DIY debt settlement - will I just make it worse?
Date: Tue, 05/19/2009 - 12:29
Amex: 16,000
Citibank 1: 16,000
Citibank 2; 13,000
Discover: 5,000
I called Amex last month and told them I was having trouble paying their high $390/month minimum, and the lowered my rate to 0% for 6 months and lowered my minimums for a year.
I called Citibank and asked them to match Amex's offer and they basically said they couldn't do anything, but still reduced my interest rate by 1% to 6.9%.
I have good credit (725-ish) and a mortgage in good standing (but no equity for any kind of a refi).
I'm considering ceasing to pay at least Citibank and Amex, if not Discover too, for a few months to 1) build up a little cash to use in negotiating and 2) hope to convince them to work with me. But I'm worried that, looking at my budget, they'll see that I *can* afford the monthly payments (just not any more) and I'm also worried about lawsuits, garnishments, collection agencies, etc. I have a day job plus I moonlight and I don't know that I can also handle being wrung out by my creditors, but I also don't want to keep paying them forever.
I've calculated a snowball plan with a spreadsheet I found online and I could theoretically have them all paid off by October 2013 (4 years from now). It relies on a very strict (but not unreasonable) budget for the next 4 years.
Does anyone think I'd be foolish to rock the boat and try to persuade my CC companies to negotiate down with me? Am I better off to pay them on time for the next 4 years, than to risk the damages of nonpayment and settlement?
My parents think I should sacrifice my credit rating (and probably, my ability to take out a loan, refi my house in 3.5 years when the ARM expires) to get out of debt faster.
What I've been reading on this site is that DIY settlement can be time consuming and frustrating, lots of certified letters and phone calls from angry creditors. Also, that it often relies on having a cash fund on hand to negotiate with. I'm certainly not lazy but I'm worried that I'm not in dire enough straights to justify any real allowances on my debt, and since I won't have enough cash to offer them a reasonable sum towards the balance (other than maybe Discover) they won't really be incented to work with me. I'm afraid I'll end up with the same debt, the same monthly outflows, worse credit, and a lot of closed accounts.
Any advice is appreciated... thanks.
What happens if something bad happens like a car break down or h
What happens if something bad happens like a car break down or home alliance fail , or air conditioner die ? Then you won't have the money to fix them and stick to the budget. Murphy's law = "Anything that can go wrong will go wrong." Then you will be back to square one. Normally I suggest a DMP but since you are struggling with the minimums and already have low apr's a DMP won't help you. You may not want to to do settlement because of the collection calls and risks but it might be your best option besides bankruptcy.
So, do you think settlement will actually make a difference for
So, do you think settlement will actually make a difference for me? Should I try to "hide" money by keeping my cash fund somewhere they can't see?
And if in 3 months, after I have probably $2500 in my cash fund (assuming I was putting my payment money there instead), are Citibank or Amex even going to deal with me, when that's such a small portion of my balance?
to back up mobile, while i was going through my settlement progr
to back up mobile, while i was going through my settlement program, my fridge and car broke down within 2 weeks time. of course i couldnt afford a new fridge and had to go through rent a center, (which i had to end up paying twice as much for.) once i got back on my feet my hot water tank quit. all within about 3 months time. it stunk pretty bad.
of course hide it and save save save, and elliminate the unnecessary stuff trust me even know im still finding new creative ways to save money. THANKS TO THE INTERNET!
they may deal they may not, its the chance you take with settlement. dont worry about your credit if you need settlement your credit can be repaired and rather quickly. you may be suprised as to what they will settle for. i have heard on this forum of people getting settlements in the teen percentile.
good luck to you!
Well this is a hard one... if you can live on a budget ok and st
Well this is a hard one... if you can live on a budget ok and still make your payments 3 year is not really that long to pay off your bills. You will still have great credit and you will be out of debt... it might be hard but it can be done. Try to get $1000 put away for emergency then just go all out on paying off your CC bills. You could try to settle and save some money but remember... it will bring your credit score down. And you need to have some money when you do talk and settle with them.
What state do you reside in? In some states, you can't be garni
What state do you reside in? In some states, you can't be garnished which slows do the incentive to take debtors to court.
Washington, which i believe *does* allow garnishment. I'm thi
Washington, which i believe *does* allow garnishment.
I'm thinking I'm better off just to stick with my snowball plan, and when I come across windfalls split them between building my savings and supplementing the snowball. I have a few thousand in savings now so I'm not worried about unexpected expenses, even on a strict budget, but I wouldn't want to wipe that money out trying to deal with a CC company. It's more important to me that I have my savings, and control of my accounts, than to hop the bailout bandwagon right now (when i really am not as unfortunate as many other people who need a bailout more than me).
Im in the same boat
I am also wondering If I should do DIY debt settlement. I keep taking ash off of one card to pay another. My husband just went through the same thing. He stopped paying and the settlement letters started rolling in, but, he ignored them! Capital One sent him a settlement for 1700 dollars on a 4000 dollar balance! He didnt even bother! Well, anyways, he ended ip fining bankruptcy. Now Im in his position, but, I filed bankruptcy 5 years ago so I cant do it again for another 3 years! Im stuck and cant even afford minimum payments! Let me know how it goes for you!