$130k in Debt :(

As far as i've heard yes u need to default before anyone will be willing to settle... now make sure to look this up as i'm not 100% sure and dont' wanna tell u to default on ur debts! :shock:
Ang
P.S. I've also heard the older the debt is the more willing they are to settle it.

I've heard the same thing too Ang. I've even heard that some settlement companies wait until you've been behind for 6 months before they will even try to settle with the creditors. If you join a settlement company some will wait for the 6 months-collect your money & then call a creditor and make an offer. I haven't dealt with them personally, but that's what some of the websites say when you dig into them.

Whatever you do-remember to check a company with the BBB!!

Best is asking if he/she can settle with the creditor. They have not expressed intrest in a debt consolidation co. There really is nothing to check with the BBB

Best- in answer to your queston-Ang is on target- before you can settle, most companies will have you be in default. Even if you aren't asking about a company- they still will wait until you are in default before they will try to settle.

If you are up to date on your payments, they have no reason to try to settle with you.

I have called several of my credit card companies and negotiated lower, or dropped interest so I could pay them off.

Companies work much the same way on this.

Good Luck, feel free to ask questions..KAren :D

What kind of debt are we speaking of here? Did the poster specify credit cards?

Volley, the poster did not specify what kind of debt, only that they want to pay it. No mention here of any consolidation, just wanting to know if they them selves can make a settlement with the creditor.

Hi Best. I do believe, also, that the older a debt is, the more likely you are to settle for as little as possible. This isn't to say that it is a good thing to let it get very old, but if you are like me, the less I have to pay the better. I know it doesn't sound good, but my ultimate goal is to get my credit looking better and to put this whole mess behind me. Between pdls and outstanding credit cards, I have A LOT of work ahead of me. I plan to give it a shot on my own, as I don't have alot of extra money to play with, but like LeeLee said, if you choose to use a debt settlement company, please check them out with the BBB first. Some of them are notorious for high fees and the last thing you probably need is to have to pay high fees. I know that is the case for myself. Good luck to you and I hope that you are debt free soon. :)

Eleroo, I am a bit confused here. If your goal is too improve your credit, why are you letting the debts get old.

I know how you feel Eleroo. The last debt I am working on is really old- have been able to negotiate pretty well.

I forgot to mention to the original poster- you didn't say how old your debts were, what type, etc. If they are very old, they may be out of the SOL. That doesn't mean you don't owe the debt, only that they cannot collect legally.

On one of my debts I paid off, I had been paying for quite some time and called them and told them I was wanting to get them paid of, and if they could drop the interest, I could pay it off sooner- they agreed.

Whatever you do, we are here to help and guide you through the process..KAren

Thank you all for the wonderful answers and insight!

The debt's are about $115k in credit cards and $15k medical.

I have been naively living off tons of home equity and credit cards since I had a failing business followed by a commission job that is paying nothing.

I have no real income to show for about 3 years. I wonder if I could show that to the debtors and start working on a settlement before I go into default? It is either going to be debt settlement or bankruptcy for me.

Sorry your post got so off topic for a little while but glad it helped u!
Are u also still paying on the medical? I don't know if the credit card companies will do much for u as far as settlement but they may drop ur interest rates before default....
Guess u can call and ask, worst they can do is say no.
Good luck and ask any questions u may have!
Ang

Best, I'm in the same position as you and the first thing you need to do is see a Bankruptcy attorney, most offer free consultations. You must be delinquent on all credit cards to file bankruptcy or to settle, but you do not have to be delinquent to consult with an attorney. If debt settlement doesn't make your situation any better because you will still have the loans to pay that you take to settle - you need to consider Chapter 7 bankruptcy. If your income is below the medium income, you are insolvent now with no way out and can't pay your bills, under a Chapter 7 all your debts will be forgiven that are unsecured, you will still have to make your mortgage payments and car loan payments, if you want to keep your car and home or any other secured debt. If you have an income over say $60,000 you may have to file Chapter 13 which will pay pennies on the dollar to your creditors of the credit card debt - the court sets the amount you must pay over a 3-5 year period. Your family size determines how much income you can make to file Chapter 7 versus Chapter 13 - for instance in Vermont it's $68,000 for a family of 4.

It doesn't make any sense to settle debt if you think your income position will not change in the immediate future and you will still be struggling. I'm going to settle because my income is tied to the real estate market and I think that in the next year things will stay maybe a little lower than now, but if I restructure I should be able to weather the storm. Also, bankrutpcy on my financial background could ruin my future employment opportunities.

I've been researching this at length and have talked to both a BK attorney and a Debt Settlement company. My BK attorney says that creditors prefer you to settle yourself and they can become intimidated by DS companies and lawyers and sometimes they will get more aggressive. If you feel that you have the ability to negotiate and you want to settle, he recommends doing it yourself. Please research the steps to settlement online - there are many forums available and publications. Just put debt settlement into your search engine.

In light of that - in reading about settlement - you do not have to show creditors your financial info and it's recommended you do not. You just have to tell them that you cannot pay them, you are looking for an alternative to filing bankruptcy and you will get back to them. Keep it short, be honest and talk to them only once a month until it escalates, they will not stop calling so buy a good caller id (privacycorp offers one that does not ring after your program your creditors number into it, it just flashes a red light and goes to the answering machine; it has a large caller id display as well so you can see who is calling, so if you want to talk, you can pick up). Usually after 90 days they will be more willing to give a better settlement because they usually charge off your cc at or about 180 days delinquency, so they get better about settling from the 120 day and on - they will usually let you know they are getting ready to charge off and make a final settlement with you - if it's not what you want - counter and wait a few days - then call back - you will get a feeling if they are serious or just trying to play hardball, but they are getting to the end and will usually settle. You need to have the money to settle to do this, plan on at least 50% of the debt - it's usually less. A piece of the pie is better than no pie - they are also reluctant to threaten you because they do not want you to file bankrutpcy. I gave my BK attorney a retainer fee to talk to my creditors if they need to verify that I can file - he knows my whole situation and wants me to file but I'm refusing because of my career. Having an attorney hired shows you are serious and is more threatening to the creditor.

Settling debt you may have some tax implications as well, if you are not insolvent at the time of your settlement you may have to count your savings as income. However, if your debts exceed your assets - you get to exclude the difference - otherwise you owe $200,000 with credit card debt, cars and residence, but your car, retirement and home are only worth $150,000 you are insolvent $50000 - so the first $50,000 in savings is not taxable. To read more about this see IRS publication 908, form 982.

This is my plan and my opinions, others may have different ideas, but I thought I'd share my stategy and technics of settlement. I hope I succeed but there is always an "if" or "but" factor.

Best wishes,

Sherri, thank you for your wonderful post. You have provided a lot of information that I am sure will be of help to many of our members.

Thanks for all that info Sherri! That was a lot of help in explaining things.