Advanced Advise Needed Only

Balance transfers and cash advances are both looked at VERY negatively in the eyes of creditors in regards to debt settlement. Some even consider it fraud. I would be very cautious if I were you.

First off, thank you for your quick response. I completely understand your cautious remarks. However, I planned on staying current with Citi until I have reached an agreement with US Bank and Chase? What is my probability of US Bank and Chase settling for 30-40% given I'm current with Citi and all other debts? I understand the best route to debt settlement is to be late on all payments, however I'm not sure if this is possible in my situation considering potential litigation charges due to the recent balance transfer. Sigh....

Chances of them settling if you're current are zero. You'll need to fall delinquent, however I see your point of the current transfers and potential litigation; although I have seen many people with current transfers and low balances such as yours not get sued either. For the creditor it can simply be too costly.

Regarding your finances, they don't fall into play when settling and you do not need to disclose any of that information to your creditors.

Again, thank you for the quick response. When stating you'll need to fall delinqent, does this mean only my credit cards or all of my debts including my mortgage? A clarification would be much appreciated. If I understand you correctly, you're stating I must be delinqent on all cards cards before worthy settlement offers will be made?

Lastly, where do I stand with my finances? Is this a bad debt to income ratio? A good distinction of how your debt to income ratio is calculated would be nice to have. I see web sites claiming all types of formulas. Thank you.

-Henry

I agree with jack...you will have to majorly tank your scores before either will settle. And then looking from a collector point of view, I would be adding up all those other bills, particularly the vehicle payment. Obviously there has to be income to keep all those bills paid.

Just your unsecured debt. The longer the delinquency the better the settlements. Reason for this is because 9 times out of 10 when you settle, you're dealing with a third party collector/debt buyer who purchases that debt from your original creditor at a fraction of the balance.

Your DTI is high; taking in all your expenses you're around 64% gross. For comparison purposes typically lenders like to lend to DTI levels less than 40% net.

Thank you for everyone's feebback. I find this information very valuable.

So, given I need to fall delinqent on all of my credit cards at the same time in order to obtain a beneficial settlement, what about these other questions?

1) Someone mentioned I'm not obligated to disclose my financial situation. Is this true? How do I answer that question when dealing with creditors and CAs?

2) At what time frame can I expect these creditors to sell the debt? 6 months? That is, after charge off? Should I wait until the debt has been sold in order to get a better settlement?

3) Should I only be communicating by mail? Is this the best method? (i.e. certified mail with receipt, etc..)

4) What about all that accumulated interest and late fees that will add to my existing balance. Should I be basing my settlement amounts off the original balance right before being late the first month?

5) The debt is completely in my name. That is, I possesed this debt prior to marriage. Do creditors have the ability to confirm my wife's wages?

6) Given the overall picture here, is debt settlement worth my time and efforts? Can I realistically eliminate my debt and live a stressles life?

Thank you everyone for your feedback. I truly appreciate the opinions of people that have been down this road time in and time out.

Sincerely,
Henry

As someone who is currently going through debt settlement (with a company) I can tell you that first, you don't have to fall behind on your mortgage. You can keep that current, to settle the other stuff. Second, you mentioned staying current with Citibank while you settle the others - but one thing that is often happening now, if a particular creditor looks at your report and sees you falling behind on other payments, even though you are current with them they can raise your interest rate through the roof (something Congress is trying to change right now) or close your account altogether. It's a good possibility this could happen.

The accumulated interest and fees is something to discuss in the negotiation process. Most likely the creditor will look at the balance at the time you make the offer, but it can still be a good deal.

I don't think your wife's income should come into play at all; in fact the creditors don't even need to know you are married if this debt was made in your name only.

You might look into other options like consolidation or debt managment programs if you don't want the hassle. Settlements really are a last resort before bankruptcy and are often a very rocky road themselves. Personally, if I had had a half-way decent income I would've found an alternate way, to protect my credit score.

Quote:

Thank you everyone for your support and advice. Going forward, would someone be able to accurately answer the (6) questions I had mentioned above. That would be very helpful.

By the way, regarding my FICO score. I've carefully weighed the pros and cons of having a high FICO score in my situation. The fact is, I already have my permanent home along with a reliable automobile. My mortgage is locked in at 30 years for 5.5% and my automobile loan is also at 5.5% for 60 months. I'm willing to dramatically lower my credit score considering I won't be using my credit any time soon. At least for large purchases, such as refinancing, etc... I guess it's time my credit score begins to work for me. Thanks.

1)You do not have to PROVE your financial status. In other words you will not be forced to provide W2s or paystubs or copies of your mortgage, other debts, etc. NOTHING. As of right now, your creditors will ask you for verbal verification of your income and financial responsibilities and that is it.


2) The original creditor (OC) will most likely hang on to your debt for 180 days and then sell it off to a collection agency/law firm. I personally believe that you will always get a better settlement offer with the OC, but I have read here that some people feel the better deals are made after charge off with the collection agency (CA). The problem is that your account will continue to accrue interest and late fees the entire time it is delinquent, so it obviously makes sense to settle it sooner rather than later when the balance is lower. Also certain companies are easier to settle with than others; SO MANY of the collection agencies are difficult to deal with. Chase will typically settle for 35%, sometimes lower.


3) Communicating by mail may be okay for some things I guess...but if you try to exclusively communicate by mail you are only going to frustrate your creditor. Everything can be done by phone, especially in the early phases when the accounts are still with the original creditor. Believe me you are better off by keeping the lines of communication wide open with your original creditor. It will help you in the end.


4) When you go to settle, your creditor will want to settle on whatever your account balance is at that moment. You should add AT LEAST 10% of whatever your account balance is at right now if you plan on settling within the first year. So, for example, a Chase account with a $6000 balance today will most likely be settled for a percentage of $6600 before charge off. So plan to settle based on a $6600 balance.


5) If your wife is not on the accounts, she will have nothing to do with it. Of course your creditors will ask if her income can help with your situation. Just tell them no and that she is buried in her own debt as well and leave it at that.


6) You ask if the overall picture is worth it? Only you can answer that. People settle their debt all the time with creditors. Many people live cash only lives and love it. In my opinion, I think it is ABSOLUTELY worth the stress. I like you am in a fixed 30 year mortgage with a great rate. I am not concerned with my fico score at this point in time. What I do know is that I don't want to pay the credit card companies for the next 20 years of my life. I should have done this years ago!


On a side note, you seem like you really have a lot of questions and are uncertain. I have heard really good things about Zip Debt for do it yourselfers. They charge a one time fee around $300...(or $350 I think) and the owner/debt expert on the site really knows his stuff. I know he offers a one time phone consultation and constant email support for as long as you need it. Even if it is not for you, google the name and check out the FAQs and blogs. He has some really good info for do-it-yourselfers. Well worth the money in my opinion.

Good luck to you!

Thank you for the information. Very very helpful.... Am I required to give my creditors my financial status over the phone verbally? Can I simply tell them I'm unable to provide that information?

Hopefully by telling them your financial info, you are helping yourself. They are going to ask you what your household income per month is. Then they will ask you about all of your bills from mortgage to utilities to other loans and unavoidable expenses. If you tell them "well I just can't give you that information" then they won't be able to evaluate your situation to see if you are a good candidate in their eyes for settlement. The best settlement offers usually go to the people that have a reduced income and therefore cannot afford to continue paying their minimum payments.

Okay, so when you say household income, do I have to include my wife's income? Will they be able to determine this if I leave this out? Obviously, it will make a big difference in their settlement offer.

Well, keep in mind that nothing is documented, and they cannot see anything except whatever is listed on your credit report. If you tell them that your wife works then you will have to tell them a figure that includes her salary. It really isn't that calculated or formal. Just sit down and list all of your debt and monthly expenses. Then figure out what you are going to tell all of your creditors is your income. Just ballpark it...they are just trying to get the big picture to see if you truly are in the "negative" each month. Just make sure that whatever you tell them you are consistent and don't change your figures in case they ask you again in the future. (Which is why it is a good idea to write it down.) Do people lie about their income? Of course they do. Whether or not you are comfortable doing that is entirely up to you.

Your original creditor will charge off the debt by eliminating that recievable from their assets; sometimes referred to as a write-off. A third party collection agency will purchase that debt at a fraction of the price. Say for instance you owe Bank of America $10,000. They will remove that debt off their books by selling it to a debt buyer/collection agency for say $1000. If they in turn try to collect on that debt for $2000 and do; they've just made a profit. My point is that it's a business transaction - there are no need for your financials.

What i recommend and what i am doing is staying in touch with creditors saying each time i call that i just want to let you know that i am having financial difficulty and i intend to get caught up ASAP. You need to make them think that you are trying to resume making payments. Please dont ask them about 20% settle if you are current or even 90 days past due. Once they see that you are 120, 130 or 150 days past due their attitude will change. About being sued, if they see you dont have assets other than your work income they will probably leave you alone. So I would not worry about that to much. Of course in the extreme they could attach a judement against your property but here again, there are millions like you and it is not that worth it for them to try and obtain judgements against everyone who has a home. Because they figure you may end losing the home before they get to.

Also you need to come with a plausible story as to why you cant pay them. They will look at your report and see that you are current with you mortgage, currnent with you car. But you migght want to say your income has been reduced by 50% which only allows you to pay what they are seeing on your credit.

Having said all this, you must be able to come thru with the payments once you get to settlements stage.

Good luck you. We are perhaps, some not all are in the same boat. I am doing debt settlement and i have listened to some CD which i joined a debt settle ment company.

Good luck.

Can someone answer my last question? Thanks!

Surely household income does involve the contribution by your legal wife.So surely they will take a consideration of this while evaluating your proposal.

Even Household income does involve your ancestral property income.