account but it typically has to be delinquent at least 120 days late or longer. The reason the creditors are willing to settle is they would much rather get something than risk you filing bankruptcy and getting nothing. Better to get a piece of the pie than none at all.

If you only have a couple of accounts, you can try to settle on your own. It would be worth it to give it a try. If you are considering bankruptcy, you'd really have nothing to lose by trying a settlement on your own first.

If I'm $18K in debt on two CC's (about $9K each) and suppose they settle to a total of say $10K and the settlement company says I can pay just over $300/month for 30 months, then that means that the first company won't get paid off until 16 months later. I just don't see any CC company waiting that long to get any sort of payment. Maybe I'm missing something here?

SusieQ wrote:

"If you only have a couple of accounts, you can try to settle on your own. It would be worth it to give it a try. If you are considering bankruptcy, you'd really have nothing to lose by trying a settlement on your own first"

If I were to do this, how long should one wait to negotiate? I'm current but paying the minimums and will probably be late on making a payment this month as well as the next and so on and so on.

Credit card companies WON'T wait that long. The account will have long been sold to a collection agency by then. And if they are really impatient, there is the danger of being sued, which is a risk within the settlement process, not necessarily which company you're with. That's why, if you only have two accounts, you might try settling them at the same time, by yourself. I chose to go with a company to do it for me for many reasons, one of which is that I had nine accounts to settle and a huge, huge mess. Two settled right away, although it has taken nine months for those two to be paid out of my account. One, my largest one, I settled on my own because there were not funds available in my settlement account (due to payments being directed to settle the first two creditors) at the exact time I needed to accept the offer. Next month, we start on the rest. But they are all smaller, so each one should only take a couple of months. And they are first-come, first-serve. The creditors or collectors are constantly negotiating with the settlement company, and when a good settlement is agreed on, that account gets paid. In a 36-month program, they know they'll get paid SOMEWHERE in that time frame, and not have to wait ten years. If you settle on your own though, be prepared to have to pay it in only two or three payments. You can get some great deals, but they don't like to give you much time to get it done.

They won't negotiate when you are current. They will only settle when it looks like it's a last resort for them to get ANYTHING out of you. Most people that do settlements have been in trouble for a long, long time and their credit is already messed up, so it's a last resort before bankruptcy. My quickest offers came in about 4 months after I stopped paying on the accounts.

So are you saying I should stop making payments for maybe 2-3 months then work with a settlement company? there's no way I could settle myself and still be able save up the money unless I could drag it out for a year or so. This just sucks!

Yep, it does. The whole dang mess of credit card debt sucks more than just about anything else. And I think it's only going to get worse, with the economy the way is. So it's good that people like us are realizing it now, when we have a chance to do something about it before the whole industry collapses and we get 2000% interest or something equally as offensive. One of the reasons I went with a settlement company is that I didn't have anything up front, either. The month I stopped paying on my cards, I started to pay the settlement company. That way, in about four months when the offers started coming in, I had some money built up in my account. The settlement company actually fields a lot of the calls, does the negotiations, and sorts it all out. Have you looked into other options, like debt management or consolidation? I know sometimes they are not a real help, but maybe you could get your interest rates lowered to buy you some time while you continue to investigate your options. Sometimes you can get hardship programs, but you have to be delinquent on the cards for those, also. You may want to check with your credit card companies and find out what their criteria are. There's no easy answer, and I always say, settlements are not for the faint-hearted. A settlement program was the best alternative for me, but everyone has a different situation. I was current on all my payments also, but my credit score was in rapid decline due to ny income-to-debt ratio and the cards being filled to the hilt. So whether I was current or not was becoming a moot point, and I just went with what I felt in my gut was the right thing to do.

You don`t have to have your bills already be delinquent 2-3 months before you enroll . Its just that you would no longer send regular monthly payments to the creditors. When an account start to go delinquent the original creditor will start to call and harass you to try and collect on the debt. After the account is 120-180 days late if the creditors has not collected by either getting you start start paying them on a regular basis again or settle the account they will move the account to a 3rd party collection agency and write the debt off as a loss. The collection agency usually works on a contingency basis or buys the debt for around 10 cents on the dollar. If the account goes to a 3rd party collection agency its not a big deal . You just work out a settlement with the 3rd party collector.

Exactly, Mobile! I enrolled at the very point I stopped paying my monthly bills to the creditor. I have also seen a couple of accounts pass through a couple of different creditors already, and the offers get lower and lower. The more time that passes, the better the offers. You just have to cross your fingers about the lawsuit issue. I was sent a summons by one of my creditors, but they offered me an alternative: a 10% settlement. They really would rather settle than sue, I think that is rare when someone actually has to go to court without being able to work something out.