$123,000 in CC debt.... our story

Don't know why I have a male avatar up there, but this is me...I am officially a member now. ;)

Hmmm, don't know why my post was moved to this forum (??)

Hi there. Wow, what a story! I can totally relate. I too accumulated a ton of debt in my early years of marriage, refinanced my house to pay them off only to rack them up again. I took out a personal loan at my local credit union, and paid them down significantly. Then I had a baby and felt the need to make everything "perfect" for my little prince...from the nursery room to preschool and extravagant Christmases and birthday parties. My son is now 7 years old and $15K debt has become $90K. Seven years of living beyond our means is how we got to that number. Shame on me. And I totally get the palpatations thing. (It gets better after you totally accept the number.)

I first went to debt management, tried that for about a year and a half and it basically got me in a slightly better place at least with budgeting but we were still living paycheck to paycheck. My husband and I both work and both have stable jobs (at least for the moment...knock on wood) and we could make the minimum payments but still had to use the cards. It is a vicious cycle that is very hard to get out from underneath. Then some of our cards (not in the debt mgmt plan) rose from 9% and 10% to 20% and 28%. We were struggling, and tired from working so hard and not having anything left over, ever.

I withdrew from the debt mgmt plan and started looking into bankruptcy, which I thought was our only alternative. While researching bankruptcy, of course I kept reading about debt settlement. I found this site, and my husband and I decided that was the way to go. You can ALWAYS file bankruptcy as a last resort. (We were looking at Chapter 13 only.)

Well I found a debt settlement company that gave me the confidence to move forward. We stopped paying our credit card bills. In hindsight I wish I would have at least staggered them a little bit... maybe a month or two apart. That would have helped. I also wish I would have NOT signed up with a debt settlement company and done everything myself. I could have saved around $3500 in fees, which I could have put towards the debt. Then again, at the time I really felt that I needed someone to "hold my hand" through the process so maybe I never would have had the nerve to go about it on my own.

So I stopped paying my creditors in September 2008. I am able to stash away $2000 per month for settlement. Here we are in February 2009...almost 6 months later. So far I have settled with American Express and I am about to settle with Bank of America. American Express sent my account to collections (a law firm that was promising to sue if I would not settle) after only 90 days. They have been the most agressive. That unfortunately earned them a front row spot in my debt settlement plan. I accepted a hardship program with Discover because I needed to buy some time and they were willing to offer me a VERY low minimum payment for an entire year. That gave me a lot of breathing room, to not have to worry about them for a while. I have heard they are also very agressive and will sue. So, I have BofA in the works and then Chase. It is all really a juggling act. Obviously you can only save so much each month, so you can't really settle with them all at the same time. It is important to know what companies are the most important to settle with before your account gets charged off (150-180 days past due). For example, BofA will typically offer a settlement right before charge off of 20% of your balance. Since I have a BofA account I knew I had to put them in the "front of the line" so to speak. (Having to settle with AmEx to avoid being sued kind of messed that up but it is working out okay.) It is all about knowing the game and flying under the radar to get the best deals.

So, is my credit shot? I'm sure. I haven't pulled up my credit score and I don't really care at this point. It wasn't great anyway since my debt to income ratio was so out of whack. My deciding factor was do I care about my credit score or getting out of debt? The idea of being without credit card debt is so freeing to me that it is worth it to me to take a hit on my credit. And for those that say you will have to pay taxes (1099) on the money that was "forgiven" as income, I have one word: INSOLVENT.

Do your homework. Knowledge is power in this industry. Trust me I am not selling or pitching a sale for this company but I have heard great things about "zip debt" from this website. I think it is a do-it-yourself plan that also includes some sort of support. Google it and check it out. I wish I would have read about that one sooner.

Finally this site is fantastic. It amazes me how many people are willing to take the time to give advice and share their experiences. I read posts on this site daily and always pick up some sort of info that I feel will be helpful. Whatever you decide to do make sure you have really educated yourself before you stop paying your bills and you will be a step ahead!!! :)

right on

You can settle that debt by yourself. I started w/ almost the exact same balance of 123k late last year 2008 w/ 10 credit card accounts. Your story seems just like ours minus the child support :) It is early 2009 and I have settled all the accts w/ a total of 40k. Don't let these sham settlement companies take any of your money. I spent approximately 95 minutes on the phone TOTAL!! (check my phone bill it's true) to save about 90k in accumulated debt. 1000 bucks a minute is what I earned if you think about it.

I currently have $32,800 debt for 6 creditors and I'm having hard attack on how will I settle my debt. I'm reading a lot of information here about debt settlement and it's really helpful. My husband lost his job and all of our expenses are getting charge on the cc. Reading all your stories inspired me that I can get our with my debt too soon!

Keep at it, and remember that you can surely fix your credit when you're back on track!

Wow, sameboat, you don't know what your post did for me!!! First of all, I was feeling a little hurt because no one even welcomed me to the site or even responded to my post for a few days. I was beginning to feel unwelcome and hopeless at the same time!

But your post made all the difference in the world! I have renewed hope now and I am going to follow your advice, especially on staggering the nonpayments. I know we can do this! I have to believe that, anyway.

Thank you so much for taking the time to post your story in such detail. I will probably come back and read it every day for inspiration!

I'm so glad my post helped you! What comes around goes around in my opinion! BTW, another thing that has really helped me so far was writing out a settlement plan (like who I ideally want to settle with first, how much I think I could settle at, who would be second and so on) and also writing out a monthly budget. Believe me I included everything in my budget down to the cup of coffee I buy on my way to work. Not dipping into the settlement money being saved was tough at first...but I remind myself to stick to the plan at all costs. No more dinners out, no more toys just because, no new spring clothes this season. Small price to pay to be out of this mess by the end of the year.

It sounds like you are in a great position to make this happen. Keep your mind on your goal of being rid of this crazy debt and you will succeed. Good luck!

Your house equity alone can settle all those debts. Save the money for the IRS next year. Try and settle before charge off and it will do less damage to credit. Good luck. I settled almost all mine but I am getting worn out. It is a grind!

BLL, could you explain? I'm not sure what you mean by "save the money for the IRS"....if you mean the 1099's we would receive on the unpaid amounts, I'm sure we would be considered insolvent.

As for the home equity, I would love to access that and settle on the debts, but I'm not sure that's an option the bank would consider (debt to income ratio is pathetic).

You CAN do it yourself, if you're diligent

Assets are considered equity in home, 401k, money in the bank the day before you settle, equity in the cars, anything is considered equity and your debts must out weigh your assets. I am not sure the IRS cares if you cannot get to your equity. They can make the argument you can sell the house FMV.

You guys are great!! I started out with $100M in cc debt and $75M over-mortgaged. I short sold my home, and settled all my cc debts. I only have Amex left to deal with. I expect to hear from their lawyers any day. What an experience but I don't regret it at all. I will be debt free for the first time in 20 years!

For the two of you who settled with Amex what % did they get you for?

congrads to all of you!!! debt is hard and i love the post about no new things. its a small price to pay to live debt free. This is the goal right? If you keep buying you will never get to the goal.

as for the origional post, I saw it for the first time yesterday and honestly i was heartbroken for you and just did not know what to say to you at the time and thought about it for awhile. maybe thats what others did too.

The key thing is now that you are taking charge of your life and responsibilities and no one here will ever tell you that it is easy because it is far from it no matter what route you go. But it will be worth it in the end.

I have told so many people this before but it is so true. you must suffer and keep in mind were you have been so that you stay focused and on track and not ever do it again. No little treats, no rewards, no night out or takeout, no luxuries. Its gonna stink if you do it right but you will remember how bad it was for you so that you will never do it again.

Now when i go to purchase items i think and think again. do i need it or do i just want it? can i afford it, and do i really deserve it? will i be sorry for it later? These questions will take me about 5 minutes of arguing with myself till i just say forget it! If you have to think that hard about it you dont need it.

I try to live on a cash only basis these days, and sometimes it still feels like im suffering, but it keeps me out of trouble and on track.

good luck to all of you and keep up the excellent work i promise it will pay off someday!

it's so good that you and your husband realized that your gambling problem was out of control ... I lived in Vegas for years and was always amazed at the people who literally lost their homes over their addiction. Congrats on that huge step forward, and I'm looking forward to hearing about how you work through the debt.

Thank you so much, that has been our biggest accomplishment yet and I'm very proud of that. It hasn't been easy but we are determined...

Wow, this is an inspirational thread, glad I came across it! My credit card debt is on a smaller scale, about $50,000 spread across 9 cards. I too am extremely nervous and scared about what's going to happen, I'm just beginning the process and have been reading these boards inside and out for all the information I can find. I'm in the early stages of default on some of my cards, and am just about to default on others, I just can't afford to pay them anymore. I managed to work out with Citi 0% interest and no fees for 12 months, greatly reducing my minimum each month, which helps, but I now realize that even all 9 of my cards gave me this deal, I still couldn't afford to pay each of them every month.

I have a question about the idea of staggering payments, I assume this means paying one on a given month and then another the next month, each time letting one slide? Wouldn't that just make it harder to pay those accounts in time by incurring late fees and higher interest rates? Whereas non-payment would still have these adverse effects, but you are not wasting your money on just covering the minimums which is probably at least half made up of the fees and interest. Is it just a tactic to buy some time and keep them off your back while you figure a plan of action? As I said, I'm just beginning this whole terrible process and am trying to learn everything that I can!

Also, what does it mean to be considered "insolvent"? It's a term that I'm not familiar with.

Thanks for sharing your stories, I'm so glad a site like this exists that people are willing to share and help others out, this site is all that's keeping my sanity right now! I wish you all the best during these hard times!

As for staggering the payments, I meant that I would stop paying on some and still make the timely payments on some others to buy me some time on them... that way I don't have to settle all 11 cards at one time.

"Insolvent" is when you owe more than you have (assets). When you settle with a credit card, they will send you a 1099 for the difference (what you ended up not having to pay on the balance). You have to claim this as income when you file your taxes. If you are insolvent, you can file a form 982 and not have to pay taxes on those 1099's. At least that's what I've learned from this site so far! I still need to investigate that further, but... one step at a time.

I was about $90K in cc debt and I am still in the process of settling. So far I have settled with AmEx and I am about to settle with Bank of America, my biggest account. I posted earlier in this thread and when I mentioned "staggering my accounts" I meant staggering the total non-payment of them. I stopped paying all of my cc cards in September. In hindsight it would have helped me if I had stopped paying one in September, then stopped paying one in October, maybe then stopped paying 2 smaller ones in November and so on until I had stopped paying on all of them. With debt settlement you must stop paying all together on an account in order for the creditor to be willing to settle. However, ALL credit card companies "charge off" (write off your account and most likely sell it to a collection agency) the account around 150-180 days...so if you stop paying them all at the exact same time they will also all charge off at the exact same time. That makes having enough money to settle difficult, and ultimately in my opinion increases your chances of being sued. Typically the best settlement deals are given right before charge off. So you want to try to close a settlement deal right before charge off with either your largest debt OR the account that will give you the greatest savings.

I read another thread recently about being insolvent. I will try to find it and bump it back to the top.

Sameboat, what % did you settle with Amex, and was it directly with them or a CA? You should do great with BOA - they are the easiest & lowest! Good luck.

Debt settlement can definitely help a person to avoid bankruptcy. But bankruptcy is not that bad too. I have seen many people leading a happy and stress free life after bankruptcy.

Thanks for clearing that up for me, it makes good sense to "stagger'', if I can afford it I will do it that way. Also, thanks for defining insolvent for me, I don't think I would be considered insolvent, my debt is not greater than my assets. Well, my credit card debt isn't anyway. I'll be keeping an eye on this thread to learn what I can!

still consider that even like in my case my settlement was pretty large so even though i ended up paying the irs 675.00 it was still below the 50% of the debt anyhow. so even having to pay the gov i still came out on top. So dont let that scare you too much if you have to pay tax on that amount. if you are getting your debts settled by 50% or more it is still worth it.

Hello again!
Okay my settlement with AmEx was 55%, and yes they did send it to a collection agency (Zwicker and Associates...they are attorneys also who don't mess around). I am SO happy to report that I just settled with Bank of America for 17% of my almost $40,000 balance!!!!! I am so happy I can't believe it. I read somewhere here that if you try to settle at the very end of the month you will get the best deals, and I think that played a part in my success with that. I can't tell all of you what a relief it is to have settled my biggest account! NOTHING will stop me now, I can almost TASTE how it will be to be debt free! :) :) :) :) :)

Congrats on the BOA settlement sameboat! I got 26% on mine and 35% on Chase. I've settled all my cards except Amex. I have 3 Amex and they've sent each one to a different CA - they're hitting me from all sides but I think I'll be ok if I can pay in 3-4 payments. Then I'm done! Did Amex let you pay in 3-4 installments?

I've settled all of my accounts except AMEX. AMEX sued me and now I have an attorney to sell the bankruptcy story. WE had 55% on the table and now believe its around 40%.....we'll likely settle for 30% because its much more than what a 3rd party will pay for this debt. I've settled all of my accounts with BOA, Discover, Advanta, and Citi for 39% on average. All settled at different times and different payment structures. Good luck all. BOA gave me the best deal @30% on 25k

guest23 was your Amex ever with a CA? How long did it take for Amex to sue you and did it go back and forth between CA and Amex for several months/years?

Just checking in folks (I'm the originator of this thread). I am now almost 60 days late on 3 cards (AmEx, US Bank, & First Nat'l Bank of Omaha), over 30 days late on several more, and still paying on a few to keep them staggered.

I'm scared to death and visit this forum every day for inspiration! The most calls I am getting are from US Bank (at least 5 calls a day!) I did answer once and tell them our hardship story, the person was very understanding as I told them I would let them know if our situation changed. However, I received three more calls from them the very same day (but didn't answer).

I am mailing hardship letters tomorrow (registered mail) to the three I'm 60 days late on. In the mean time, hubby and I are trying to sell some things to get some money together for settling.

Will keep you informed!

Hi We too are in a lot of cc debt and trying to settle ourselves 56 days late and getting calls. I read above that you are sending hardship letters. Is it a good idea to send them all a hardship letter? and also why is it better to settle before it gets charged off? a credit agency cannot sue you...can they??? appreciate any advice you can give us for settlement.

Hello oakrascal, some say to send a hardship letter and some say not. Some also suggest to do everything by phone and others say to do it all in writing. I'm just going to do both. I plan to answer calls once or twice a month and let them know if our situation has changed or not. I thought it was a good idea to send out at least one letter so they have our "situation" in writing.

I hope someone else can answer your other questions, this is all new to me to and I am still learning. I'm so grateful for this forum.

Ah geez...forgot to log in. That last reply was from me.

hello guest and thank you for replying. I think I will wait for them to call.I can tell you something that just happened to us and we got our first settlement offer it was through world first bank they offered 50% of balance over 3 months,asked if it could be stretched out over 5 months,she said she put in the counter offer..they never called me back I called them once a week and then they told me they never submitted the counter offer,they submitted counter offer and then they called me back with another offer,90% of balance,saying my counter offer was denied,asked where was the 50% offer and they told me that I made up the whole story and they never offered me that 50%...where's the paper for proof? he asks so I learned my lesson and will get everything in writing whenever anyone offfers me anything even if I put in a counter offer.I just never imagined that they would come back and say I made up that offer and they never offered it to me.I think it was all a plan to begin with..because the guy was soooooooooooooo NASTY,I think it was all a plan to get me going,upset. Anyway...we too are very grateful for this forum.I hope to help other people with my(our) situation too.

Could you guys share the letters you sent to the cc co asking them to settle for X percentage?

Also when you send the letter, did you all send how? Registered mail, mail with tracking, etc?

I'm in the beginning stages of the whole settlement process (just defaulted 2-3 mos ago) so I haven't even discussed settlement yet. The letters I mailed were just our initial hardship story and that we are trying to generate some money...blah blah blah. But it is the truth. We haven't even made our mortgage payment this month so I'm certainly not going to be able to make any cc payments. Home first!

I sent my letters certified with return receipt requested. It cost me $5.42/ea but at least I'll have proof they received it.

Good effort butterfly. I hope things work out for you :wink:

Thanks, anya. Seriously, it's the encouragement from people like you and others on this forum that's going to be the only thing that gets me through this!

Well hang in there. And if you have any questions please feel free to ask us anytime.

Keep us posted :P

Hi Butterfly!
I saw that you posted recently and just wanted to say hang in there! It sounds like you are doing great. Making the effort to communicate with your creditors will pay off for you!

Banks are really desperate right now, and it seems like they are all settling even earlier than they have in the past. I just settled with Chase at 35%. My last big acount ($27K) is with Citibank, but I won't have enough saved to settle with them until the fall. In the meantime, in order to buy myself some time to save, I accepted a hardship plan that they have offered. Zero percent interest for 12 months, and the minimum amount due each month was reduced dramatically. Of course I would rather save that money each month towards settling, but at least this way I know they aren't gearing up to sue me. So it may take me a couple of months longer than I originally anticipated. Anyway, I thought I would mention this to you in case you get into a bind with not being able to save enough money and need to buy yourself some time. All of your creditors have some sort of hardship program available.

Another note, I know you are staggering the non-payment of your accounts, but I wanted to suggest the advice that you should not stagger them TOO much. Really a couple of months is best. The reason is this: your creditors will run a credit report on you, and will be able to see that you are paying some of your accounts but not others. They will not like that. They will want to know why is it that you can pay company "X" but not them??? If you are only staggering them only a month or two apart, it is believeable that you are having a hard time financially, and just could not continue paying everyone right "around" the same time. (Of course you truly ARE having a hard time financially, but you need them to believe that you cannot afford to pay them ANYTHING.) Also, if you stagger them too far apart from one another, after you settle the first account, that account will be shown as "settled" on your credit report. Your other creditors will see that, and again want to know why you did not catch up with them on your late payments when you came into a chunk of cash!

Most creditors are now only allowing 3 months to pay off any agreed settlement amounts. Many creditors used to allow 6 months to pay but I am pretty certain that is a thing of the past. Just want to make sure you knew of that because it can definitely make a big difference in how you are planning to come up with enough funds.

Another thing, I'm sure you have the smarts to not mention settlement at this point...that is a sure fire way to speed up your account into a department that you don't want to be in at this stage. Just stick to your story and be pleasant to all that call. Tell them you are trying to figure things out, find a second job, whatever. Give them a glimmer of hope that maybe next month if things change, you will be back on your feet, but this month you are still in such a horrible place financially that you just can't pay for anything but your mortgage and groceries. Be prepared for them to drill you as to WHY you can't pay ANYTHING. Saying you got "behind" on bills won't cut it. You need to have a reduction in income for some reason or another.

Glad to hear you are hanging in there and reading up on things on a regular basis! When this is all over you'll be asking yourself "why didn't I do this sooner?" I know I will! :) :) :)

These stories are so helpful. They give me hope!

I am 47,000 in debt and do not own a home. I make decent money by cannot pay the bills. Credit counseling can help but I will have no money left for any emergencies, dr visits, car repairs etc. if I go with them. I HAVR quit using the cards and am living frugally. How do I know which company is safe? I think I can get a lower rate with consolidation but with who? I am desperate.

I was able to get a settlement over 6 months. I had to agree to pay 50% of a $13,000 balance though. The didn't accept my lower settlement offer of $4,000 lump sum. Only way I could pay more was to spread it out.

This was a BOA/FIA Card Services account.

hello everyone, still learning thanks to all of you and from the bits and pieces that I have been reading please tell me if I am correct in saying that when you are doing your own settlement usually you have 150-180 days before charge off and it is best to settle before this happens,right? why? because the charge off looks worse on your credit report???and wouldn't you get a better settlement if it was charged off and gone to collections? and once it is charged off the credit card company can no longer sue you..right??second....can a collection agency sue you?thanks for your help

arb - how long ago was it that you settled with BofA? How past due were you when you got the settlement?

Thank you for that very informative post, sameboat (and for your continued encouragement... it is truly appreciated!!!)
Now you've got me thinking about how we're staggering these payments to our cc's.?? So I'm hoping you will give me some advice on something.
We have three citibank cards ($4500, $1500, & $1600).?? We really wanted to try and pay these off instead of settling, since they are so low.?? But now I'm wondering if this is not a good idea??? Do you think I should just let them go and try to settle later?

We just thought that since they are so low, it would be three less cards we would have to deal with if we could just get them paid.... but what we are paying will definitely show up on our credit report, plus, the money we are paying could be used to settle some of the first offers that may come in very soon.?? Also, I've heard from love_my_things (I think!) that citibank sues over small amounts!

I'm just not sure what to do on this.?? If anyone has suggestions, I'm all ears!

i was just reading in some recent posts that people have settled with citi,pretty good settlements too

Hi Butterfly;
Yes I think that Citibank is more likely to sue.?? (From what I have heard and read.)?? However, if they will combine all three of your accounts, you could end up with a pretty good settlement, so I wouldn't necessarily leave them out of your settlement plan.?? It seems as though the bigger the balance, the better the settlement offer, which obviously means a bigger savings for you.
On the other hand, have you talked to Citibank about a hardship plan for any or all three accounts? ??Being on a reduced payment plan with them would still allow you to save, but give you the peace of mind that you won't have to worry about??them for a while -??which will allow you to??focus on your other creditors.?? I am currently on a hardship plan with Citibank - 0% interest for one full year, and my monthly payment is less than half of what it normally would be if I was paying the regular minimum payment.???? They had other repayment options but that was the best option for me.????It was the only way I could buy myself some time to save settlement funds for them.?? (Of course they don't know that my goal is to settle; my settlements with other creditors have not yet shown up on my credit report yet, but they probably will this month.)?? The more I think about it, and as I sit here and type this out, I think that is the approach I would take if I were you.
Sounds like you are doing well...glad to hear it! :)??

Sameboat, do you think we would have to default on them before they would give us a hardship offer? Because as of right now we are current on all three citicards. It just scares me that we might get sued over such a small amount!

Definitely.?? As long as you are current, it is business as usual.?? For me, here is what happened: when my account was around 60 days past due, they offered a short term hardship plan - only 2 months long, but for those 2 months I did not have to pay anything (they called it a deferment hardship) and the interest and late fees stopped.?? So I took that offer.?? That was for the months of January and February.?? Then I called back just before my March payment was due and asked if there were any additional hardship offers for me.?? That is when they gave me the 12 month, 0% interest offer, with a lowered minimum amount due.?? So I took that offer, and I plan to make that reduced minimum payment until I have saved 50% of my balance.?? Then I will most likely stop paying on the account again, with the hopes of settling.?? Of course by then they will be able to see all of settlements I have on my credit report, so I may be putting myself in a bad situation but it is a chance I am willing to take.?? I will be keeping my eye on how Citibank is dealing with settlements and hopefully it will work out as I am planning.
I know for sure they will not offer anything (other than maybe a small interest reduction from what your??accounts are at now) unless you are late.?? What a shame that the offers that really help people can only be offered if the account is late.?? Something else that they suggested (but I did not take it) when I called in March was a fixed repayment plan.?? They said I would have to close the account, and that they would re-work the debt almost like a loan over a 60 month period.?? Maybe that would be an option for you if it would really lower your minimum amount due.??
Unfortunately I don't think there is going to be any way around you getting any sort of better offer unless you become past due.???? If I were you I would not pay your next bill and then call them.?? Tell them your income has been reduced and you are struggling.?? Then ask what kind of hardship offers they may have available for your account.?? You may have to wait until the 60 day mark to get a really good offer though.

Once again, thank you so much for your advice! I think I will go ahead and do that. I will keep you posted. Thank you again! You're so nice to take your time to help others.